In his 2023 Shareholder Letter, Prem Watsa, often called the “Warren Buffett of the North,” issued a rare and candid mea culpa that offers a sobering lesson in humility, risk, and the unpredictability of technology investing. Watsa laid bare his investment in BlackBerry, a bet that spanned over a decade and cost Fairfax Financial dearly.
“That brings me to a major mea culpa!” Watsa begins, referring to Fairfax’s deep involvement in BlackBerry, starting in 2010. He wasn’t just a passive investor.
In 2013, as the once-dominant smartphone company teetered near collapse, Watsa helped engineer a lifeline by investing $500 million in convertible debentures and supporting John Chen’s appointment as CEO.
By early 2014, Fairfax’s total investment had ballooned to $1.375 billion, including $787 million in common shares.
At the time, BlackBerry was in dire straits. “BlackBerry reported a loss of $1.0 billion – in one quarter and most analysts were predicting bankruptcy!” Watsa recalls. Yet Chen stabilized the company, bringing it to breakeven and later profitability. Watsa praised him: “No CEO worked harder.”
But while Chen stopped the bleeding, he couldn’t reignite growth. “Unfortunately, John could not make it grow!” Watsa wrote, citing revenues of just $656 million in 2023—down from $10 billion in 2010.
By the end of Chen’s contract in November 2023, and Watsa’s own retirement from BlackBerry’s board in February 2024, the investment had fallen far short of its promise.
Fairfax did recover the principal on its convertible investment along with $200 million in interest. But the common shares told a more painful story. Acquired at $17.16 per share, they were valued at just $3.54 per share in 2023. “Another horrendous investment by your Chairman,” Watsa admitted.
In perhaps the most stinging line, Watsa reflected on the opportunity cost. “Imagine if we had invested it in the FAANG stocks! The opportunity cost to you our shareholder was huge! Please don’t do the calculation!” It’s a rare admission of strategic misjudgment from one of Canada’s most respected investors.
Watsa’s experience is a stark reminder that even the most seasoned investors can misread the future—especially in the volatile tech sector. His final takeaway is blunt: “No technology investment for me!”
In a world of bravado and spin, Watsa’s honesty is refreshing—and a cautionary tale for investors chasing the next big thing without appreciating the risks.
You can find the entire letter here:
2023 Fairfax Financial Shareholder Letter
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