by Gavin M.
November 4, 2013 - A date which will live in infamy. Let's look at this date as objectively as we can. This is the deadline set by BlackBerry for Fairfax Financial's purchase of the company. Please do remember that this is a LBO using BMO and BofA to pony up the cash to buy BlackBerry. Fairfax does not have the cash to pay for an all-cash deal.
Let's look at the possible scenarios:
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BlackBerry Gets Sold for $9/share
Everyone except the sheep who bought above $9 celebrates and everyone congratulates themselves for buying such a wonderful stock at $8 or below. BlackBerry goes into acquisition mode and will be under FairFax's mercy for staff changes and operational directions. Thorsten Heins will be laughing so hard since he will make $55M for the company's purchase. Again, the CEO wins, everyone else loses.
BlackBerry Does NOT Get Sold
There will be an expected price drop. How far? That is anybody's guess. BlackBerry will be back in buyout limbo all the while burning through they available cash > $2Bn or so. By March of 2014, they will start to contemplate breakup or the other B word - Bankruptcy.
BlackBerry Gets an Extension
This is one of the few things that may not get mentioned. This is also what I'm afraid of. If they get an extension to God knows when, any directional bet you make just turned into a major jedi mind-meld. You will have to be waiting awhile to see what happens.
In the end, you either love or hate BlackBerry. The investment and trading community is so polarized, no one is on the fence. Whichever side you pick, just be ready for November 4th. It could be something or it could be nothing...
I will short on or before November 4th. This is my plan. Plain and simple.
Traders from Equity Sense will be writing on this blog on positions and other market-related things.