Why Prem Watsa Loves the Company

Everyone knows that BlackBerry Ltd (NASDAQ:BBRY) is now not even a competitor in the smartphone space, the company has been reduced to a niche player, but still there are a few people who have bet big on BlackBerry and continue to hold their bets. Prem Watsa, Founder of Fairfax Financial Holdings, is one of them. Last year he tried to purchase BlackBerry at $9 per share, but the deal went awry after the due diligence. He still is optimistic about the company as is evident from his continuing stake in BlackBerry’s stocks and his purchase of the company’s convertible debentures. One can catch a glimpse of why Watsa likes BlackBerry Ltd (NASDAQ:BBRY) so much, by going through the annual letter to Fairfax’s shareholders from earlier this year.

Prem Watsa

One of the primary reason that makes Watsa optimistic about BlackBerry is the credentials of the company’s new CEO, John Chen. Mr. Chen emigrated to the U.S. from Hong Kong at the age of 16, after which he gained a Bachelor’s degree in electrical engineering from Brown and a Master’s from Caltech. His most outstanding achievement is the turnaround of Sybase, When MrChen took over Sybase in 1998, it had lost money for four years, its stock price was down 90% and most analysts were predicting bankruptcy within six months. Within a year, Sybase was profitable and in 2010, 12 years later, SAP bought it at $65 per share, more than ten times the $5 –$6 per share it sold at when Mr. Chen took over. He has also been on the Board of Wells Fargo -which is one of the biggest banks in the World- for eight years and Disney for ten years.

Watsa also enumerates Mr. Chen’s achievements since he took over BlackBerry, which includes a joint venture with Foxconn to manufacture low cost phones for emerging markets, bringing back the ‘‘BB Classic’’ phone (the Q20) and saying publicly that BlackBerry would break even by the fourth quarter of fiscal 2015.

Another thing that makes Watsa optimist is that he feels the market is highly overvaluing tech companies like Twitter Inc (NYSE:TWTR), Facebook Inc (NASDAQ:FB) and others. He provided a sobering comparison between Twitter Inc (NYSE:TWTR) and BlackBerry, which demonstrated in some ways that why BlackBerry is not such a bad bet after all.

“Twitter went public, just after BlackBerry, announced its convertible debt issue, at $26 per share, giving it a market value of $18 billion. It had revenues of $665 million and losses of $645 million, and most investors could not get a single share unless they were very good clients of the major houses underwriting the issue. On that day, BlackBerry traded in excess of 100 million shares at $6 per share, giving it a market value of $3 billion. BlackBerry had revenues of approximately $8 billion with cash of $2.6 billion and no debt other than the new convertible debt to be issued,” Watsa said in the letter.

Prem Watsa also tried to take BlackBerry Ltd (NASDAQ:BBRY) private last year, although his bid was rejected. He also decided to commit $1.0 billion to invest in the company. According to Fairfax’s latest 13F filing, the fund owns over 46.65 million shares of Blackberry.

Disclosure: None

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!