Research in Motion Ltd may take up to five years to regain its stride after its recent stumbles, but the BlackBerry maker's stock is a good value at current levels, investor Prem Watsa said on Thursday.
Speaking at the annual shareholder meeting of Fairfax Financial Holdings Ltd, the Canadian insurer he heads, Watsa said he believed RIM's recent troubles were mere hurdles for a company he called a "Canadian success story."
"Is it going to turn around in three months, six months, nine months? No," Watsa told reporters after the meeting in Toronto. "But if you're looking four, five years ... We make investments over four or five years."
RIM's once high-flying shares have dropped 70 per cent during the past 12 months as it has bled market share to smartphone rivals such as Apple Inc while demand for its Playbook tablet device has floundered.
RIM's Toronto-listed shares rose nearly 4 per cent Thursday afternoon to C$13.90, likely helped by reports on a Blackbery-focused blog that RIM plans to announce its first BlackBerry 10 device in August for an October launch.
RIM declined to comment on the report, citing its standard policy not to talk about rumors and speculation. The company said in late March the first BlackBerry 10 device remained on track for a launch in the latter part of the year.
Watsa, a value investor whose approach and acumen is sometimes compared to Warren Buffett's, joined RIM's board in January as part of a front-office shuffle in which Thorsten Heins replaced longtime co-CEOs Jim Balsillie and Mike Lazaridis.
Watsa also boosted Fairfax's stake in RIM to 5.1 per cent at the time, making it one of the company's largest shareholders.
Asked what he saw in the struggling company, Watsa pointed to his close friendship and admiration for Lazaridis, who remains on the company's board, and suggested shareholders have been to quick to give up on the company.
"Mike Lazaridis is a technical genius. Some of you might forget that this is a company in Canada that invented the (mobile) email service that we all use. It's not like Apple wasn't there, and Google wasn't there," he said, stressing that he was speaking as an investor, rather than as a board member.
Once the dominant player in the smartphone sector, RIM's BlackBerry has withered from competition from Apple's iPhone and Google's Android system, prompting Lazaridis and Balsillie, the men who had engineered RIM"s rise, to step down in favor of former Siemens executive Heins.
More recently, RIM has hired lawyers to work out a restructuring plan that could include selling assets, seeking joint ventures or licensing patents, according to people briefed on the matter.
Watsa would not comment on how RIM should move forward, stressing that his investment was based primarily on his belief the stock was undervalued.
"The stock price is down 90 per cent (from its all-time high in 2008). That overrides everything else," he said.
"People think that ... when things are going down it's over, and when things are going up, it will never stop. The reality is it's different," he said, noting the company's strong cash position and lack of long-term debt.
"But there's no guarantees," he said.
Good macro calls
Watsa has built a reputation as a shrewd investor by correctly calling major market disruptions like the 2008 and 1987 stock market crashes, and making billions for Fairfax as a result.
Speaking at the meeting, he said he would maintain the company's hedges on its equity holdings, as he believed the equity market would retrench over the next few years.
Further out, however, he said the days of bonds outperforming stocks were likely over.
"If you take a 10-year view, stocks are going to be a terrific place," he said. "For us, caution is the best way forward."