Fairfax Financial Holdings Ltd. has officially exited its long-standing investment in BlackBerry Ltd., marking the end of a 16-year partnership that ultimately turned sour. The decision comes as BlackBerry’s automotive software division garners renewed interest from investors, highlighting a significant shift in the tech landscape.
End of an Era
In a recent regulatory filing in the United States, Fairfax disclosed that it no longer holds any shares in BlackBerry. Previously, the Toronto-based firm owned approximately 26.26 million shares as of early May, a decrease from 35.4 million shares last September. Fairfax had maintained a substantial stake in BlackBerry for over a decade but began divesting after March 31, 2025. Prem Watsa, the CEO of Fairfax, refrained from commenting on the investment’s outcome.
For years, Fairfax was one of BlackBerry’s most significant shareholders, holding as much as 8 per cent of the stock in early 2025. The firm had the option to convert its BlackBerry debt into equity through a series of convertible debentures initiated in 2013. However, Fairfax never exercised this option, which could have increased its stake to over 16 per cent. Instead, the company chose to roll over portions of the debt into new debentures, ultimately concluding these arrangements in 2024.
A Costly Investment
Although Fairfax earned around US$200 million in interest income from holding US$500 million worth of BlackBerry debentures, the losses on its stock investment are far more significant. Watsa’s 2024 letter to shareholders indicated that Fairfax invested approximately US$882 million in BlackBerry shares, acquiring them at an average price of US$17.16 each. Since then, the stock has not approached that value, save for a brief period in 2021 when it was buoyed by “meme stock” traders.
Based on the timing of its sales, Fairfax may have recorded a loss of at least US$288.5 million on its BlackBerry stock. This figure likely underestimates the actual loss, as the company probably sold its shares for even less. Cumulatively, Fairfax’s financial woes related to BlackBerry investments exceed US$124.5 million, including a US$36 million loss sustained when selling 5.2 million shares in 2014.
Reflecting on this venture, Watsa referred to the BlackBerry investment as “another horrendous investment” in his shareholder correspondence two years ago. He lamented the substantial opportunity cost, speculating on how that capital could have performed had it been invested in high-growth tech stocks like the FAANG companies—Facebook, Amazon, Apple, Netflix, and Google.
Shifts in Strategy and Leadership
Fairfax initially entered into a partnership with BlackBerry in 2010, at a time when the Canadian tech firm was struggling against fierce competition from Apple and Google’s Android devices. Watsa, a value investor often compared to Warren Buffett, perceived an opportunity for recovery. He believed in BlackBerry’s potential, especially after its co-founder Mike Lazaridis appointed him to the board in 2012.
However, BlackBerry’s attempts to revive its smartphone business faltered, leading to a strategic review in 2013. Fairfax eventually facilitated a US$1.25 billion recapitalisation to secure the company’s future, bringing in turnaround expert John Chen as CEO. Watsa expressed optimism about Chen’s leadership, particularly regarding a shift in focus towards cybersecurity.
Despite Watsa’s initial enthusiasm, Chen’s tenure faced challenges as BlackBerry struggled with declining revenues and shareholder dissatisfaction. By 2023, Chen departed from the company, and Watsa subsequently stepped down from the board.
Under new leadership from John Giamatteo, BlackBerry has recently seen a resurgence. The firm reported five consecutive profitable quarters after a challenging period, with its cybersecurity division benefitting from increased demand. Moreover, BlackBerry’s QNX embedded software division, which powers over 275 million vehicles, has experienced impressive growth, suggesting a brighter future ahead.
A Broader Market Perspective
Interestingly, Fairfax is not alone in its exit from BlackBerry. Regulatory filings reveal that other major shareholders, such as British hedge fund Fifthdelta Ltd., have also divested significantly during the last quarter. Meanwhile, BlackRock Inc. has notably reduced its stake, indicating a broader trend among investors.
Why it Matters
The dissolution of Fairfax’s investment in BlackBerry serves as a cautionary tale about the volatile nature of the tech industry. As companies pivot and adapt to changing market demands, the ability to foresee long-term value is crucial. Watsa’s reflections on his investment choices underscore the importance of strategic foresight in capital allocation. As BlackBerry embarks on a new chapter under fresh leadership, the implications of this divestment could resonate across the tech investment landscape, prompting other investors to reassess their portfolios in light of emerging opportunities.
