Invest in Research in Motion (RIMM) with less Risk than Prem Watsa!

I saw this news item yesterday that Prem Watsa bought another 25 million shares of RIMM in the last month.  As of July 4, he now owns 51.8 million shares of RIMM, which is about 9.9% of the company.  He owned 26.8 million shares as of March 31, 2012, which was more than doubled from his holdings at the end of 2011.

What would ModelPrice Guy do with this information?

Nothing!  As I commented in my previous post, as RIMM broke down through EBV-3 on May 15, 2012, RIMM must go through a bottoming process.  Any security which trades below EBV-3 has a life of its’ own.  Price volatility picks up with no boundaries to give the security structure.  The wilderness.

It has been reported that Prem started purchasing his position in the 50’s, and his average cost is in the high teens.  You as an individual investor can do better than this.  How?

Wait until RIMM breaks up through EBV-3 or $11.18 as of the May 31, 2012 balance sheet.  If RIMM endures additional operating losses EBV-3 will be lower after one or two quarters from now.  Maybe RIMM won’t make it.  We (and you) have the luxury of time to wait and see what happens.  We can bide our time! The market will always know before the reported fundamentals anyway and as an extra bonus your average cost will be lower than Mr. Watsa’s!

Research in Motion with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

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