BlackBerry has “a lot” of upside, investor Benj Gallander says

Reputation counts for a lot in business, a prime example being BlackBerry (BlackBerry Stock Quote, Chart TSX:BB) CEO and number one cheerleader John Chen, whose stick-to-it-ness when it comes to turning around a faltering company has caused many a would-be sceptic to once again put their faith in the BlackBerry name.

Count Benj Gallander of Contra the Heard Investment Letter among the converted. The investor says that while the stock isn’t likely to double over the next half-year, there’s good value in BB as a long-term hold.

“I own BlackBerry,” Gallander told BNN Bloomberg Tuesday. “I was at the Fairfax AGM where [CEO Prem Watsa] talked quite a bit about BlackBerry. I like the company. Where will it go in the next six months, to $17 or $18? If I was a betting man, I’d bet against it. I’d bet against any stock going up 50 per cent in six months.” (All figures in US dollars.)

“I never put time frames on stocks like that,” he says. “My target price is about $24. I think what [John Chen] is doing is correct.”

Watsa and Fairfax Financial made headlines back in 2013 when the holding company moved to acquire BlackBerry for $4.7 billion, a deal which was nixed in favour of a $1-billion stake in BB. Watsa has been clear that it’s his high estimation of Chen that spurred the investment.

“The reason we put a lot of money in [BlackBerry] was because of John Chen,” Watsa said to BNN Bloomberg in 2018. “John Chen is an outstanding executive —long track record. He had a terrific turnaround at a company called Sybase.”

Last year, BlackBerry shareholders re-affirmed their confidence in Chen and his turnaround plans for the erstwhile phone-maker by offering him a new five-year contract worth at least C$128 million. BlackBerry’s share price has risen from a low of $5.44 back in late 2013 to a high of $14.55 hit in January 2018. So far in 2019, BB is up 26 per cent and currently trades in the low $9.00 range.

“I had a long conversation about BlackBerry when I was at the Fairfax meetings, and some people think that it’s not going to do it,” says Gallander. “I compared it to Cybase that John went into. It had a big takeover later. It’s not the same kind of turnaround, though, because BlackBerry has had to go into another space.”

“But BlackBerry is a good stock to own. I think it has a lot of upside,” he says.