The Hidden Value of Blackberry Stock
I read an interesting article today. It was written by Achilles Investment Research, a boutique investment consultancy. The article stated that BlackBerry was a cinch to reach $17 this year. It was an interesting piece because it mirrored Citron investments recent report and it is showing that some deep thinkers are bucking Wall Street’s herd mentality thinking. I don’t normally take much notice of analyst because the ones who publish articles are backing their (usually short) position and the ones who don’t are quietly making money and want to milk their position for all its worth before the aforementioned herd stampede and suck out their profit.
This report was interesting because, like Citron it was based on an analysis of what the stock is worth and more importantly why.
The report started off by saying that the adoption of a long-term investment philosophy serves investors the best. This is a surprisingly moral view in a generally immoral business.
The report goes on to say what most analysts miss, has fallen on widely publicised hard times: poor handset sales, falling market share, unsuccessful product launches and inventory write-offs combined with eye watering quarterly losses over the last years. The resulting in a massive quarterly loss of $4.4 billion, however, the report states that now we will see a meaningful inflection point as the company pulls itself out of the self-dug ditch.
Achilles is a contrarian investor and what they say they like about BlackBerry is that i
The second thing Achilles speaks about is the fact that Bla 85% over the last five years. Achilles believes that this value destruction is unwarranted. They conservatively estimate that BlackBerry holds about $3.0 billion in cash and short-term securities on its balance sheet at the end of the quarter. With 526 million shares outstanding, this translates into approximately $5.70 per share in cash- and short-term securities value. In other words: 63% of BlackBerry's current market capitalization consists of cash and short-term securities, while the company retains all the upside from its enterprise segment.
Fifth, Lenovo (), the Chinese technology company that was (but also rumoured to be blocked because of its Chinese Government connection)
Investor perception can change quickly, Both () and () were struggling with their hardware businesses and both companies went through transformational change that included a new business direction. However, the change wasn't fully understood by the marketplace. In the case of Nokia, for instance, the sale of its device unit to () fundamentally changed how investors thought about the company. The sale of its device business was a major catalyst for the stock, and also allowed the company to move forward with its plan to change its business model to become a wireless infrastructure provider and focus on its location-based service segment.