Research In Motion Ltd. (RIMM:US) 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:US)’s iPhone and devices built on Google Inc. (GOOG:US)’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.
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