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Re: Evaluating BBRY Using Buffett's Arbitrage Strategy
Posted by: jsoumilas (IP Logged)
Date: November 5, 2013 06:06AM

Hello Ning Jia. Like you I believed that BBRY was a likely arbitrage situation. Unfortunately with the news yesterday, it did not turn out that way. What do you think of BBRY at this price? Is it likely that the company would be broken up? Is there value at this price?

John


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Re: Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: altamami (IP Logged)
Date: November 6, 2013 08:41PM

I definitely agree with this. On a value basis, BBRY is attractive. However, on a product, management, and future business outlook basis BBRY is still unclear at best.

AA


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Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: 20punches (IP Logged)
Date: November 10, 2013 09:18PM

SeaBud - I like your comments a lot. It's always nice to have someone looking at a situation from a different perspective.

As disappointed as I am with the outcome so far, at the time I was writing the article, the odds were good in my opinion and what happened last week was an alternative among a few, but unfortunately one that was the least favorable...... I don't think this is a deal that is destined to fail. If Fairfax can get 1 billion convertible bond financing, what made it not be able to get the $1.2 billion? So in my opinion, Fairfax was able to consummate the deal, but somehow didn't choose to.

Agreed on the perceived margin of safety may never exist. If BBRY's business keeps going down and it keeps burning cash, in a few years, it may very well no longer exist. I did my analysis before the deal and I know BBRY is not going to worth much in a few years if things don't turn. If wasn't for Watsa's bid, I wouldn't even consider BBRY. If Warren Buffett says Berkshire will buy BBRY for $4.7 billion, regardless of what BBRY is worth, would you buy BBRY at $4 billion? That was why I wrote this article. But I guess in the end, Watsa is not Buffett after all.



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Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: 20punches (IP Logged)
Date: November 10, 2013 09:30PM

Jsoumalis: As SeaBud has mentioned in his comments, the perceived margin of safety may never exist. One mistake that I have learned in my earlier mistakes is that you can't do the liquidation value analysis based on what's on the balance sheet today. You gotta look out a few years and ask if the company keeps going downhill and burn cash, what will the balance sheet look like in 3-5 years, or 10 years? In BBRY's case, what we have is a business that will likely to worth close to nothing in 5 years if things do not turn. So on a stand-along value basis, unless BBRY is liquidated within a year, the margin of safety based on asset value is not promising.

But is there a chance that BBRY is broken up and sold separately? I wouldn't rule that out. Just look at all the interested parties - Google, SAP, Qualcomm, Samsung, Lenovo and even Fairfax itself. It is too early to tell what is going to happen but I'm following BBRY closely as well.


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Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: 20punches (IP Logged)
Date: November 10, 2013 09:33PM

Batbeer2: I'd be pretty happy if history just rhymes:)


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Re Evaluating BBRY Using Buffett s Arbitrage Strategy
Posted by: vgm (IP Logged)
Date: November 15, 2013 04:38PM

" Fairfax Financial Substantially Ups Its Stake In BlackBerry"

"Fairfax now holds 17.7 percent of outstanding shares of BlackBerry compared the 9.9 percent the firm owned when it was attempting to buy out BlackBerry."

https://businessincanada.com/2013/11/15/fairfax-financial-substantially-ups-its-stake-in-blackberry/


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