Bookkeeping: Restarting Research in Motion (RIMM)

Looking around I've noticed we had killed off all technology exposure - so trying to think of things that could go well, I want to get something on that side of the ledger. Unfortunately, all my favorite names are also the hedge funds favorite names - the Apples (AAPL), Research in Motions (RIMM), Qualcomms (QCOM) - even Amazon (AMZN). Or Mastercard (MA) which is not a technology stock but along the same line of thought....

So I am sort of tossing a coin on which one to buy, one name is good enough in this market where they are all treated quite the same - unless we know which hedge funds funds blowing up owned each of these, and to what degree they still own it on their books, there is no way to figure out which has the least risk. I still really like Apple here, but decided on Research in Motion. Apple does report in a few weeks so there is upside potential but also downside - but expectations now are so low I could see them saying good things... BUT they always are conservative on guidance - which people have taken literally in the past and panicked. Research in Motion already reported, "disappointed" [Sep 25: Research in Motion Disappoints on Guidance and Misses Quarter], and was taken to the woodshed - down 40% in a few weeks. So there is at least not earnings risk. And all I want is exposure to "NASDAQ" which I could also of done through say Ultra Technology (ROM) - however some of the top holdings in that ETF are not my favorites.

So this is really just a proxy on NASDAQ, but there was the announcement of the launch of 'Storm' today which should help later in the fall. Normally I'd buy both Apple and Research in Motion but in this market, its not about individual fundamentals, just huge sector rotations. (or lately, rotation to nowehere) And with how quick the trading is, the less positions to manage the better.

• Research In Motion (RIMM) this morning announced that its new touch-screen BlackBerry, the Storm, will start shipping to Verizon (VZ) and Vodafone (VOD) later this fall. The device will be priced in line with the Apple (AAPL) iPhone at $199, and will match Apple’s 8 GB of storage capacity.
• Canaccord Adamas analyst Peter Misek responded to the news by upping his rating on the stock to Buy from Hold. Misek wrote that “the unveiling of RIM’s highly anticipated touch screen handset should provide some much needed relief to the investor base.” He says the Storm news should boost Street confidence in estimates for the fiscal third quarter ending in November and the fourth quarter ending in February.
• RBC Capital’s Mike Abramsky, who has a Sector Perform rating on the stock, writes that the Storm has some advantages over the iPhone, including BlackBerry email, a removable battery and a 3.2MP camera capable of shooting video. He notes that RIMM claims its haptic touchscreen technology makes its virtual keyboard better than the one offered by Apple, with better typing accuracy.
• JMP Securities’ Samuel Wilson repeated his Market Outperform rating and $80 target price. “As the lead holiday season product, distributed for free with contract at Vodafone, we believe this launch will drive a substantial uptick in RIMM sales,” he writes. Wilson says the phone is “designed as ammunition for carriers left out of the iPhone.” Oppenheimer’s Ittai Kidron, who has an Outperform rating on RIMM, asserts that “with strong carrier support this holiday season, we believe the Storm fundamentally changes the game” for RIMM.
• UBS analyst Maynard Um, who has a Neutral rating on RIMM, writes that the arrival of the Storm should be good for RIMM’s shares, but cautions that he is “keeping an eye out for the BlackBerry Bold launch at AT&T as concerns over further delays linger.”

None of those comments matter one iota in this market since they talk about fundamentals - which have not mattered for a long time. I can't recall the last time I saw Research in Motion around 16x earnings... despite all its ills it is still growing 40%ish. But since the structure of companies mean little, we're only treating it as a trading vehicle as all this market allows. At some point the sellers must get exhausted in this market and liquidations are complete.

I closed the last of our Research in Motion about 1 month ago at $103... today it traded in the low $50s at its worst - amazing. I'm buying a 2.9% stake in the $59s. While I think Christmas will be rotten the last thing to go will be the electronic gadgets...

Conceptually I am bullish here from the standpoint of "it hasn't been this bad since 1932 so we must bottom at least for a while" - that hedge fund liquidation situation is the only bogeyman that does not allow me to be more constructive. If they let up for just 2 weeks it would be nice. I'm also reading "some" measures of credit are finally showing "some" signs of improvement today - if this continues it would lead to a conclusion that the mountains of actions done by authorities are having some effect. At this point, that is all many people want to see... still too early to be trusting of anything lasting though. We'll see. Unfortunately, the market simply overrides any individual company at this point.

Long Research in Motion in fund; no personal position