American investors like BlackBerry more than Canadians do, this investor says

BlackBerry (BlackBerry Stock Quote, Chart TSX, NYSE:BB) may be fondly remembered by Canadians as the company that once put the maple leaf on top of the world —at least when it came to mobile phones— but with the company’s future now pinned to software and security rather than the smartphone, there’s less love for the stock coming from Canadian investors, says portfolio manager Lyle Stein, who claims it’s our American cousins who are still betting on BB.

BlackBerry’s share price is more or less back to square one, having risen from the $9 mark back in early 2017 only to fall back to the same range by the close of 2018. The company made a big splash this past November by announcing the acquisition of Irvine, California, cybersecurity firm Cylance for US$1.4 billion, BB’s largest purchase to date. And while the market has so far refused to react positively to the news, it’s still the company’s secure software angle that is keeping investors — or US ones, at least — hanging onto BB, says Lyle Stein, senior portfolio manager and managing director at Vestcap Investment Management.

“BlackBerry is a bit of a US darling,” says Stein, in conversation with BNN Bloomberg. “I don’t think there are a lot of Canadian funds, fund managers or institutional investors that own BlackBerry, for whatever reasons. The Americans are playing it as a call on technology and the automobile.”

“The software that BlackBerry does, the security around that software, in particular, is quite appealing, and so this has been the story for BlackBerry. The bulls think that QNX is going to be the solution in terms of security when we go into these driverless cars and have data going left, right and centre,” he says.

Acquired by BlackBerry in 2010, the company’s QNX operating system is being fitted for the smartphone market and most notably the still-developing autonomous vehicle industry. Last year, CEO John Chen announced that QNX had already been embedded in 120 million vehicles worldwide, with the company now stating that QNX has enabled “the first digital cockpit solution” to safely and securely link up the many systems that make up today’s autos.

“The QNX Platform for Digital Cockpits enables automakers to offer a reliable and secure QNX-based digital instrument cluster and infotainment system that provides access to the latest Android-based applications such as Google Maps and Google Play Music all from a single ECU,” reads the company’s news release on Monday.

A recent report from market research firm IHS Markit projects that 33 million self-driving vehicles will be on the roads globally by 2040. It’s that type of forecast that’s drawing investors to BlackBerry, says Stein.

“It’s a bet, it’s an interesting bet, and if this plays off, it could be quite a hit. If it doesn’t, [BlackBerry] will probably be acquired,” Stein says.