Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

RIM’s offices in Waterloo, Ont.

Peter Power/The Globe and Mail

Fairfax Financial Holdings Ltd.'s decision to roughly double its stake in Research In Motion Ltd. gives it a significant amount of sway in determining the BlackBerry maker's fate.

Toronto-based Fairfax has been buying up shares of RIM at what it sees as near-rock-bottom prices this year, and has now amassed a holding that amounts to 9.9 per cent of the beleaguered technology giant. The stake makes it RIM's largest shareholder.

Fairfax CEO Prem Watsa joined RIM's board in January, after being approached by co-founder and current director Mike Lazaridis, who owns 5.1 per cent of of the company according to regulatory filings.

Story continues below advertisement

Mr. Watsa now stands to play a larger role in RIM's future. Fairfax's stake gives it, and RIM's board, a bit of new muscle with which to fend off any hostile offers for RIM or unwanted shareholder activism. But, importantly, Fairfax also has more leverage now in discussions with any potential partners or friendly buyers for RIM or certain of its assets, as the Waterloo, Ont.-based firm carries on with the strategic review that its investment bankers are carrying out.

There has been much speculation about a potential takeover of RIM since the company confirmed that it had hired investment bankers to help it conduct a strategic review. Mr. Watsa said Fairfax is not banking on a takeover of RIM, but rather is making its investment based on the firm's management and the potential of the BlackBerry 10 operating system slated for release in January.

Mr. Watsa said he's looking at an investment horizon of three to five years.

Whatever the outcome, Mr. Watsa, who has been dubbed the Warren Buffett of the north, has a big incentive to ensure that RIM's shareholders come out ahead: having joined the board and spoken very publicly about RIM's prospects, he's putting his reputation on the line. "This company has a tremendous brand name that is recognized worldwide," Mr. Watsa told The Globe and Mail. "It has 78 million users, 56 million BlackBerry Messenger users, patents and a worldwide network."

He added that RIM has a liquid balance sheet, with $2.2-billion in cash and no debt as of the end of the last quarter.

Fairfax's stake was worth $361.7-million after markets closed Monday, with the stock up 1.46 per cent to $6.97 on the Toronto Stock Exchange. RIM's stock has been on a long decline since early last year, when it traded at close to $70 a share.

Mr. Watsa said the new purchase reduces the average cost of RIM shares for Fairfax, and noted famed investor John Templeton's maxim: Invest at the point of "maximum pessimism."

Story continues below advertisement

"We don't know if RIM has reached that point, but we figure it's pretty close," he said.

Fairfax had already quietly become Research In Motion's fourth-largest shareholder by last September, at which point it owned 2.25 per cent of the firm, a smaller stake than California-based Primecap Management as well as RIM co-founders Jim Balsillie and Mr. Lazaridis. In January, Fairfax disclosed that it had upped its stake to 5.12 per cent.

In Primecap's last disclosure in February it said that it owned 5.42 per cent of RIM.

Mr. Balsillie's last disclosure said that he, as with Mr. Lazaridis, also owns 5.1 per cent.

Todd Coupland, an analyst with CIBC, said Fairfax's decision to increase its stake is a constructive move for the technology giant when it comes to protecting itself from unwanted takeovers or activism. "Control is still in the market but it's certainly helpful," said Mr. Coupland, who feels that a hostile takeover is not likely because technology companies are largely a function of their talent, and a buyer would want to ensure that key people stay.

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies