In a significant move, Fairfax Financial Holdings Ltd. has completely divested its stake in BlackBerry Ltd., concluding a challenging 16-year partnership with the once-iconic Canadian technology firm. This decision comes at a time when BlackBerry’s automotive software division is experiencing a resurgence in investor interest.
Fairfax’s Exit from BlackBerry
Toronto-based Fairfax disclosed in a recent U.S. regulatory filing that it no longer holds any shares in BlackBerry. The company had previously owned 26.26 million shares as of early May 2025, down from 35.4 million in September 2024. Fairfax’s involvement with BlackBerry dates back to 2010, when it initially invested in the company as it faced mounting competition from rivals like Apple and Google. Over the years, Fairfax’s holdings peaked at 46.7 million shares, but a gradual sell-off commenced after March 31, 2025.
As one of BlackBerry’s largest shareholders, Fairfax held approximately 8 per cent of the company’s stock as of early 2025. Despite possessing rights to convert its debt into additional shares, Fairfax chose not to exercise this option, which would have elevated its stake to over 16 per cent. Instead, the firm restructured its debt multiple times until it was fully repaid in 2024. While Fairfax earned around US$200 million in interest income from its BlackBerry debentures, the investment in stock proved to be a costly venture.
Financial Losses and Regrets
Prem Watsa, Fairfax’s CEO, has openly expressed disappointment regarding the company’s BlackBerry investment, which totalled around US$882 million. In his 2024 letter to shareholders, he stated that Fairfax had acquired its shares at an average price of US$17.16 each. Unfortunately, apart from a brief spike in 2021 driven by “meme stock” investors, BlackBerry’s stock has not approached this average since early 2012.
Calculating the losses from Fairfax’s divestment suggests a minimum loss of US$288.5 million, with actual losses likely being much higher. This figure does not take into account previous losses, including a US$36 million write-down incurred when Fairfax sold 5.2 million shares in 2014. The total financial impact of the investment is estimated to exceed US$124.5 million.
Reflecting on this venture, Watsa candidly referred to it as “another horrendous investment” in his previous letters, lamenting the missed opportunity to invest in high-performing technology stocks like the FAANG companies—Facebook, Amazon, Apple, Netflix, and Google. Had Fairfax diverted its funds to these firms, the returns could have multiplied significantly.
A Shift in BlackBerry’s Strategy
Fairfax’s initial investment was made during a tumultuous period for BlackBerry, as the company struggled to adapt to the rise of touchscreen smartphones. Watsa’s belief in BlackBerry’s potential, spurred by optimism from co-founder Mike Lazaridis, led Fairfax to increase its stake over the years. However, despite Watsa’s early enthusiasm, BlackBerry’s attempts to regain market share with new devices failed, prompting a strategic review in 2013.
In what was seen as a pivotal moment, Fairfax proposed a buyout, ultimately leading to a US$1.25 billion recapitalisation plan in 2013. Watsa brought in turnaround expert John Chen as CEO, but despite early optimism, BlackBerry continued to face challenges under Chen’s leadership.
Shareholder discontent grew as the company’s financial performance faltered, leading to Chen’s departure in November 2023. Watsa’s exit from the board followed soon after. In his latest letter to shareholders, he remarked that patience is “not always” a virtue, highlighting the burdensome nature of the BlackBerry investment.
BlackBerry’s Recent Revival
Interestingly, since Chen’s departure, BlackBerry has begun to show signs of recovery under new leadership from John Giamatteo. The company has implemented cost-cutting measures, refinanced its debts, and divested the struggling Cylance business. Notably, BlackBerry’s stock has surged to its highest levels in years, excluding the earlier speculative peaks, marking the fifth consecutive profitable quarter after a prolonged period of losses.
The cybersecurity division is thriving, driven by increasing demand due to global geopolitical factors. Additionally, BlackBerry’s QNX embedded software division, which powers over 275 million vehicles, reported a remarkable 26 per cent increase in revenues recently.
As other significant shareholders, including British hedge fund Fifthdelta Ltd. and investment giant BlackRock Inc., have also reduced their holdings in BlackBerry, the company’s stock market performance has captured renewed attention.
Why it Matters
The exit of Fairfax from BlackBerry underscores a pivotal moment in the technology investment landscape, particularly for legacy firms that struggle to innovate in rapidly changing markets. While Fairfax’s costly foray into BlackBerry serves as a cautionary tale of opportunity lost, BlackBerry’s recent revival hints at a possible turnaround. This situation raises critical questions about the future of technological investments and the shifting dynamics in a sector that is increasingly defined by agility and foresight. As investors watch closely, BlackBerry’s ability to sustain its resurgence will be a key determinant of its long-term viability in the competitive tech arena.
