BB - BlackBerry

[beerbaron]

Wow, I e-mailed BlackBerry to see how much of NantHealth BBRY owns.  And I got a response.

 

We have not disclosed these details.  The following link includes the extent of details that we have publicly shared: http://press.blackberry.com/press/2014/blackberry-invests-in-nanthealth-for-integrated-end-to-end-healt0.html

 

What is bad about them not wanting to provide you with private non public information?

 

BeerBaron

[kfh227]

Wow, I e-mailed BlackBerry to see how much of NantHealth BBRY owns.  And I got a response.

 

We have not disclosed these details.  The following link includes the extent of details that we have publicly shared: http://press.blackberry.com/press/2014/blackberry-invests-in-nanthealth-for-integrated-end-to-end-healt0.html

 

What is bad about them not wanting to provide you with private non public information?

 

BeerBaron

 

Actually, I posted it so that we and others don't have to hunt for this information.  I spent a few minutes looking so I posted the verification.

 

I was also surprised to get a response.  I think this may be the first time that a company actually responded to one of my inquiries also.

[nwoodman]

Wow, I e-mailed BlackBerry to see how much of NantHealth BBRY owns.  And I got a response.

 

We have not disclosed these details.  The following link includes the extent of details that we have publicly shared: http://press.blackberry.com/press/2014/blackberry-invests-in-nanthealth-for-integrated-end-to-end-healt0.html

 

Thanks for posting

[sleepydragon]

for me,  instead of trading around it, I doubled up when it went back to 7 from 10 :)

my cost basis is so low now that I am just going to sit on this position and never take profit, nor do any tradings, unless it go back to 6 in which case i will sell. These kind of situation could see the stock go up many many times but with huge swings.

 

Here's an interesting story about Blackberry and Me, as told in another forum:

 

"I had a similar recent experience where I sold before my idea played out because of a quick run up with no change in the business.

 

I bought blackberry late last year at really close to all-time low and 1 month later it went up 75% just because some peddler blogged that it was a good investment, so I made the decision to sell.

Recently the market got impatient again and share price dropped to a price I was willing to pay, and lo and behold the SAME GUY blogged the SAME THESIS and share price went up 30% just 1 week after I bought again. I shit you not. I sold again, naturally."

 

So I was expecting to invest in blackberry, but ended up trading it and made quite a lot of money out of it! I still believe in the story, but the free money was too tempting to leave on the table.

[TwoCitiesCapital]

Hi guys,

 

I realize that BBRY isn't dead yet for a lot of us, but I really managed to botch this one up and thought I'd share my post mortem. Hopefully it helps some of you.

 

Before we begin, I'd just like to tell you that I'm not generally a person to sway to emotions and have generally done pretty well with being able to keep my head in situations. I was buying BofA @ 15 in the 2008 and bought all the way down to quadrupling my position at $4 in 2009 if that gives you any idea how I resolute I can be. I think this case study will show that even individuals who usually have their head about them can lose it and how powerful these psychological and behavioral forces can be.

 

7/2012: BBRY trades at about $7.00. I estimated it had a liquidation value of $12-$15. I bought as a deep value asset play. The margin of safety had been obtained with a decent price and there were several "positive" factors supporting my investments. Earnings were only negative due to inventory write downs, cash flow yield was 500M (12.5% cash yield) w/ depressed cash flows, 50% of the market cap was cash, there was no debt, and the new phones/OS were set to be released in 6 months which was a potential catalyst for improving public image. I knew I was getting a bargain because people were talking about bankruptcy as an option even though they had no debt and plenty of cash and were FCF postive...clearly there was a mismatch in perception and reality. Position is roughly 2.5% of portfolio.

 

12/12: Price spikes to $10 per share prior to any release of phones, earnings, etc. Calls are selling at a premium due to the volatility so I sell covered calls @ $12 against the entire position to pocket premium. Stock quickly rises to $12, then to $14.

 

1/13: Prices fall back to $10.91. Instead of buying back call at a slight loss to ensure I have exposure to further upside (as obviously this thing can move!), I double my position hoping that the call will expire, I'll keep the premium, and I'll have 2x the exposure for the next bounce up. This excitement was, in part, supported by the fact the phones were being extremely hyped and supposedly doing well in their releases in Canada in the UK. Prices rise all the way to $17.50 and I feel really, really good about myself.

 

2/13: It really seems like the new phones are doing well. Anecdotal evidence from web tracking statistics suggests that the BBRY mobile OS is way more represented then it was a few months ago. Reviews on Verizon and ATT are solid and the Q10 is heavily anticipated. People are raving about Blackbberry all over the web but short interest is still high making me excited for an ensuing squeeze. I re-evaluate my thesis, determine that my price target is $25 per share based on improving phone sales/cash flows. Stock drops from 17.50 to 13. I buy at $16 and $13.

 

4/13: Prem Watsa says he thinks shares are worth $30-40 per share. This sits very well with me as my estimate is even more conservative then his. Continue buying in confidence that $13 and $14 are a steal. Even bought a few call options at a strike of 17 to leverage my upside.

 

5/13: Continue tracking web statistics and reviews. Both continue to support the recovery hypothesis. It's now a 20% position for me with an average cost around $12-13.

 

6/13: Blackberry announces disappointing earnings, writes down $1B in inventory, burns 500M in cash that quarter, and stock tanks by 35-40%. I'm thunderstruck. They didn't even have $1B in inventory on the balance sheet....

 

8/13: Blackberry says it's open for a sale. I suspect that Prem would certainly try to buy at fire sale prices and am concerned that he'll get it. I sell 20% of my position at $10. The stock had risen 25% on speculation of the buyout and I didn't think shareholders would be getting a deal if Prem was the one to buy.

 

9/13: Prem Watsa offers to buy company at $9. Stock is trading at 7.80. I repurchase the 20% I sold to arbitrage the purchase banking on his past history of closing on deals.

 

Of course we know how this ends. The buyout didn't happen and the stock collapses. I sold the entire position between 5.50 and 6. I didn't do this because I was despondent, depressed, or anything else. I was severely disappointed with the results but still knew it was worth more than $6 (that was my original thesis for buying it, they could sustain massive losses and still be worth more then $6-7).

The whole reason I sold it was that it was in taxable account - I had just lost 50-60% on a 20% position. I wanted the tax write off... Of course the stock rose 40% in less than a month before I could repurchase it driving me absolutely bonkers...I just couldn't win.

 

So let's analyze this and break it down:

 

1) I think it's clear my original asset based thesis was dead on. Blackberry has lost billions since my original purchase and $7 per share still proved to be a steal despite absolutely failing at everything ever. Margin of safety FTW.

 

2) Selling a call option on a position I knew to be undervalued was stupid - even if it had run too far too fast on no new news. The fear of missing out on future gains coupled with my unwillingess to take a loss on the option forced me to double my exposure at prices that were 50+% higher than my original entry to simply continue my upside. I maintained almost 2x the downside I had previously with the same amount of upside. How stupid of me! There's no excuse for this other than my unwillingness to take a loss on the option. I was hoping I could gain on the options & stock solely through the timing of the gains.

 

3) I used anecdotal evidence and Prem Watsa's forecasts as confirmation my $25 target was supported. (Confirmation bias). I played with the phones and liked them so I thought everyone would. I didn't think about the fact that I'm a somewhat of a techie and generally more logical with my purchases/analysis than most people buying phones. Also, apps aren't nearly as important to me as to most other people so the lack of them didn't seem like an issue to me. I generalized my personal experience and it was easy to see how this phone would be a success. )

 

4) I was hugely over-confident in the position with a 20% weighting. I have since established position limits that will not allow me to over a 15% allocation and this is only to the most predictable of enterprises (certianly not turnarounds). I realize now that all the information I was consuming on BBRY was only making me more confident and not more accurate in my predictions (a dangerous combo). I've since learned that this is actually common in people and that they are generally no better at forecasting when inundated with all the date they could ask for. This has inspired me to "keep it simple, stupid." From now on I will not be using anecdotal evidence, obscure web tracking statistics that aren't measuring what mattered (total sales), or reviews. I will only be watching metrics that matter to my thesis.

 

5) Let's drop some accounting knowledge: Not all potential liability from inventory can be measured from the inventory line item. That $1B loss was a huge wake up call for me because the company didn't have anywhere near that amount in inventory the prior quarter. I should have paid more attention to negative articles at the time who had mentioned that the purchase agreements with suppliers were in the billions.

 

6) I think my speculation on Prem making a low ball offer was the only smart speculation that I did during this entire process. Selling at 10.14 and repurchasing at $7.80 after his $9 offer was probably the only smart thing I did (though some may disagree because they thought he was unlikely to go through with it).

 

7) I still don't know what to think about my decision to recognize the losses for tax purposes. I don't think there is necessarily anything inherently wrong with my thinking here, but watching it rise 40% literally from the day after I sold and on felt like the gods just wanted to laugh at me. I was prepared to buy at a 10% premium as the tax loss would be great enough to counteract that, but I had no idea that a 40% rise was in the cards. I think I may only sell for tax loss purposes if I'm planning on exiting the position permanently.

 

As a final thought, I re-entered a small position a few weeks back at $7.70 now that John Chen has made some progress re-focusing the organization, reducing expenses, increasing margins, and getting back to the things that BBRY is good at: security and enterprise software. I'm also excited to see where there movement in the IoT takes them.

 

This has by far been the investment most riddled with mistakes. These mistakes were a result of a lot of things: loss aversion, over confidence, just plain stupidity, generalizing individual experiences, and poor forecasting. The funny thing is...all that happened later on. My original investment thesis and price were solid. It was the subsequent volatility afterward that drove all of the other mistakes. Anyhow, I hope you guys are able to read through this and glean some knowledge from my many embarrassing mistakes.

 

 

 

 

[Liberty]

Amazing post, Zach, and I don't even care much about BBRY... I wish more people would do post-mortems like that, there's a lot to learn in there. Thanks for sharing you experience!

[ODLUM]

Amazing post, Zach, and I don't even care much about BBRY... I wish more people would do post-postmortems like that, there's a lot to learn in there. Thanks for sharing you experience!

Hear hear. Reading through this chronology reminded me of several "lessons learned". For example, my best ideas are usually my first ideas. Subsequent analysis can lead to over-thinking, second guessing, etc.. Also, my personal experience and beliefs are usually very low quality inputs in the investment decision making process. I have learned to put them aside. Lastly, I most respect those who follow a more disciplined and narrow process -crunch the numbers and go or no go, torpedoes be damned. Thanks for sharing.

ODM

[jouni1]

great post! made me think again about concentrated portfolios. i saw a lot of similar stuff happen (over longer periods of time) with people close to me investing in nokia.

 

they had crazy market shares and world-class logistics etc. and it all fell down. it's easy to get caught up in these, especially if you live close to the failing once-great business. when it seems too good to be true, it usually is.

[Patmo]

Hi guys,

 

I realize that BBRY isn't dead yet for a lot of us, but I really managed to botch this one up and thought I'd share my post mortem. Hopefully it helps some of you.

 

Before we begin, I'd just like to tell you that I'm not generally a person to sway to emotions and have generally done pretty well with being able to keep my head in situations. I was buying BofA @ 15 in the 2008 and bought all the way down to quadrupling my position at $4 in 2009 if that gives you any idea how I resolute I can be. I think this case study will show that even individuals who usually have their head about them can lose it and how powerful these psychological and behavioral forces can be.

 

7/2012: BBRY trades at about $7.00. I estimated it had a liquidation value of $12-$15. I bought as a deep value asset play. The margin of safety had been obtained with a decent price and there were several "positive" factors supporting my investments. Earnings were only negative due to inventory write downs, cash flow yield was 500M (12.5% cash yield) w/ depressed cash flows, 50% of the market cap was cash, there was no debt, and the new phones/OS were set to be released in 6 months which was a potential catalyst for improving public image. I knew I was getting a bargain because people were talking about bankruptcy as an option even though they had no debt and plenty of cash and were FCF postive...clearly there was a mismatch in perception and reality. Position is roughly 2.5% of portfolio.

 

12/12: Price spikes to $10 per share prior to any release of phones, earnings, etc. Calls are selling at a premium due to the volatility so I sell covered calls @ $12 against the entire position to pocket premium. Stock quickly rises to $12, then to $14.

 

1/13: Prices fall back to $10.91. Instead of buying back call at a slight loss to ensure I have exposure to further upside (as obviously this thing can move!), I double my position hoping that the call will expire, I'll keep the premium, and I'll have 2x the exposure for the next bounce up. This excitement was, in part, supported by the fact the phones were being extremely hyped and supposedly doing well in their releases in Canada in the UK. Prices rise all the way to $17.50 and I feel really, really good about myself.

 

2/13: It really seems like the new phones are doing well. Anecdotal evidence from web tracking statistics suggests that the BBRY mobile OS is way more represented then it was a few months ago. Reviews on Verizon and ATT are solid and the Q10 is heavily anticipated. People are raving about Blackbberry all over the web but short interest is still high making me excited for an ensuing squeeze. I re-evaluate my thesis, determine that my price target is $25 per share based on improving phone sales/cash flows. Stock drops from 17.50 to 13. I buy at $16 and $13.

 

4/13: Prem Watsa says he thinks shares are worth $30-40 per share. This sits very well with me as my estimate is even more conservative then his. Continue buying in confidence that $13 and $14 are a steal. Even bought a few call options at a strike of 17 to leverage my upside.

 

5/13: Continue tracking web statistics and reviews. Both continue to support the recovery hypothesis. It's now a 20% position for me with an average cost around $12-13.

 

6/13: Blackberry announces disappointing earnings, writes down $1B in inventory, burns 500M in cash that quarter, and stock tanks by 35-40%. I'm thunderstruck. They didn't even have $1B in inventory on the balance sheet....

 

8/13: Blackberry says it's open for a sale. I suspect that Prem would certainly try to buy at fire sale prices and am concerned that he'll get it. I sell 20% of my position at $10. The stock had risen 25% on speculation of the buyout and I didn't think shareholders would be getting a deal if Prem was the one to buy.

 

9/13: Prem Watsa offers to buy company at $9. Stock is trading at 7.80. I repurchase the 20% I sold to arbitrage the purchase banking on his past history of closing on deals.

 

Of course we know how this ends. The buyout didn't happen and the stock collapses. I sold the entire position between 5.50 and 6. I didn't do this because I was despondent, depressed, or anything else. I was severely disappointed with the results but still knew it was worth more than $6 (that was my original thesis for buying it, they could sustain massive losses and still be worth more then $6-7).

The whole reason I sold it was that it was in taxable account - I had just lost 50-60% on a 20% position. I wanted the tax write off... Of course the stock rose 40% in less than a month before I could repurchase it driving me absolutely bonkers...I just couldn't win.

 

So let's analyze this and break it down:

 

1) I think it's clear my original asset based thesis was dead on. Blackberry has lost billions since my original purchase and $7 per share still proved to be a steal despite absolutely failing at everything ever. Margin of safety FTW.

 

2) Selling a call option on a position I knew to be undervalued was stupid - even if it had run too far too fast on no new news. The fear of missing out on future gains coupled with my unwillingess to take a loss on the option forced me to double my exposure at prices that were 50+% higher than my original entry to simply continue my upside. I maintained almost 2x the downside I had previously with the same amount of upside. How stupid of me! There's no excuse for this other than my unwillingness to take a loss on the option. I was hoping I could gain on the options & stock solely through the timing of the gains.

 

3) I used anecdotal evidence and Prem Watsa's forecasts as confirmation my $25 target was supported. (Confirmation bias). I played with the phones and liked them so I thought everyone would. I didn't think about the fact that I'm a somewhat of a techie and generally more logical with my purchases/analysis than most people buying phones. Also, apps aren't nearly as important to me as to most other people so the lack of them didn't seem like an issue to me. I generalized my personal experience and it was easy to see how this phone would be a success. )

 

4) I was hugely over-confident in the position with a 20% weighting. I have since established position limits that will not allow me to over a 15% allocation and this is only to the most predictable of enterprises (certianly not turnarounds). I realize now that all the information I was consuming on BBRY was only making me more confident and not more accurate in my predictions (a dangerous combo). I've since learned that this is actually common in people and that they are generally no better at forecasting when inundated with all the date they could ask for. This has inspired me to "keep it simple, stupid." From now on I will not be using anecdotal evidence, obscure web tracking statistics that aren't measuring what mattered (total sales), or reviews. I will only be watching metrics that matter to my thesis.

 

5) Let's drop some accounting knowledge: Not all potential liability from inventory can be measured from the inventory line item. That $1B loss was a huge wake up call for me because the company didn't have anywhere near that amount in inventory the prior quarter. I should have paid more attention to negative articles at the time who had mentioned that the purchase agreements with suppliers were in the billions.

 

6) I think my speculation on Prem making a low ball offer was the only smart speculation that I did during this entire process. Selling at 10.14 and repurchasing at $7.80 after his $9 offer was probably the only smart thing I did (though some may disagree because they thought he was unlikely to go through with it).

 

7) I still don't know what to think about my decision to recognize the losses for tax purposes. I don't think there is necessarily anything inherently wrong with my thinking here, but watching it rise 40% literally from the day after I sold and on felt like the gods just wanted to laugh at me. I was prepared to buy at a 10% premium as the tax loss would be great enough to counteract that, but I had no idea that a 40% rise was in the cards. I think I may only sell for tax loss purposes if I'm planning on exiting the position permanently.

 

As a final thought, I re-entered a small position a few weeks back at $7.70 now that John Chen has made some progress re-focusing the organization, reducing expenses, increasing margins, and getting back to the things that BBRY is good at: security and enterprise software. I'm also excited to see where there movement in the IoT takes them.

 

This has by far been the investment most riddled with mistakes. These mistakes were a result of a lot of things: loss aversion, over confidence, just plain stupidity, generalizing individual experiences, and poor forecasting. The funny thing is...all that happened later on. My original investment thesis and price were solid. It was the subsequent volatility afterward that drove all of the other mistakes. Anyhow, I hope you guys are able to read through this and glean some knowledge from my many embarrassing mistakes.

 

That hurt to read, I sympathize. Maybe next time just forget about it after buying into a company? All that fidgeting is what appears to have really hurt, your initial idea was well reasoned. You unfortunately caught the worse case scenario and still would have ended up fine had you not F'ed around at every turn.

[peter1234]

Sorry to read your post, it must have really hurt putting this together and reliving it. (That's why most people don't do it).

 

Thank you very much for sharing and letting us learn.

 

Turnarounds (and tech in particular) have a wide range of outcomes.

(I am sure Watsa did not expect the developments.)

 

So proper position sizing strikes me as a good learning.

 

What might be helpful is writing down your thesis when you open the position as well as how you are going to monitor progress.

 

 

 

[TwoCitiesCapital]

Hi guys,

 

I realize that BBRY isn't dead yet for a lot of us, but I really managed to botch this one up and thought I'd share my post mortem. Hopefully it helps some of you.

 

Before we begin, I'd just like to tell you that I'm not generally a person to sway to emotions and have generally done pretty well with being able to keep my head in situations. I was buying BofA @ 15 in the 2008 and bought all the way down to quadrupling my position at $4 in 2009 if that gives you any idea how I resolute I can be. I think this case study will show that even individuals who usually have their head about them can lose it and how powerful these psychological and behavioral forces can be.

 

7/2012: BBRY trades at about $7.00. I estimated it had a liquidation value of $12-$15. I bought as a deep value asset play. The margin of safety had been obtained with a decent price and there were several "positive" factors supporting my investments. Earnings were only negative due to inventory write downs, cash flow yield was 500M (12.5% cash yield) w/ depressed cash flows, 50% of the market cap was cash, there was no debt, and the new phones/OS were set to be released in 6 months which was a potential catalyst for improving public image. I knew I was getting a bargain because people were talking about bankruptcy as an option even though they had no debt and plenty of cash and were FCF postive...clearly there was a mismatch in perception and reality. Position is roughly 2.5% of portfolio.

 

12/12: Price spikes to $10 per share prior to any release of phones, earnings, etc. Calls are selling at a premium due to the volatility so I sell covered calls @ $12 against the entire position to pocket premium. Stock quickly rises to $12, then to $14.

 

1/13: Prices fall back to $10.91. Instead of buying back call at a slight loss to ensure I have exposure to further upside (as obviously this thing can move!), I double my position hoping that the call will expire, I'll keep the premium, and I'll have 2x the exposure for the next bounce up. This excitement was, in part, supported by the fact the phones were being extremely hyped and supposedly doing well in their releases in Canada in the UK. Prices rise all the way to $17.50 and I feel really, really good about myself.

 

2/13: It really seems like the new phones are doing well. Anecdotal evidence from web tracking statistics suggests that the BBRY mobile OS is way more represented then it was a few months ago. Reviews on Verizon and ATT are solid and the Q10 is heavily anticipated. People are raving about Blackbberry all over the web but short interest is still high making me excited for an ensuing squeeze. I re-evaluate my thesis, determine that my price target is $25 per share based on improving phone sales/cash flows. Stock drops from 17.50 to 13. I buy at $16 and $13.

 

4/13: Prem Watsa says he thinks shares are worth $30-40 per share. This sits very well with me as my estimate is even more conservative then his. Continue buying in confidence that $13 and $14 are a steal. Even bought a few call options at a strike of 17 to leverage my upside.

 

5/13: Continue tracking web statistics and reviews. Both continue to support the recovery hypothesis. It's now a 20% position for me with an average cost around $12-13.

 

6/13: Blackberry announces disappointing earnings, writes down $1B in inventory, burns 500M in cash that quarter, and stock tanks by 35-40%. I'm thunderstruck. They didn't even have $1B in inventory on the balance sheet....

 

8/13: Blackberry says it's open for a sale. I suspect that Prem would certainly try to buy at fire sale prices and am concerned that he'll get it. I sell 20% of my position at $10. The stock had risen 25% on speculation of the buyout and I didn't think shareholders would be getting a deal if Prem was the one to buy.

 

9/13: Prem Watsa offers to buy company at $9. Stock is trading at 7.80. I repurchase the 20% I sold to arbitrage the purchase banking on his past history of closing on deals.

 

Of course we know how this ends. The buyout didn't happen and the stock collapses. I sold the entire position between 5.50 and 6. I didn't do this because I was despondent, depressed, or anything else. I was severely disappointed with the results but still knew it was worth more than $6 (that was my original thesis for buying it, they could sustain massive losses and still be worth more then $6-7).

The whole reason I sold it was that it was in taxable account - I had just lost 50-60% on a 20% position. I wanted the tax write off... Of course the stock rose 40% in less than a month before I could repurchase it driving me absolutely bonkers...I just couldn't win.

 

So let's analyze this and break it down:

 

1) I think it's clear my original asset based thesis was dead on. Blackberry has lost billions since my original purchase and $7 per share still proved to be a steal despite absolutely failing at everything ever. Margin of safety FTW.

 

2) Selling a call option on a position I knew to be undervalued was stupid - even if it had run too far too fast on no new news. The fear of missing out on future gains coupled with my unwillingess to take a loss on the option forced me to double my exposure at prices that were 50+% higher than my original entry to simply continue my upside. I maintained almost 2x the downside I had previously with the same amount of upside. How stupid of me! There's no excuse for this other than my unwillingness to take a loss on the option. I was hoping I could gain on the options & stock solely through the timing of the gains.

 

3) I used anecdotal evidence and Prem Watsa's forecasts as confirmation my $25 target was supported. (Confirmation bias). I played with the phones and liked them so I thought everyone would. I didn't think about the fact that I'm a somewhat of a techie and generally more logical with my purchases/analysis than most people buying phones. Also, apps aren't nearly as important to me as to most other people so the lack of them didn't seem like an issue to me. I generalized my personal experience and it was easy to see how this phone would be a success. )

 

4) I was hugely over-confident in the position with a 20% weighting. I have since established position limits that will not allow me to over a 15% allocation and this is only to the most predictable of enterprises (certianly not turnarounds). I realize now that all the information I was consuming on BBRY was only making me more confident and not more accurate in my predictions (a dangerous combo). I've since learned that this is actually common in people and that they are generally no better at forecasting when inundated with all the date they could ask for. This has inspired me to "keep it simple, stupid." From now on I will not be using anecdotal evidence, obscure web tracking statistics that aren't measuring what mattered (total sales), or reviews. I will only be watching metrics that matter to my thesis.

 

5) Let's drop some accounting knowledge: Not all potential liability from inventory can be measured from the inventory line item. That $1B loss was a huge wake up call for me because the company didn't have anywhere near that amount in inventory the prior quarter. I should have paid more attention to negative articles at the time who had mentioned that the purchase agreements with suppliers were in the billions.

 

6) I think my speculation on Prem making a low ball offer was the only smart speculation that I did during this entire process. Selling at 10.14 and repurchasing at $7.80 after his $9 offer was probably the only smart thing I did (though some may disagree because they thought he was unlikely to go through with it).

 

7) I still don't know what to think about my decision to recognize the losses for tax purposes. I don't think there is necessarily anything inherently wrong with my thinking here, but watching it rise 40% literally from the day after I sold and on felt like the gods just wanted to laugh at me. I was prepared to buy at a 10% premium as the tax loss would be great enough to counteract that, but I had no idea that a 40% rise was in the cards. I think I may only sell for tax loss purposes if I'm planning on exiting the position permanently.

 

As a final thought, I re-entered a small position a few weeks back at $7.70 now that John Chen has made some progress re-focusing the organization, reducing expenses, increasing margins, and getting back to the things that BBRY is good at: security and enterprise software. I'm also excited to see where there movement in the IoT takes them.

 

This has by far been the investment most riddled with mistakes. These mistakes were a result of a lot of things: loss aversion, over confidence, just plain stupidity, generalizing individual experiences, and poor forecasting. The funny thing is...all that happened later on. My original investment thesis and price were solid. It was the subsequent volatility afterward that drove all of the other mistakes. Anyhow, I hope you guys are able to read through this and glean some knowledge from my many embarrassing mistakes.

 

That hurt to read, I sympathize. Maybe next time just forget about it after buying into a company? All that fidgeting is what appears to have really hurt, your initial idea was well reasoned. You unfortunately caught the worse case scenario and still would have ended up fine had you not F'ed around at every turn.

 

I don't know if forgetting about it is really the solution. I think investors certainly should monitor investments and adjust positions and attitudes based on events as they occur. I think part of the problem was the events I was looking at weren't clear signals that forecasted/measured the turnaround I was looking for. Even with that, the prices I paid ($13-$16) still don't strike me as totally stupid or outlandish...just no safety if I was wrong...which I was.

 

I think the biggest lesson for me is learning that I'm much more susceptible to greed then I am to fear. Watching the position drop didn't bother me at first. It was greed that led to position increases with no margin of safety if I was wrong. It was greed that allowed me to justify a 20% position in an inherently risky company with the $ signs before my eyes if I was right. It was greed that pushed me to sell options that resulted in my first mistake of doubling positions. The only time fear/despair came in was after they announced the massive losses and I realized I was terribly wrong with no safety net. Then, once again when it rose 40% right after I sold. I think having a 20% position fall 40% and then rise 40% right after you sell is probably enough to shake even the most stoic investors.

 

Ultimately, had I held on to the 20%, I might have still made a decent return given that it's already near my $12-$13 breakeven but results don't justify the process. I made half a dozen mistakes that ended up setting me up for potential massive losses if I was wrong. I ended up realizing those losses for tax purposes but I probably would've reduced the position anyways as I started to reflect on what I'd done. I couldn't have known, or counted on, John Chen to save my ass which is why I didnt buy in again until recently once it had come back down to the high 7s. Reducing position sizes will keep me from being as affected by any one position so greed doesn't take over again. Focusing only on the 3 or 4 metrics that matter will help with over confidence and close me off to noise. And above all, a margin of safety is not defined by distance from your best case scenario. It's defined by distance in your worst case. This would've prevented all purchases from $13-16 and the options that really killed me.

[rpadebet]

Zach,

Great post.

 

My experience too is similar to yours, though on 8/13 when you sold some of your stake, I most probably was on the other side buying in with my initial 2% position @10 ;). I later increased it to a 5% position after the sale announcement @8.5 and rather quickly to a 10% position once it started dropping to 7-8 range. Sat on some good losses once the deal fell through. Kicked myself for not having judged the management correctly, believing PW on his public statements about closing the deal and mostly for not understanding the extent of off balance sheet purchase agreements.

 

However, early this year when the stock rocketed, i trimmed my stake by 50% to lock in at least some profits on last lots I had bought. Thankfully I reinvested those proceeds into AIG Warrants (and that's been a pretty good investment up until now ;) ).

 

Right now I am still sitting on a 5% position with a high cost basis in the 9$ range. I kept it mostly to remind me of my mistake and ever since , every new investment I consider, I try to be more humble and paranoid about my inferences.

 

I like what BBRY is doing now. I think I got lucky with John Chen heading this company. Now I am sitting on some totally undeserved profits given my faulty initial thesis and judgement. It could easily have been a total loss, but my feelings about this investment wouldn't change. It was dumb investment at the time. I got lucky and I am happy I learnt something through it.

 

PS: I am going to keep the position until the lesson is seared into my memory permanently

 

 

As a side note: This is why i like John Chen. The punch line is awesome -

 

"If you offer me a $100/share, I'll probably call you back"

 

[sleepydragon]

I was watching blackberry for a long time and decided to buy when they hired John Chan. Normally, the new CEOs will make big writedowns, so I bought after the first quarter when John Chan joined. I bought at around 5.99.  The company has no debt and has some good assets like QNX. Plus, John Chan is from silicon valley. I felt he shall be able to sell the company given his networks.

 

The stock then went to $10~11, and then came back to 6 or 7. I doubled up at around 7. Now it grows about 50% of my portfolio.

 

I had similar investments with FSLR and LVS. But my mistakes was I sold too early. I would have become millionaire if I didn't sell. :) I bought LVS at $2 and sold at $7.  now it's 75. The reason I sold too early is because i tried to trade around the stock, and then stock popped after I sold. It was too hard to buy it back emotionally when the stock popped right after you sold.

 

So now I just buy and hold, or cut loss if stock tank too much. I just don't sell when I have good profit. And I usually don't buy more when I have a loss. Just like Munger said: the most difficult thing is just sit on your ass and do nothing.

 

 

[sleepydragon]

"AOL  (AOL_) CEO Tim Armstrong said he and other CEO's still use and love their BlackBerry phones.

 

Armstrong told CNBC's Squawk Box from the Allen & Company media and technology conference in Sun Valley, Idaho that he uses three phones. ""The Samsung Note I have, and I have an iPhone also, they are excellent for me for Web viewing, entertainment, video, those type of things. And I use those phones everyday," he said. "But BlackBerry for me is a utility."

 

"If you look around Sun Valley," he continued, "you see people who have to do a tremendous amount of work...on BlackBerrys."

 

 

 

[phil_Buffett]

zachmansell i almost 100% feel and act the same as you with Blackberry. brilliant describtion. i posted a time ago in the biggest Investment Topic ( in General ideas) my experience:

 

 

my biggest mistake was Blackberry.

 

my first buy was last year when the stock was around 6$ almost at the low. i saw the Company not dead yet and allot of good assets, prem in it and so on. i bought a Little stake, make good Money on it. my first mistake was that i take the trading mentality. normally i have the value Approach, great bargains, longer term Holding period. but this time it was the wrong side. the fact that you earn a lot of Money in short time was the devil. i sold it after very short time with around 40% gain. then i didnt follow it closer and the rise in Blackberry stock goes on, i was angry that i sold to early. after studying it closely i decided to go back and invest in it again, i think this was in the end of December 2012 last year when the Shares Drops after bad earnings. i bought a lot of Shares, especially because of the release of the new smartphones in end of Januar i was very optimistic. and i saw still a lot of value in it. the stock rises very much thereafter in Januar and i sold short before the Launch date for a 40% gain in one month.  this was all great, big gains in very short time. but then the Errors beginn. i bought a Little stake back before the Launch (too much greed) then as everybody knows the Launch was terrible, i was in the red, bought more and more Shares. the rollercoster begin stock up and up and stock down and down. i put more and more Money into it,. i was so blind of to much greed. read the prem watsa comments especially the fair value of 40$ in a few years and so on, thousands of articles why Blackberry is so good and so on, have the Feeling that this Thing will double in a year. but then after the downtrend begin with bad Marketing ( i hated how they doing Marketing) the bad earnings, the false promises from Thorsten heins (that he will sell tens of millíons of q10) i realize that it was a big mistake ever to invest in such a Company. with this competitors Samsung and apple and lot of other Players. Blackberry was a good Company, great assets, great Chat, great patents, great engineers. but they do all steps wrong. all steps!  i trusted also too much on the words of prem watsa and chou for example. that the patents alone would be worth 13$. i was to greedy and then i sold my stake around 8,5$ with a 40% loss.

 

the end of this mistake is, i made Money altough i have a 40% loss. i made 40% two times (80% gain combined) and then i lost 40%. so i have still 40% more Money. but it was terrible. i make an Investment what i never would do again. in such a specific Branche and terrible Situation. my lesson is that i never buy such a Company again, and only buy things that i can hold longer term and sleep well at night. too much greed is very dangerous.

 

so i was almost completly doing the same as you zachmansell. the lesson from this is that iam never buy such big positions. i make good Money with bac as a 50% Holding (making 75% at the time where bac was at 5$) but still dont like it to have almost all in on stock. i now have 20-30 and feel way better.

[rpadebet]

http://www.cnbc.com/id/101834316

 

Apple IBM Enterprise partnership hits at the heart of BBRY's new strategic focus. It could be big.

BBRY enterprise partnership with MSFT next?

[Alekbaylee]

Chen preparing the company for (partial) sale?

 

http://business.financialpost.com/2014/08/18/blackberry-ltd-qnx-certicom-patents/

 

The more I read, the more I like...

[txlaw]

Chen preparing the company for (partial) sale?

 

http://business.financialpost.com/2014/08/18/blackberry-ltd-qnx-certicom-patents/

 

The more I read, the more I like...

 

I don't this this necessarily means a sale.  It makes sense to reorganize this way in order to optimally utilize BBRY's assets.

 

John Chen continues to impress. 

[sleepydragon]

I think Passport could be a big hit.

A lot of companies give employees ipad with company apps. Passport, which is bigger, can attack that market. It's smaller than Ipad but is big enough to run those apps. Most importantly, Passport is much more secure. Blackberry's selling point is it's security.

[txlaw]

Profile of Nanthealth founder:

 

http://www.forbes.com/sites/matthewherper/2014/09/10/medicines-manhattan-project-can-the-worlds-richest-doctor-fix-health-care/

[txlaw]

More notable news.

 

Shellshock bug makes many Unix/Linux devices very vulnerable to complete capture by hackers.  This highlights why Linux is not necessarily that great (yet) for mission critical IoT/M2M and mobile use cases.

[kfh227]

Earnings are in.  Almost at a profit.

 

Notable news.

 

1) In 3 days, 200,000 Blackberry Passorts have been sold.

2) In November, $200 million in quarterly royalty payments to Adobe disappear.

3) Further down the pipe, all the free conversions to BES10 will no longer be free.  Not sure of date but I think it is February some time.

4) BES 12 is around the corner.

5) New Device concept being shown this quarter or next.  I forget the venue but could look it up.  Z10 replacement I would hope.

 

Not investing related unless you care about anecdotes:  My wife has the Z30 and quite honestly, I don't think I want a 5" screen.  I'd love to get a Z10 refresh with maybe an extra 0.1" on the diagonal.  Dare I say it, the Passport is damned tempting to get.  The problem for me though is that I am a runner and can't imagine having it in my armband.  If I wasn't a runner, I'd consider it.

[Alekbaylee]

I doubt Chen/Watsa would agree to a $18 share...

 

http://www.valuewalk.com/2014/10/blackberry-buy-offer-lenovo/

[Aberhound]

I received my Passport after ordering it about 10 days earlier. The phone is superb. The sound quality for calls is what I like best. I now use speakerphone instead of earphones. There are dozens of details where you think what a great design. I transferred my contacts from my Phone and most contacts now has a picture and full contact details automatically for linkedin or Google+. Blackberry Hub is great all emails! tweets etc. in one place. Blackberry Blend is great as it puts everything on my work computer so I can now take files etc. for meetings or Court easily by drag and drop on my desktop which syncs it to my phone. The keyboard has eliminated my past frustration typing on my old IPhone.

 

I was at my daughters soccer game and another Passport owner comes over very surprised to see another owner. We chatted and it was clear to me that we both felt like the lucky chosen few. The phone has strong network effects because of BBM and the ability to make video calls to other BBM users. This is a phone made for business. Chen is the master.

[DCG]

The reviews I've read of the passport haven't been very good.