Blackberry (Nasdaq:BBRY) is probably going private. Will shareholders get screwed over. Hell Yeah. First the leading smart phone company falls from grace because of the Apple then Android Juggernauts. While still making money and generating positive cash flow this investment is pummeled in the court of public opinion which is not the best place for isolating true value.
Stock drops precipitously and rumours and stories abound about viability. All the while creating positive cash flow and maintaining a sizeable cash balance. Some loser. In the mean time the board is reconstituted. Hockey owner wannabes leave. Bay Street professionals come in.
Barb Stymiest former head of Toronto Stock Exchange, former Chief Investment Officer Bank of Montreal, former member of Group Executive of Royal Bank of Canada; currently on board of directors of Sun Life, and some other star blue chip places she suddenly is nominated to run Blackberry. Well run in the sense that she was Chairman and someone else was going to decide important stuff about technology. But she knew the street.
Bunch of remedial stuff gets tried. Shares kinda bounce around. They dead cat bounce off their lows. Q10 is brought to market but does not topple Apple in one fell swoop. (No kidding) Talk of mergers and take overs become just that. Then one of Canada’s largest pension plans. CPPIB Canada Pension Plan Investment Board starts to take serious but small positions. The word gets out. It’s gonna be them but we have to do this by the numbers.
So will investors realize value or will they be forced out. the stock traded north of $60 not two years ago. Today it flits around $10 on news of a private equity offer by a deep pocketed investor. What will it drift up to? What will the take-over premium be? Should investors accept the offer and cash in. Or should you keep a portion and take the very long ride that a pension plan will take. CPPIB is smart. Very smart.
Investors should signal that they want to take a piece of the long action in return for not starting lots of lawsuits.
BTW the American Social Security Fund pales in comparison to Canada Pension Plan. CPP is able to invest in assets other than government bonds at low interest rates. They have professional management which hunts value like the best of them.
George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @ financialskepti