Former Blackberry CEO dumps stake

Michael Lazaridis sold enough shares to have a 4.99% ownership stake in Blackberry. Below 5% he is no longer required to file with the SEC if he wishes to dispose of any more equity.

The material part of his SEC filing is:

(c) On December 23, 2013, 1258701 sold 3,166,893 Shares at an average price per share of $7.55 and on December 24, 2013, 1258701 sold 333,107 Shares at an average price per share of $7.63, in each case through open market sales.

What a vote of confidence. He raised $26.45 million out of these transactions, which would have been a quarter billion had he done this three years ago!

Taxation year for Canada coming to a close

For Canadians, today is the last day to buy and sell stocks and debentures on the TSX and still have it count for the 2013 tax year.

The date for US securities is on the 26th because Boxing Day is not a trading holiday in the USA.

If it is your US tax return you are concerned with, you can sell securities up until December 31 to have the IRS consider it a 2013 tax year transaction.

Regardless of all of this, market movements at this time of year are on computer trading autopilot as most decision-makers with any market influence are away from their main desks.

Merry Christmas everybody.

Some research discards – PDII

PDI, Inc. (Nasdaq: PDII) is a contract pharmaceutical marketing corporation. They managed to make it past my initial screen and I did some subsequent research. On initial glance, it does appear to be relatively cheap from a valuation perspective (revenues in relation to enterprise value is quite inexpensive), but the corporation suffers from significant customer concentration and they are strategically diversifying into partnering with diagnostic companies which creates a different element of investment risk – and valuing these risks from an external investor perspective adds even further complexity.

I generally do not like customer concentration and will pass on this, but will leave this for more enterprising readers out there to figure out if there is value here – my hunch is that the computer traders out there are looking at the low enterprise value in relation to other valuation metrics ($24 million vs. $75 million market cap, and $150 million revenues over the past 12 months), but are not paying enough attention on tangible book ($2.27/share) which means the downside risk is a bit lower (clarification, added December 24, 2013: downside risk referring to a lower price floor) than one would intuitively think.

In other words, without projecting some future external factors out there that would lead to ‘big pharma’ engaging firms such as these, or any intuition that these investments in diagnostics will succeed (there is no way of knowing), PDII is a pass on my books.

Blackberry Q3-2014

It looks like sentiment reached its maximum in mid-December; also just after the earnings release the lowest trade after-hours was at $5.70/share. Clearly the market over-discounted the negative aspect of this quarterly result despite the fact the company’s revenues were well below consensus.

It still remains an interesting business case, whether their existing businesses are viable after shutting down their consumer end. I think their QNX segment has value, but how much is another question. I generally believe their BBM technology is over-hyped and is going to become a “me-too” type product even when ported to other consumer platforms (Android and iOS). It reminds me of what happened to OS/2 when they successfully were able to have Windows 3.1 applications run within the OS/2 operating system – why bother when you can just have Windows 3.1 and not have to mess around other operating systems?

Anyhow, no positions and I will not be taking one. Too many eyeballs are on Blackberry and a lot of those eyeballs are connected to brains a lot smarter than I am.

General comments on the market

I have not written too much lately, but the short-term research focus continues on stocks that are generally trading at 52 week lows. If you are into gold mining companies, let me tell you, there is no shortage of research to be conducted.

Fortunately, I do not focus on the gold mining industry and can let other intelligent people harvest opportunities in that category. One would think, however, that large-scale entities like Barrick (TSX: ABX) and Kinross (TSX: K) would have some sort of value, given that they are trading at lows they haven’t seen in a decade. That said, just because a large corporation has traded at a certain level in the past doesn’t mean they will continue trading at that value forever – the market is full of survivor bias, which is why you don’t see Polaroid or Kodak trading anymore.

There is another focus which I have been slowly shifting my attention to, and this is territory that is generally unexplored for me: international stocks, beyond those in English-speaking jurisdictions. My natural investment aversion to non-English speaking jurisdictions is colliding against the general belief that there seemingly are entities trading out there that are at relatively cheap valuations. I can easily see right now, however, that I am the person around the poker table that everybody wants to take a dollar out of, so I am very wary treading into this direction.

I did find a particular investment candidate in the early part of the quarter which I pounced on with two feet and this unexpectedly has boosted the performance of the portfolio considerably and I hope to find others. I might write a report on this one after year-end.