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Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: 20punches (IP Logged)
Date: October 3, 2013 12:16PM

Cap2c - That was a respectable statement from Watsa. It just shows the confidence he has in Canada's No.1 brand. Personally I think $4.7 billion is a fair price based on a balance sheet analysis. Thanks for your comments.


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Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: ecotycoon (IP Logged)
Date: October 3, 2013 06:21PM

Great article Jianing7978, we think the same :) feel quite greedy when i've notice this arbitrage opportunity too.

1-Fairfax are famous for signing contract on an handshake.
2-Fairfax stand for Fair and acquisition, Fair price acquisition for the benefit of both parties.

If they say they agree for 9$ a share this mean in my opinion a 99% chance they will acquire the business for 9$ a share meaning close to a 15% return. Sound safe to me when the overall market is expect to return around 2% on an historical basis.


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Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: 20punches (IP Logged)
Date: October 4, 2013 09:01AM

Ecotycoon: Thanks for commenting. I totally agree with you:) The market seems to think otherwise though and I've seen a few analysts raising serious questions regarding the viability of the $9 offer but none of them has taken into consideration Watsa's past record. That baffles me.


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Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: chihin (IP Logged)
Date: October 5, 2013 10:11AM

Noted this phrase in the writeup: "That's 13.6% in six weeks or more than 200% annualized."

Assuming no counterbidder appears, are we assuming that Fairfax actually complete the deal and pay shareholders the $9 in 6 weeks, i.e., around 4 November 2013?

Or am I missing something important here?


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Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: 20punches (IP Logged)
Date: October 5, 2013 07:15PM

Chihin: I probably should clarify that a little better. I am not assuming Fairfax will actually complete the deal in 6 weeks. My point was in 6 weeks, we will have more clarify and less doubt, thus removing the uncertainty discount that is currently priced in BBRY's stock. So let's say around Nov 4th 2013, Fairfax announces that it has pulled all the financing needed and will sign a definitive agreement, I would think the market will then fully recognize the $9 deal and BBRY should be trading around $9. Thanks for pointing that out.


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Re: Evaluating BBRY Using Buffett's Arbitrage Strategy
Posted by: junming82 (IP Logged)
Date: October 6, 2013 03:03AM

It would be very interesting to see how it all pans out as there have been reports that Blackberry is in talk with Cisco, Google and SAP to sell them all or parts of itself. Such a deal would be an alternative to the preliminary agreement reached weeks ago with a group, led by BlackBerry’s biggest shareholder, Fairfax Financial Holdings, to take the company private for about US$4.7 billion (S$5.86 billion), a bid which has faced some scepticism because of financing questions.
________________________________________________________________________________​___
Disclaimer: This is not a buy or sell stock tip. Please do your own research.

Value investing blog: http://valuestocksinvesting.blogspot.sg/



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Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: 20punches (IP Logged)
Date: October 7, 2013 10:43PM

Junming: Thanks for commenting. Blackberry has a very solid patent portfolio, especially in the mobile security area. I think Google, Samsung, Microsoft and Apple might all be interested in its intellectual properties. BBRY is burning cash but I can see a major handset producer acquireBlackberry and do a massive lay-off as well as a production line and corporate overhead integration to achieve synergy, like what Google did to Motorola.



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Re: Evaluating BBRY Using Buffett's Arbitrage Strategy
Posted by: SeaBud (IP Logged)
Date: November 4, 2013 02:28PM

Hate to go back to this and not doing it in an "I told you so sense", but this deal is falling thru and a lesson learned analysis is appropriate. Technology moves fast in both directions. I do not believe Buffett would have touched this with a 10 foot pole because the thesis was based on Fairfax paying money, not the value of the company. The cost of turning this enterprise around is an anchor for a company in a business that moves at lightening speed. This is not like a cigarette maker or soda maker - it is absolute crashing failure. As such, the perceived margin of safety never existed because the underlying business was not undervalued.


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Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: batbeer2 (IP Logged)
Date: November 4, 2013 04:32PM

What we have here is a $3B company trading around NCAV.
- With roughly half its market cap in cash.
- With a highly regarded and shareholder friendly guru on the board.

It's been a year since I saw a stock that checked those boxes. It was called RIMM.
If memory serves, kfh227 submitted it for the contest. It doubled within months.



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Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: SeaBud (IP Logged)
Date: November 4, 2013 05:39PM

Relying on Fairfax as the definer of value was a mistake as I said a month ago. The value is never defined by what somebody will pay but by what something is.

I agree that now we have a company with half its market value in cash and enough cash, and a friend, to make a turn. However, BBRY is still bleeding cash and it is unclear how BBRY returns to the game and produces revenue.

I will be watching BBRY closely because if they can make a business play and even stabilize, this stock will do quite well. I invested in Nokia because they were valued at less than the network division plus cash - the handset business was free. In this case, the business must have some potential stabilization path (either handsets or bbry messaging) to be interesting and today I am not sure that exists. In other words, you may be buying 50 cents of cash for a dollar?....

Disclosure - long time in the telephony, technology industry and highly skeptical in general!


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