Prem Watsa Down $130M on Research In Motion Ltd (BBRY)


Prem Watsa, a member of the board and the largest shareholder, at Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) is still confident the company can resurrect its fortunes according to the most recent Fairfax Financial Holdings Ltd (PINK:FRFHF) (TSE:FFH) shareholder letter.

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The company is down an estimated $130 million on the Canadian handset manufacturer.

Prem Watsa frames the Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) story as the antithesis of the Dot Com Bubble. The firm fell to a low of $6.22 in the second half of 2012. At that price the firm’s valuation was one third of the book value per share. The valuation didn’t make sense, and he was confident it would recover.

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As of December 31 2012, Fairfax Financial Holdings Ltd (PINK:FRFHF) (TSE:FFH) owned 51,854,700 shares in Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB). In his letter, Watsa says that the average price of those shares was around $17. That purchase price implies a huge (paper) loss for the Canadian investment company.

At time of writing, Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) shares were trading just below $14.50. At that price, Fairfax Financial Holdings Ltd (PINK:FRFHF) (TSE:FFH) is down an estimated $129.63 million on its Blackberry bet. Prem Watsa must be expecting great things from the firm.

There’s only been a couple of days in the last year that the Fairfax’s bet on Blackberry has gone into the black, those were the optimistic moments before the release of the company’s newest mobile operating system.

According to the most recent 13f filing from Fairfax Financial Holdings Ltd (PINK:FRFHF) (TSE:FFH), 24.51 percent of the company’s long equity portfolio were in Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) shares.

Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) shares dropped by around 3 percent in this morning’s market as traders appeared to lower the premium implicit in a possible buyout offer from Lenovo Group Limited (PINK:LNVGY) (HKG:0992). The firm’s shares rose by more than 14% yesterday on the rumor.

Prem Watsa believes in Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB). If he abandons his estimated 10 percent of the firm, very few investors are likely to keep their faith. The investor is “excited about its prospects under [CEO] Thorsten’s leadership and Mike’s [Lazaridis] technical genius.” That excitement needs to turn into a return soon.

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