Investors made their decisions regarding Research In Motion in the months leading up to the Jan. 30 launch of its BlackBerry 10 smartphone. The company released two devices. The first, the all touch-screen BlackBerry Z10, was available in the UK, Canada and UAE, in February, and not in the U.S. until March. The second, the Blackberry Q10, with a physical keyboard, will not appear until April.
Shares lost 12 percent after the phone's debut, and have gained almost 3 percent since the start of February as more information has come to light. Without disclosing actual numbers, Research In Motion CEO Thorsten Heins, announced on Feb. 6 that the previous day was the best day ever for a BlackBerry smartphone launch, and 50 percent better than any of its other Canadian launches. In the UK, the phone performed close to three times its best sales in the first week of a BlackBerry smartphone launch.
Research In Motion, which has lost 85 percent of its market value in the last five years as it was crowded out by competitors such as Apple (AAPL) and Google (GOOG), has much riding on the success of the new phone model. It has reported three consecutive quarters of net losses, and in the third quarter, global subscriptions fell from 8 million to 7.9 million.
Thorsten Heins, who took over as CEO from founders Jim Balsillie and Mike Lazaridis in January, reduced 5,000 jobs at the company, aiming to save $1 billion, postponed the launch of the BlackBerry 10 until Jan. 30, supported it with a global marketing plan, and pushed its older BlackBerry 7 sales with promotions before the launch.
In spite of the business challenges, the company increased its cash balance at the end of the third quarter to $2.9 billion, from $2.3 billion the previous quarter, and increased cash flow to $950 million from $432 million in the same time.
The most substantial sale of Research In Motion was made by Donald Yacktman, manager of a $21 billion fund and previously BlackBerry’s fifth-largest shareholder, who approximately halved his holding in the company in three of his funds. He has 21,825,212 shares remaining, or approximately 4 percent of his funds.
Yacktman introduced the stock into one of his portfolios in the second quarter of 2011, when the price was $44 per share on average.
Though normally a long-term investor, he was most aggressively buying in the fourth quarter, which began with the price near its multi-year low, and ended with it up 58 percent. Yacktman said in a CNBC interview he bought the stock below $7 and sold over the course of the rally.
“We look at forward risk-adjusted rates of return, and this one has a very wide range of potential outcomes,” Yacktman commented in the interview.
“The value side, the protection side, the cash the patents the embedded base that was paying money to store information, as you know that last leg has been thrown out and has in effect been packaged in the price now. So they have in some degree bet the ranch on this particular product. The product works, could be very successful, on the other hand the backstop position is probably lower and they would probably end up having to sell the company, but it looks very promising,” he continued.
The only other sizable Guru sale was from Jim Simons, who reduced almost 38 percent of his holding to 2 percent of the company’s shares, and runs most of his fund based on mathematical algorithms.
Primecap Management reduced 0.58 percent of its holding, and is hanging on to just over 5 percent of the company’s shares.
Prem Watsa, whose Fairfax Financial Holdings (FFH) is the largest BlackBerry shareholder, with a 9.89 percent stake, neither reduced nor increased its holding in the fourth quarter. Watsa had just purchased more than 25 million shares – almost doubling his stake – in the third quarter, during which the price tumbled to its multi-year low.
The fourth quarter’s low price and immediate rally in the fourth quarter attracted a number of shrewd value investors. Andreas Halvorsen, who runs $13.8 billion Connecticut-based Viking Global and is a Tiger alumnus, increased his position by more than 247 percent in the fourth quarter. Because he started his position in the third quarter of 2012, Halvorsen has an approximate 57% gain on average on BlackBerry. As of the end of the fourth quarter, he owns almost 16 million shares, or a little over 3 percent of the company.
Jeremy Grantham, who has invested in the company since before 2008, made his largest increase to it in a year, buying 895,200 shares in the fourth quarter, his ninth consecutive quarter of buying shares.
Joel Greenblatt purchased 43,171 shares, building his position to 195,701 in total, representing less than 1 percent of his portfolio and the company.
To see more about BlackBerry, visit its 10-year financial page here. Also, see the portfolios of Donald Yacktman, Prem Watsa and Andreas Halvorsen.
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