BlackBerry takeover: Takeover targets are some of the most widely discussed companies among investors and traders alike. In some cases, an acquisition will bring windfall gains to unexpecting shareholders, though speculating on these names can backfire. Regardless of what your feelings are on this topic, it’s useful to look at how hedge funds and other prominent investors are trading stocks with fresh takeover rumors.
BlackBerry
Perhaps the most obvious takeover target in the tech world is BlackBerry Ltd (NASDAQ:BBRY), the beleaguered mobile devices maker. Shares of BlackBerry were briefly halted last Friday before the company announced it will cut two-fifths of its workforce, disclosing it expects a loss of nearly $1 billion next quarter. Obviously, this is awful news for any BlackBerry investor, as the company’s stock price is now down over 40% in the last six months and 16% in the past week.
In the hedge fund world, one shareholder is particularly bullish on BlackBerry: Fairfax Financial’s Prem Watsa. Known quite famously as the “Warren Buffett of Canada” for his value investing pedigree, Watsa has helped Fairfax increase its book value by almost 25% a year since 1985. According to his last 13F filing, Watsa and Fairfax hold nearly 22% of their $2.4 billion equity portfolio in BlackBerry stock. Other notable hedge fund managers Andreas Halvorsen and Donald Yacktman also hold smaller positions in the company, though Watsa’s stake dwarfs both investments by an average ratio of nearly 3-to-1.
With that being said, Watsa’s decision to resign from BlackBerry’s board in August leads many analysts to speculate that he wants to help take the company private. In a report last month, AllThingsD’s John Paczkowski said that Watsa “has recently been reaching out to private equity firms, gauging their interest in participating in a buyout of the company.” An outright sale to a larger player like Microsoft Corporation (NASDAQ:MSFT) or Facebook Inc (NASDAQ:FB) is also still a possibility.
Yahoo! Finance’s Marty Wolf has discussed these scenarios, mentioning that Facebook “has been “experimenting” with mobile phones and given Google Inc (NASDAQ:GOOG)’s relationship with Motorola, could be interested,” adding that a Microsoft buy is “unlikely to happen” because of the Nokia Corporation (ADR) (NYSE:NOK) partnership.
Although Donald Yacktman was involved in the Dell Inc. (NASDAQ:DELL) saga earlier this year, there aren’t really any traditional activist investors with open positions in BlackBerry stock at the moment. Unless a filing from someone like Carl Icahn or Jeff Ubben changes the picture significantly, any progress on the M&A front will likely come from within BlackBerry’s boardroom.
And that it did. The company announced today that it has an offer for $9 a share from a consortium of investors led by Watsa and Fairfax. We’ll keep you updated.
Who else is on the takeover radar?
Jive and Fortinet
A couple other names garnering takeover talk are Jive Software Inc (NASDAQ:JIVE) and Fortinet Inc (NASDAQ:FTNT). Both companies were on Robert W. Baird’s list of 2013 M&A candidates in the tech sector, and to this point, neither have been part of any material transactions this year. Jive, the small-cap social business software provider, has received support from hedge funds Legg Mason Capital and JAT Capital, and billionaires D.E. Shaw and Ken Griffin also hold small positions.
While Jive Software hasn’t issued a press release admitting it is actively seeking a sale like BlackBerry, the company was in talks with SAP AG (ADR) (NYSE:SAP) in May before the enterprise giant ultimately took a pass. It’s reasonable to think that Shaw, Griffin and the rest of Jive’s larger investors are hoping for a deal to be made with another large-cap software player.
Fortinet investors, similarly, have had a very good time over the past few months, with shares of the network security provider up nearly 22% since July. Cisco Systems, Inc. (NASDAQ:CSCO)’s purchase of Sourcefire, Inc. (NASDAQ:FIRE) earlier this year renewed optimism that a bidding company would pay a lofty multiple in an acquisition. Shaw and Griffin also have exposure here, while Lee Ainslie and Steven Cohen were buying Fortinet shares in bulk during the second quarter. Ainslie upped his stake by 400% in his last 13F filing, while Cohen’s SAC Capital increased its position by a whopping 4,000%. SAC subsidiary Sigma Capital also holds some Fortinet shares, so we’ll be watching this situation closely. Stay updated for BlackBerry takeover news.
Click here to learn more about Insider Monkey’s Hedge Fund Newsletter.
Insider Monkey’s small-cap strategy returned 47.6% in its first year ended last month, beating the S&P 500 index by more than 29 percentage points. Try it now by clicking the link above.
Disclosure: none
