Prem Watsa brings hope to RIM's restless shareholders

Wed Jan 25, 2012 1:53pm EST
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By Cameron French and Alastair Sharp

TORONTO (Reuters) - The arrival of the man known as "the Warren Buffett of North" on Research In Motion's board this week offers a ray of hope to the BlackBerry maker's impatient shareholders after their disappointment that an insider was named new chief executive.

That's not to say the reclusive Watsa - who heads Fairfax Financial, now RIM's fourth-largest shareholder - has a reputation as a turnaround artist who will agitate for radical change at the struggling company.

But his 2.25 percent shareholding and new role as director suggest Watsa sees real value in the withered share price, even though some say the company has fallen hopelessly behind its rivals in the hyper-competitive smartphone and tablet markets.

Based from the Indian-born Canadian's track record, fellow shareholders have good reason to be optimistic.

"Prem is attracted to companies that are out of favor and unpopular with the market," said Todd Johnson, a portfolio manager at BCV Asset Management in Winnipeg, which holds Fairfax bonds. "He likely believes RIM is salvageable and that the market is unfairly punishing the stock now.

His investing acumen has helped shares of Fairfax Financial, technically an insurer but also his investment vehicle, rise more than 100-fold in just over 25 years. Watsa is chairman and CEO of Fairfax and controls its voting shares.

Watsa's appointment to RIM's board was part of a head office shuffle in which Mike Lazaridis and Jim Balsillie gave up their shared chief executive role to Heins, a company insider.

RIM investors, who have watched their stock drop 84 percent in the last three years, sent the shares down sharply after the change in leadership was announced.   Continued...