How are our trades faring?
4
It was a punchy call in our May edition to slap a Conviction Buy on the whipping boy that is RIMM. Many an eminent global fund manager has caught a cold buying the shares down from $30 a share over the last 18 months, and that includes such luminaries as David Einhorn and George Soros, no less. Quite simply, our Buy recommendation was based upon a “sum of the parts� calculation that stuck a floor on the stock of $11-13 in a fire sale; the target of $20 being based upon a 50% premium to the then share price ($13) in the event of a takeover.
At the time of writing, the shares trade at $11 and so from the recommended purchase price there is a capital loss of $2 (15%). Given the modest premium to tangible book value that the shares currently trade on we remain long Rimm in the expectation of corporate activity.
RIM chart
July 2012 | www.financial-spread-betting.com | 37