Those Betting Against BBRY Stock Now Could Be Kicking Themselves Later
BlackBerry Limited (NASDAQ:BBRY) doesn’t get much respect in tech circles these days. BBRY stock has lost a jaw-dropping 90% of their value over the past few years and the company has surrendered most of its mobile market share to rivals. Many investors have written the company off.
But if anyone had bothered to pay attention, CEO John Chen is staging an impressive comeback. The company is now back on a sound financial footing and there are several catalysts that could send Blackberry stock higher. Here’s what the bears are missing on BlackBerry stock.
BlackBerry Stock is Insanely Cheap
My favorite investing setup is what l like to call “ugly-to-less-ugly” situations. It involves buying assets that have suffered through hard times, digested the bad news, and are poised to move higher. During these periods, when most people can’t stand the thought of buying, you can often pick up assets for a fraction of its real intrinsic value.
This is definitely the case today with BBRY. At today’s prices, the market is only valuing the entire company at $3.8 billion – roughly the value of BlackBerry’s cash, patents, and service business. In all of its wisdom, Mr. Market will throw in BlackBerry Messenger, the QNX operating system, and BlackBerry Enterprise Service 12 for free.
BlackBerry Bears Are Focused on the Wrong Business
Blackberry stock bears continue to focus on the company’s terrible handset business, but BlackBerry really isn’t really about phones anymore. CEO John Chen has his eyes on a much bigger prize – the “Internet of Everything.”
Think about it like this: while there might be up to five billion handsets in the world, there are over 500 billion devices. Over the next few years, the Internet is going to expand from tablets, handsets, and personal computers, to just about every device imaginable from cars to bathroom scales. According to Cisco CEO John Chambers, this new industry could be worth up to $19.0 trillion annually by 2020. (Source: “Cisco CEO Pegs Internet of Things as $19 Trillion Market,” Bloomberg, January 8, 2014.)
BlackBerry sees itself as the brain in the larger “Internet of Everything” nervous system. Connecting billions of devices to the Internet will create a mindbogglingly large amount of data, which the company plans to help decipher into meaningful information. And given BlackBerry’s reputation for security, no other business is better positioned to capture this emerging market.
The Smart Money is Buying BlackBerry Stock
Some of the world’s smartest money managers are backing a turnaround in BBRY. A number of respected hedge fund investors, including Nelson Obus, Eric Sprott, and D. E. Shaw, increased the size of their stake in the company last quarter. Billionaire value investor Prem Watsa has also accumulated a $381.5 million position in BlackBerry stock.
What could have all of these money mavens so excited? I’d say it could only mean one thing: they see an epic rally ahead.