RIM – stock-picking shame and salvation!

Blackberry10Finally RIM is getting some respect.  Today ScotiaCapital upgraded the stock to a sector outperform rating:

“In our view RIM does not need to deliver the best selling smartphone in order to deliver an upside EPS surprise. And we believe there is enough demand for the new product for it to have a successful launch and year.”

This doesn’t help me a whole lot.  I participated in The Globe and Mail’s My One and Only stock-picking contest over a year ago.

Participants were asked at the end of 2011 to choose one North American-listed stock, income trust, American depositary receipt or exchange-traded fund for 2012. The returns will be tallied at the end of the year in Canadian dollars to determine the winner.

However, a contrarian bet on beleaguered RIM hasn’t yet produced results for Malvin Spooner, president of Sienna Capital Management Inc…. The stock has suffered a 46.8-per-cent haircut.

pkiOUCH! Actually I gave them two picks . Research in Motion was one, and PerkinElmer the other.  Unfortunately the journalist who called me completely missed the PerkinElmer pick (didn’t scroll down my email far enough) – unfortunate because the PKI outperformed the market, climbing from from $19 to $30 (+58%) over the course of the year.

But alas it was Research in Motion that was published as my “one and only” stock pick and it went the other way over the course of 2012.  My reasoning was sound – the company had loads of cash and a fortune in patents, 80 million subscribers and a new product on the way.  What I missed was that the new product launch would be delayed again inspiring the short-sellers (the walking dead of finance) to hammer the stock relentlessly.

Picking just one stock is a portfolio manager’s nightmare.  I can assure you I’ve had many torpedo stocks over the years: sometimes it’s just bad timing and other times it’s just a bad idea.  Generally the good picks outnumber the bad ones if one has any skill at all.

But thank goodness investing isn’t a contest.  In real life, decisions must be made every day.  Yes RIM was a disaster on paper for most of 2012 but a thinking person would either have bailed or taken advantage of the very cheap stock price.  One exceptional investment advisor, Mr. Bill Howe at Raymond James did the right thing during the summer months by taking advantage of the depressed share price. Here is his recent note to me:

RIMJan-2013Hey Mal,

You managing money yet? If so, please let me know where.  Thanks for telling me in June 2012 that RIM was the most hated stock and you couldn’t find an analyst that had a buy.

Bill and I have always agreed that ‘usually’ the best time to buy a stock is when no analyst would dare recommend it.  For most of July the stock was around $7.00 per share and universally despised.   Now that the the stock is trading above $17 analysts are beginning to recommend it.

When the the Globe & Mail contest began (end of 2011), RIM was trading in the neighborhood of $15.00.  Oh the shame I felt watching it plummet to half that price.  But timing is everything and despite the rebound towards the end of 2012 it didn’t get much higher than $12.00.

The one lesson learned over the course of a lifetime is there will be shame, but if you’re patient there can be salvation.  Now that RIM is above $15 again, I feel I’ve been delivered from disaster.

About Mal Spooner

Malvin Spooner is a veteran money manager, former CEO of award-winning investment fund management boutique he founded. He recently authored A Maverick Investor's Guidebook which blends his experience touring across the heartland in the United States with valuable investing tips and stories. He has been quoted and published for many years in business journals, newspapers and has been featured on many television programs over his career. An avid motorcycle enthusiast, and known across Canada as a part-time musician performing rock ‘n’ roll for charity, Mal is known for his candour and non-traditional (‘maverick’) thinking when discussing financial markets. His previous book published by Insomniac Press — Resources Rock: How to Invest in the Next Global Boom in Natural Resources which he authored with Pamela Clark — predicted the resources boom back in early 2004.
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One Response to RIM – stock-picking shame and salvation!

  1. Bill Howe says:

    Hey Mal,

    Right on, once again!

    Here we are in January 2013 and several analysts a week now are making the call you made back in June 2012! Why are they doing so, not on fundamentals, but only because the stock is moving higher.

    I think it was Socrates who was considered the wisest man in ancient Greece only because he realized how little he knew!

    Thanks for this blog and your sound counsel!

    Bill Howe
    Raymond James

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