SEC filings published last week show that James Harris “Jim” Simons bought 3.3 million shares in BlackBerry (NASDAQ:BBRY) (TSX:BB) in December, valued at US $35.9 million, a strong vote of confidence in BlackBerry by one of the savviest stock pickers in the world.
Jim Simons is a renowned mathematician, who founded the Medallion Fund in 1982, part of his Renaissance Technologies empire.
“There are just a few individuals who have truly changed how we view the markets,” said Theodore Aronson, of Aronson + Johnson + Ortiz LP, a quant-oriented investment firm in Philadelphia managing $29.3 billion. “John Maynard Keynes is one of the few. Warren Buffett is one of the few. So is Jim Simons.”
At the exact moment when the subprime markets were melting down and Bear Stearns was declaring bankruptcy, Simons’ Renaissance was posting unbelievable gains.
Andrew Lo, director of the Massachusetts Institute of Technology Laboratory for Financial Engineering and chief scientific officer of quant hedge fund firm AlphaSimplex Group LLC, once said of Simons, “All of us in the quant business have conjectures and hypotheses but very little data. So we like to speculate about what Renaissance could possibly be doing. They are so far ahead of everybody else that it’s both challenging as well as exciting to engage in that kind of idle speculation.”
Simons, for his part, can discuss string theory and autism as well as he can the stock market. He once researched what effects sunspot activity might have on the markets. His results were inconclusive.
All the same, one ignores an endorsement from Simons at their own peril.
Popular opinion has it that BlackBerry is an also-ran, long ago overtaken in the handset phone business by Apple and Samsung and struggling to cling what meager market share it still has.
A study just published by the International Data Corporation shows that BlackBerry’s market share among smartphone users dropped from 1.9% in 2013 to just 0.4% in 2014, an incredible drop from the 40% market share BlackBerry enjoyed in 2010.
Somehow or other, this hasn’t dissuaded Jim Simons from loading up on BlackBerry stock, anticipating that not only will BlackBerry’s share of the handset market likely bounce back, but also that the company’s early investments in Internet of Things support technology is about to pay off in a big way.
To that end, Simons’ investment in BlackBerry follows from previous investments he has already staked out in early movers in the IoT revolution, including IBM, F5 Networks and Sierra Wireless.
The decision to buy in December might have been triggered by news that Ford noisily decided to dump Microsoft in favour of QNX Systems, owned by BlackBerry, to operate its in-vehicle operating system.
And despite the company’s sagging handset sales, analysts predict an earnings-per-share increase of 54.20% over the next five years for BlackBerry.
Last spring, BlackBerry unveiled a new division, called Project Ion, which, working with QNX Software, aims to provide a secure platform for objects in the IoT category to speak to one another and to the cloud.
QNX has already proven itself the leader in the IoT field, specializing in healthcare, nuclear and automotive technologies, not to mention BlackBerry 10 smartphones.
“We like to speculate about what Renaissance could possibly be doing. They are so far ahead of everybody else that it’s both challenging as well as exciting to engage in that kind of idle speculation.” – Andrew Lo, director of MIT’s Laboratory for Financial Engineering
If Cisco Systems is to be believed, the Internet of Things will largely just be referred to as “the economy” by 2020, generating value so great that it signals the beginning of a post-industrial revolution.
Skepticism about such predictions is healthy, especially when those predictions shade into PR or self-interest.
But if Jim Simons’ faith in BlackBerry is any indicator, it’s a good bet that right about now is the moment that the Internet of Things economy is rising out of the basement and accepting passengers willing to get in on the ground floor.
This week, at the Embedded World 2015 conference in Nuremberg, QNX is unveiling its QNX Wireless Framework, applying the same smartphone connectivity technology found in BlackBerry phones to any device or object or system that might be connected in the future.