What now for Blackberry (T.BB)? Short squeeze, real estate windfall drive rally

Stockhouse Editorial
0 Comments| January 22, 2014

Rallying Blackberry (TSX: T.BB, Stock Forum) shares jumped another 8.5% to $11.81 Wednesday, a move that is being driven by a short squeeze, according to an investment report.

“The writedowns in the previous quarter, along with the partnership with Foxconn in the hardware business, have considerably de-risked Blackberry’s operations and have limited downside opportunities,’’ writes Scotia Capital analyst Daniel Chan in a research report titled “What now?”

“Short interest has been declining as a result of these actions.”

Blackberry has rallied all the way from $7.46 in December, 2013, leaving the company with a market cap of $6.2 billion, based on 524.6 million shares outstanding. The 52-week range is $18.38 and $5.79.

Reports said Blackberry is also getting a boost as investors eye a revenue windfall from the technology company's plans to sell its Canadian real estate assets, even though the company did not disclose how much it plans to raise from the sale process. The properties consist of more than three million square feet of office space.

Chan went on to say that while the stock continues to experience a nice run from the short squeeze, we believe investors have some time before we see improving fundamentals.

“The downside risk is limited, but we believe the upside opportunities are far too speculative to make a bet on at this point,’’ Chan writes. “We recommend clients maintain their position in the name.

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