Xerxes

When i am buying something that i really want, but that takes liquidity but has a limited-time deep discount, i use my line of credit, then pay it back a month later when the paycheck is coming. Cash flow management is nothing new. Nothing stops FFH to do its buyback using its credit line and pay it back when the cash is received from Riverstone's sale, if buyback in Q1 is their intention. If it is not, then it is not. In exactly 2 weeks time, FFH shares will either get really cheap (i.e. cheaper) (if perceived that management screwed up its diamond-hands when it came on BB) .... or FFH will soar a lot if perceived they put the right trade in place. It is one thing for Prem Watsa adhering to deep value and not giving up on that framework ... it is entirely another thing for the same deep-value minded person choosing not lock-in profit in some fashion (partially at least). In my opinion, public investors while they can have an opinion, they cannot complain about Prem use of deep-value, after all, they can chose not to buy FFH shares, .... but if Prem would fails to lock in profit in some fashion, than i think public investors have a right to be really concerned. After all they all chose to come to FFH and get a seat in the Deep Value Church, and not the YOLO/#NeverSell Church.

When a crash happens, it is always (I think) a liquidity shortage event. So that is why all stocks and even gold go down and US Dollar goes up (followed by Japanese Yen due to the carry, Swiss Frank (the haven)). Even Bitcoin will go down, specially now that it has been institutionalized (meaning there is leverage at play). A cross-asset correlation of well diversified portfolio goes straight to 1. I think one's best bet is to be provider of liquidity in a market crash, but on the way down, i don't there is something that will soar in value (short of a put option that is extremely well times or one of those insurance type black swan product that we only talk about it when bad things happen).

Last year on Jan 31, it announced the date for Q4 conference call which was in mid-Feb. So tomorrow there will be the date announcement for Q4 results but that is it i think. Not sure if there is black out period before which they cannot say more than that. I am half glass full type of person, so i am thinking he is busy with the buybacks, so he cannot really announce anything on BB that would tip his hand, either way. :-) Unrelated, i saw on the news that OMERS used the Reddit rally as an opportunity to exit on a shopping mall investment that was underwater. And said: "We’ve been a long-term investor with Macerich and throughout this relationship they have been a valued partner,” Dan Madge, a spokesman for the Teachers fund, said in a written statement. “Moving forward, we are focused on scaling and diversifying our global real estate platform, and growing our existing Canadian real estate business." https://finance.yahoo.com/news/reddit-fever-ignites-mall-stock-020810263.html Right on !

Hold the Door, Hold the Door, Holdroor, Holdoor, Hold'or, Holder, Holdor

How likely to deploy in a prolonged bear market of 50+%? I'd say the odds are VERY high. Not comparable to 2020 because 1-month of being down only 35% from the peak before a massive recovery despite incredible earnings and balance sheet damage hardly screams "deal of the century" to me. But in a prolonged 50% draw down over 12-18 months, similar to 2008/2009 or 2000-2002? Yea, I think they have red the time to assess the outlook and who is cheap relative to that outlook, and put money to work. And i think BRK/FFH shareholders would need to stomach 40-50% drop, but a sharp rebound if and when it deploys its fire power to fuel up on opportunities. But the market has to fall enough. Just listened to RTX conference call, although their are bearish for Q1, for Q2, Q3 and Q4, they are seeing compounded 10% increase quarter over quarter in the Aftermarket. That tells me that at least for industrial the reflation trade is very real, eventhough some segment of the market has gone crazy.

How do you know they missed on Monday? apologies; typo i meant to put "if they missed"

Thunder strike twice for FFH They missed to sell some on Monday .... Today is your day

In fact, John Chen will hit his compensation and can retire early without finishing the job.

Assuming the cost base of $10 USD in 2013 as an approximation for cost (not including convertible), it would take a 10% compounded year-over-year to bring it to $21 USD in the current year. 10% compounded would mean $21 USD by close 2021 15% compounded would mean $30 USD by close 2021 20% compounded would mean $42 USD by close 2021

Thanks While i agree with the view that when this happen correlation will go to 1 on any diversified portfolio, i think to your point value should fall less. How likely it is that FFH, BRK and for that matter BAM or ONEX, will deploy their firepower in a potential prolonged 50% drop in the stock market. That is what i was expecting in the bear market in March 2020; i can understand now why that didn't happen given how the pandemic did/might affected their insurance and some operating businesses. But a classical market crash with a prolonged bear market with a 40-50% drop is what these capital allocators live for ? would you say equity allocation of say FFH's $40 billion will grew beyond a $4-5 billion that is today ?

Parsad we are barely up with FFH and/or other value names, and now you are already expecting a 50% drop from here ! :-)

No choice, since he used up his dry powder to buy Cyient. Another way to think of it is the following: broadly speaking with FFH' portfolio doing better now than say 6-9 months ago, has enough 'pressure' been lifted off the dreaded D/E ratios, such that if Watsa chooses to either trim/keep/sell BB it will be entirely based on the merit of the investment and the right-sizing of the portfolio ... and not because he is a situation where he needs to trim/keep/sell. I think with so much treasury and cash in the $40 billion portfolio, he doesn't really need to the 'liquidity' that selling BB will provide to him, other than freeing up capital for another equity investment of the same risk profile, in which case, he would be moving money from something he knows relatively really well to a new name that he probably knows less well ... and in market that is broadly speaking very expensive by some measure and yet fairly valued by other measure (interest rate). EDIT: lastly, if he doesn't do anything about it, when he has the chance, man o man, that is going to be a huge endorsement of BB's potential. It is one thing to talk about its potential when BB is down, it is entirely another thing to have an opportunity to lock-in big short term profit and forgo it ... to me that is going to be a huge bullish signal on BB. The intellectual exercise is fascinating, and I am going to need to some popcorn for the Q4 results.

There is a difference between Digit and BB. Digit is a FFH' brainchild in some ways. Just the fact they sold ICICI to grow Digit, shows how close Watsa is to those investments and how much he believes in it. But Blackberry is not. It is an orphan. It is a coincidence that he got himself into BB for different reasons ... and now BB is morphing into something much better. Not because of anything FFH did from a strategic guidance point of view. At the end of the day as a portfolio manager, he has a maximum allocation in his mind for a business that he may not be 100% comfortable with. Perhaps there is an in-between solution, where it keeps some upside.

Right on !!

Folks, John Chen is an employee of BB not a majority holder of BB. Prem is not there to please him. Prem, a value investor, at the end of the day will trade out of a highly overvalued position .... partially if needs be. In 2008-09 when he sold the swaps, he sold them when they were valuable to someone else and he didnt ride till the end. Bank of Ireland, once he made his gain, he tagged and bagged. These are the instincts of a trader and a portfolio manager. In case of BB, he literally can borrow return from the future ... pull forward by the YOLO crowd. It is a blessing but a tough hand for sure. At this point, I am ok with whatever decision he makes, as long as it is decisive. I just don't want have a repeat of the 2020 AGM, where he was explaining the mayhem in the market and how the credit spread of a blue chip like Walt Disney blowing out. In my head, I was asking so what did you do about it ...

Thanks guys, Of course BB could go $100 (ala AMD) and FFH could be hedging 100% of its position on BB, which would cap their upside, in which case i did something dumb. I got to say this, eventhough it will be for Q4 results, i never been so excited to get to the FFH conference call, just to see how they think of the recent moves on BB and what they are doing about it.

Sold completely all BB positions Sold UBER completely (had a 40% gain on it) I am an average investor, and when an average investor makes 40% gain on a so-so name like UBER in 14 months it is time to go. Better to sell when you can sell than sell when you want to sell. At $100 billion market cap, UBER has the same market cap than RTX. I had bought UBER few months before the pandemic, and did not add to it in March. Don't know if it is a mistake selling it now, but i needed to lock-in profit in something, and on the quality ladder in my portfolio that was close to lowest. I still like Dara and the work that he is doing, if anyone can it is him.

This morning i almost choked when i saw BB. Ran to my computers, couldnt log in to RBC Direct Investing; some IT issue. Try different computers same freaking IT problem. Try mobile App; barely working. Was really pissed. I dont know how can RBC run its brokerage like this on a normal day. Finally took me an hour to put through 4 orders: - Sold the rest of my BB shares at $25 CAD (cost at $10 CAD) - Sold few 02/19 Expiry call option on BB that I bought a week ago - Bought more FFH - Unrelated sold Uber completely I don't know what to say about BB that is now largely unhinged, but really feel bad for the insider that sold last week. It would really suck if FFH after so many years hedged all 100% of it in a way that cap the upside.

^^^ Agreed on comment on electrification. That is why i found him to be credible and highly refreshing. I like investors who have specific point of view and dont just say "the world will come to an end, i saw it in 1999, everything sucks". He is actually giving nuggets and i think is 100% on the money on renewables (though doesn't take a genuis to say that). The pandemic in fact accelerated it. On the comment about BRK and potential in changing tax structure, perhaps, BRK needs a large pivot into being a global player -- outside his comfort zone but cheaper on valuation work with. ala pivot into bonds in the late 1990s.

Staying in the realm of option value, as Petec stated: Here is another one. Few years ago, who would have thought Roku would be anything in the media space in the midst of giants. Yet, precisely because of its size it was able to become the neutral platform that the media giants could be ok with for the last leg; so it triumphed because it became the Switzerland of its space. Blackberry, perhaps has a similar opportunity; John Chen has already indicated what they are doing is being the pipeline of data for the customers, with no economic interest to sell data or monetize it.

I hope he's right. Things are getting crazy. Not just Hertz in bankruptcy anymore. It's everywhere you look. Thanks for posting. i saw it last night and was thinking about posting as well on this very thread. Highly relevant. I loved his description of the Dot.com burst and how it was in slow motion. First the junk got shot down, then the less junk, then better quality ... then the whole thing start rolling like an iceberg for the next 2 years. I liked his comment that he is not saying you should sell everything, but to re-allocate to value and outside the U.S. And that best time to sell/trim, is when you can sell but you dont want to sell as oppose to you want to sell but you cannot sell because its prices has come down. I also recommend his letter released in Jan 2021. https://www.gmo.com/americas/research-library/waiting-for-the-last-dance/ I think they key point is that most of Grantham's interview was focused on technology names so that is why he was bearish. Fun facts: he drives a Tesla. If he were to the an interview on his views on cyclical/value names, i am sure he would sound far more bullish overall. I also highly recommend reading/viewing views from Mike Wilson from Morgan Stanley (not fully on bubble territory for him). Somehow he seems to get it right. His latest interview with Bloomberg, he describe how the overall market is broadening compared to how narrow (i.e. FANG) it was in Q2 and Q3 and how that is a good thing. So saying that while S&P500 might not move a lot in 2021, underneath the hood, the other 495 companies, will have good things happening to them. I recall back in March-April, in the midst of the mayhem, he was saying this is the foundation of a new bull market (i hope i remember correctly and that i am not misquoting). Now he sees a new economic cycle, which naturally lags the bull market, which started in March-April 2020. no disagreement there.

even a well conceived analysis that would suggest that BB is capable of pounding outa $400 million earning with a 20X multiple slapped on with be ok as well :) Sadly, i sold the shares that i bought @ $4CAD in March for $6CAD earlier in summer and bought IAC with it. Happy about IAC but should have used new capital. I still have another set of BB shares that I had bought $10CAD two years prior.

Dazel That was a great read. Thank you. Although, this is from 20 years ago, if you have any opinion or insight on Onex today and that you would like to share, please do not be a stranger to the Onex thread.

AtlCDore On your note, while i cannot comment on the technical details that you had bought up, just because i dont know those things (volumes on open or close) very well. My hypothesis (based on the fact that this could be FFH last chance to do so) has always been that FFH will do one big buyback in Q4/Q1 period. And that we will see it in the 2020 letter to shareholders and might even seen Prem on BNN after the fact. Others have disagreed with me pointing the need to fuel up the subs etc.

Allow me to dig in: 2018 letter; that is the latest i could find, it is worth nothing that this was prior to the new convert; so very likely that the fully diluted cost has changed. "On a fully converted basis we own 95 million shares at a net cost of $12.30 per share." 2013 letter: there were some trimming back in 2013 as they got into the convertibles. "We purchased $500 million of the BlackBerry convertible debentures and have said that we would sell some of our common shares over time to rebalance our position (we have sold 5 million shares at about $10 per share as of this writing). The rest of the convertible debentures were purchased by six contrarian long term investors, of whom four were Canadian." From 2013; in hindsight Prem had a great point about Twitter when he compared to Blackberry. Twitter didn't do anything for its shareholders. Its market cap today stands at $37 billion. Both Twitter and BB didnt do to well over the next 7 years but just goes to show that every unicorn story doesn't also pan out. "Interestingly, Twitter went public, just after BlackBerry announced its convertible debt issue, at $26 per share, giving it a market value of $18 billion. It had revenues of $665 million and losses of $645 million, and most investors could not get a single share unless they were very good clients of the major houses underwriting the issue. On that day, BlackBerry traded in excess of 100 million shares at $6 per share, giving it a market value of $3 billion. BlackBerry had revenues of approximately $8 billion with cash of $2.6 billion and no debt other than the new convertible debt to be issued. If you thought that Twitter was grossly overvalued at $26 per share, it promptly doubled and currently is selling at $55 per share, with a market value of $39 billion." 2012 letter; that is where i remember the $17 USD break-even. The initial mistake to SJ's point, was the position sizing that made it probably too hard for them to move away from, once they realize that they were off on the thesis. A year later once they probably realized their long journey, they compensated that with the interest payment on the convertibles. Nothing is wrong with being wrong, but in this case looking back, the attrition war took its toll. "At its low of approximately $61⁄2 per share, it sold at 1⁄3 of book value per share and a little above cash per share (it has no debt). The stock price had declined 95% from its high! The company produces the BlackBerry which for years was synonymous with the smart phone. The BlackBerry brand name is perhaps one of the more recognizable brand names in the world and the company has 79 million subscribers worldwide. Revenues went from essentially zero to $20 billion in about 15 years – and then it hit an air pocket! The company got complacent, perhaps overconfident, and did not respond quickly enough to Apple and Android. Mike Lazaridis, the founder and a technological genius – and a good friend – asked me to join the Board, which I did after meeting Thorsten Heins, whom Mike recommended as the next CEO of the firm. Thorsten’s 27 years of experience in all types of leadership jobs in small and large divisions at Siemens, combined with his five years at BlackBerry, were exactly what was needed. Thorsten hired a very capable management team and then focused on producing a high quality BB10 – the next generation of BlackBerries. The brand name, a security system second to none, a distribution network across 650 telecom carriers worldwide, a 79 million subscriber base, enterprise customers accounting for 90% of the Fortune 500, almost exclusive usage by governments in Canada, the U.S. and the U.K., a huge original patent portfolio, an outstanding new operating system developed by QNX and $2.9 billion in cash with no debt, are all formidable strengths as BlackBerry makes its comeback! The stock price recently moved as high as $18 per share, a far cry from the $140 per share it sold at a few years ago. And please note, 1.8 billion cell phones are sold worldwide annually, and of the 6 billion cell phones in the world, only 1 billion are smart phones. Lots of opportunity for Canada’s greatest technology company! What is striking, even for a person like me who has seen many bull and bear markets, is that at $61⁄2 per share, all the Wall Street and Bay Street analysts were uniformly negative – just as they were uniformly positive only a few years ago at prices north of $100 per share. John Templeton’s advice to us: “Buy at the point of maximum pessimism”, still rings in our ears!! We own approximately 10% of the company at an average cost of $17 per share and we are excited about its prospects under Thorsten’s leadership and Mike’s technical genius."