Why I Love BBRY Stock Pt. 2
I missed yesterday's quarterly release and conference call; however, I kept skimming a barrage of sky-is-falling press releases. I thought, Oh my gosh. What happened? The stock must be falling like a rock on Jupiter. So, I looked at my stock.
The stock headlines say the stock took a beating, yet it closed at $7.50ish, trading at four times its average volume. It started out at 7.50ish and remained there all day in its "perfect market" high volume equilibrium point of whatever.
I bought it at $6.90, as corroborated in the post I'm responding to. I thought, how can I be down and taking a "beating" if I'm up? I'm up 10% for the year as a whole in this stock, and I only had it for a few months now. The voices in my business partner's brain, Mr. Market, are like the voices of a mentally disturbed individual. Would that be multiple personality disorder or Schizophrenic? I don't know.
So I took a deeper look, and nothing changed. The stock missed analyst sales projections, but I had no expectations. Let's review:
1) This company has over $1 billion in cash. They are now cash flow positive.
QUARTER REPORT: The company continues to be cash flow positive with very strong balance sheet.
2) The Patents they have are worth over $2 billion by conservative estimates. They have thousands, and can easily turn into a patent suing machine on short notice. Or they can sell some. It is great overlooked value.
NOTHING CHANGED HERE. In fact, it's more realistic to say they wrth about $10 billion in worst-case scenario with all these strategic/synergistic acquisitions made recently.
3) The new CEO Mr. Chen is amazing. A tech turnaround expert. I have watched every interview I can get my hands on with this guy. He is the best leader for this company, hand-picked by Prem Watsa. Ever since he's been on the job, things have only gotten better.
QUARTERLY REPORT: Positive cash flow, beat earnings estimate, doubled software sales which is the company's new focus, and acquisitions are being consolidated as performing well with tremendous growth and great future prospects.
4) Chen said it takes 3 years to turn a company around. He is going into year 3 and is on track.
QUARTERLY REPORT: Still on track.
5) the new Priv on the Android platform was a good move. The industry has consolidated and this is the path forward. The reviews are strong. With less than 1% market share, I'm confident BlackBerry found a niche. It will be the more educated, upperclass niche for the Priv and cheaper models can come later. The sales have been out the gate well received. I have read so many reviews that I'm sure increasing market share from below 1 percent is a cinche. The security is for the more sophisticated consumer and untouchable on the market. The few glitches are irrelevant. Those get smoothed out as time goes with new updates.
QUARTERLY REPORT: They improved margins and are growing priv sales; albeit with some slow rollouts with carriers. But nothing suggests the phone is not being well received. Marshmallow upgrade comes out in about a month as they "smooth" things out and improve it without sacrificing its key niche in security.
6) Even if Priv doesn't pan out, the company made strong acquisitions in other areas. It's not the phone company that is in the so-well branded minds of the consumer. They are flying under the radar with great new tech companies that many people don't understand. Many analysts want them to dump hardware and focus on a quick path to profits in software. So Priv is going to be a great branding model that is profitable, or it's going to put them on a fast track to profits in its failure. Either way, the future is bright.
QUARTERLY REPORT: Chen still sees profit as early as September of this year. So the company may or may not dump Priv. The verdict is not in yet. Nothing changed here.
7) Their stock buyback program has doubled in its capacity. They are returning value to shareholders buy taking a potentially 5% shares outstanding off the market to be retired, and they are so cash rich it won't even make a dent in their cash position. It is faith in their company and inside knowledge of its value.
QUARTERLY REPORT: Nothing changed here.
8) It is the number one stock of Prem Watsa's Fairfax portfolio. He just keeps putting money in. A short Google search of who he is, is all anyone needs for the best endorsement on this stock. Only Warren Buffett could be a better endorsement, but he doesn't understand tech or invest in tech. IBM being the obvious exception, but not because it's a tech company in his words.
QUARTERLY REPORT: No change.
I believe this year or next is when Blackberry starts taking the market by storm. This is going to be a huge turnaround success story and will be case studies in universities.
QUARTERLY REPORT: It's only been a few months. Everything is on track with my expectations. If it comes this year or next, or even the next after that, who cares? I'm already up 10% and I expect to be climbing the wall of pessimism, the easy hurdles, all the way up to the wall of optimism and beyond.
