Fairfax Financial CEO Prem Watsa speaks at the Empire Club in Toronto in January, 2025. Mr. Watsa has expressed regret over the company's US$882-million investment in Blackberry, saying patience is 'not always' a virtue.Frank Gunn/The Canadian Press
Fairfax Financial Holdings Ltd. FFH-T has sold out of BlackBerry Ltd. BB-T, ending a once-close but ultimately money-losing 16-year relationship with the Canadian technology pioneer – just as its car software business is drawing renewed investor interest.
Toronto-based Fairfax revealed in a U.S. regulatory filing Friday that it no longer owns any shares of BlackBerry.
According to U.S. regulatory filings, Fairfax had 26.26 million shares in early May, down from 35.4 million last September. It held 46.7 million shares for about 11 years, but began selling down its holdings some time after March 31, 2025, the filings indicate. Fairfax chief executive officer Prem Watsa declined to comment about the investment.
Fairfax was one of BlackBerry’s largest and most influential shareholders for years, with 8 per cent of the stock as of early 2025. It also had rights under a series of convertible debenture financings dating to 2013 to turn its BlackBerry debt into more stock. Fairfax never exercised those rights – which would have increased its BlackBerry equity stake to upward of 16 per cent – instead rolling over part of the debt several times into new debentures until it was fully repaid in 2024.
Fairfax earned about US$200-million in interest income over 10-plus years while holding US$500-million of BlackBerry’s debentures, Mr. Watsa said in his annual letter to his shareholders published in 2024.
However, Fairfax appears to have lost far more than that on its BlackBerry stock, for which it paid about US$882-million. Mr. Watsa said in the 2024 letter that Fairfax had bought its then-current holding of 46.7 million shares for an average US$17.16 apiece. Other than a few days in 2021 when “meme stock” speculators drove up the share price, BlackBerry stock has not traded anywhere close to Fairfax’s average cost since early 2012.
Based on when Fairfax sold down its BlackBerry stock, it would have booked a loss of at least US$288.5-million. That’s a best-case calculation based on the stock’s peak prices during those periods. Fairfax likely received less than that, meaning its losses would have been much higher. That adds to US$36-million lost when Fairfax sold 5.2 million shares in 2014 for about US$7 apiece less than it paid, for a total loss in excess of US$124.5-million on its BlackBerry stockholdings.
Mr. Watsa called his BlackBerry foray “another horrendous investment by your chairman,” in his letter to shareholders two years ago. “To make matters worse, imagine if we had invested it in the FAANG stocks” he added, referring to Facebook parent Meta Platforms Inc. META-Q, Amazon.com Inc. AMZN-Q, Apple Inc. AAPL-Q, Netflix Inc. NFLX-Q and Alphabet Inc. GOOGL-Q, the parent of Google. “The opportunity cost to you our shareholder was huge! Please don’t do the calculation! No technology investment from me!”
An employee works at BlackBerry's Network Operating Centre in Waterloo, Ont., in 2018. Mr. Watsa has noted the large opportunity cost of investing in BlackBerry instead of the so-called FAANG stocks.Andrew Ryan/The Canadian Press
The opportunity cost was substantial. Had Fairfax put that US$882-million into any of the FAANG stocks instead, the investment would have grown at least eightfold in value and as much as 27-fold over the 11 years from Jan. 1, 2013, to Dec. 31, 2023, shortly before Mr. Watsa wrote that letter. All five stocks have gained further since then.
BlackBerry represents a small holding for Fairfax, which had total assets of US$109.1-billion on June 30. Fairfax stock has also had a solid run, gaining 311 per cent over the past five years.
Fairfax first invested in BlackBerry in 2010 as the latter faced a growing set of challenges. Apple and Google Android-powered touchscreen smartphones were gobbling up the market that BlackBerry had pioneered, and the Ontario company’s recent launch of a tablet computer was a bust. Within three years the stock would fall more than 95 per cent from its peak and trade for barely the value of its cash.
But Mr. Watsa, a contrarian value investor who has been compared to Warren Buffett, saw a bargain. He believed BlackBerry could recover, sharing the optimism of its co-founder Mike Lazaridis, who he’d replaced in 2009 as chancellor of the University of Waterloo.
Fairfax upped its stake to 5.1 percent and Mr. Watsa joined the board in 2012 at Mr. Lazaridis’s invitation as Blackberry promoted telecom veteran Thorsten Heins to CEO. By mid-2013 Fairfax owned 9.9 per cent of the stock. “Lots of opportunity for Canada’s greatest technology company!” Mr. Watsa wrote to Fairfax shareholders in 2013.
But BlackBerry’s new family of smartphones was delayed and failed to reverse the company’s decline. The board launched a strategic review in summer 2013 and Fairfax offered to buy the company, eventually leading a US$1.25-billion convertible debenture recapitalization instead that fall. Mr. Watsa brought in U.S. tech turnaround specialist John Chen to replace Mr. Heins, and the Fairfax boss became BlackBerry’s lead director.
Former BlackBerry CEO John Chen, shown on the floor of the New York Stock Exchange in 2018, was unable to revitalize the company after years of decline. He left in 2023.BRENDAN MCDERMID/Reuters
Over the next few years, Mr. Watsa spoke glowingly about Mr. Chen in his letters as the new BlackBerry boss oversaw a steep downsizing, a fruitless last-ditch attempt to save the handset business and a series of acquisitions that shifted the company’s focus to cybersecurity.
“All BlackBerry shareholders are fortunate that he decided to take the job of saving Canada’s iconic technology company,” Mr. Watsa wrote of Mr. Chen in March, 2014. Two years later he wrote: “Although the stock price has yet to reflect the progress at BlackBerry, we continue to be excited about John’s leadership.” In 2020, Mr. Watsa again praised Mr. Chen, writing that with its recent US$1.4-billion purchase of cybersecurity company Cylance “BlackBerry will be a growth company again.”
But Mr. Chen was growing unpopular with shareholders as revenues declined and BlackBerry bled cash. Many were incensed by a rich pay package negotiated between the CEO and Mr. Watsa. The Cylance business deteriorated and weighed on the company’s performance. At BlackBerry’s June, 2022, annual meeting, a majority of shareholders voted against the company in a non-binding say-on-pay vote, and a bare majority supported Mr. Watsa’s re-election to the board.
Mr. Chen’s contract wasn’t renewed and he left the company in November, 2023; Mr. Watsa left the board the following February. Weeks later he acknowledged to Fairfax shareholders what a drain the BlackBerry investment had been. In this year’s letter to Fairfax shareholders, Mr. Watsa said patience is “not always” a virtue, pointing to his investment in BlackBerry.
Surprisingly, Mr. Watsa has had nothing to say about BlackBerry’s revival under Mr. Chen’s successor, John Giamatteo, who has slashed costs, refinanced the company’s debt and sold Cylance. BlackBerry’s stock has hit its highest levels in years (excluding the meme stock pop) and in June it reported its fifth consecutive profitable quarter after three years of losses.
Its cybersecurity division has benefited from steady demand owing to geopolitical factors. Meanwhile, its embedded software division QNX, whose operating systems powers more than 275 million cars, reported a 26-per-cent jump in revenues in the most recent quarter and is expected to deliver robust growth with expanded offerings to automakers and other industries including robotics in the coming years.
With files from Andrew Willis and James Bradshaw