Watsa’s Fairfax Becomes RIM’s Biggest Shareholder
Research In Motion Ltd. (RIMM) shareholder Fairfax Financial Holdings Ltd. (FFH) almost doubled its stake in the BlackBerry maker, making it RIM’s biggest investor and offering a vote of confidence to the ailing Canadian company.
Fairfax, an insurer run by Toronto-based investor Prem Watsa, owns 51.9 million RIM shares, according to a regulatory filing today. It held 26.8 million shares as of April 1, according to data compiled by Bloomberg. The company raised its stake to 9.9 percent, worth about $351 million.
RIM shares have tumbled 95 percent from their 2008 peak as falling sales of BlackBerry smartphones erode RIM’s market share in an industry it once dominated. A recovery at RIM, which has lost consumers to Apple Inc. (AAPL)’s iPhone and devices built on Google Inc. (GOOG)’s Android software, may take three to five years and the BlackBerry maker’s stock is undervalued, Watsa said in April. He joined RIM’s board in January as part of a management overhaul that included the replacement of co-founders and co- CEOs Jim Balsillie and Mike Lazaridis with German-born CEO Thorsten Heins.
Watsa’s decision to double down on RIM took him past Lazaridis and Balsillie as well as Primecap Management to become RIM’s biggest shareholder. He has a history of making contrarian bets, having predicted the downfall of U.S. banks tied to the collapse of the subprime mortgage market. Fairfax’s profit before one-time items reached a record $1.69 billion in 2008 as the company’s bet on credit-default swaps on U.S. banks and insurers paid off.
Watsa founded Fairfax in 1985, modeling his management style after billionaire value investor Warren Buffett, who buys the assets of out-of-favor securities.
Watsa, a long-time acquaintance of Lazaridis, said in April he’s confident RIM will turn around its fortunes in the coming years.
“All you can do as a member of the board is to let them focus on the long-term, don’t second guess the management,” he said at the time. “In Thorsten Heins, they’ve got terrific management.”
RIM gained 1.3 percent to $6.86 at the close in New York. The Waterloo, Ontario-based company’s stock has dropped 53 percent this year.