Tiny Activist Fund Calls on RIM to Shake Things Up

A small, little-known Canadian activist investor, Jaguar Financial Corp., called for Research In Motion Ltd.’s board to consider a wide range of strategic alternatives, including a possible sale of the company or its patent holdings—a fresh sign of investor unrest over the poor stock-market performance of the BlackBerry maker – its share price has fallen nearly 50% since the start of the year.

Normally, you’d think we’d see some investor enthusiasm that something, anything might jolt RIM’s stock price. And yet, RIM’s shares are barely budging today. (Granted, most other stocks are deeply in the red, so RIM’s 12-cent bump today might be as close to wheeeee as the markets can manage today.)

Still, the move marks an acceleration of shareholder criticism over the smartphone and tablet maker. RIM’s share price has suffered this year amid a series of lackluster product launches. In recent months, RIM has seen its market share for the North American smartphone market shrink, as rivals Apple Inc. and Google Inc., whose Android system powers several smartphones, have come to dominate the market.

Bigger, better-funded activists have so far stayed away. And RIM has successfully fended off one investor-led attack already. Earlier this year, an activist fund called for a shareholder vote over the company’s controversial management and board structure. The company’s two top executives share both the CEO role and the chairman role.

But RIM’s board managed to convince the investor to back down ahead of a shareholder meeting, after agreeing to study its structure and report back about possible changes by early next year.

Indeed, RIM would be a hard sell. First, even at a depressed share price, it remains a $16 billion company. Moreover, some analysts believe Canada wouldn’t be warm to foreigners scooping up one of the Maple Leaf’s biggest companies. Last year, Anglo-Australian mining giant BHP Billiton Ltd. dropped a nearly $40 billion bid for fertilizer maker Potash Corp of Saskatchewan after Canada blocked the deal on grounds that the offer did not provide a “net benefit” for the country.

And then there’s the nature of the investor pressure itself. We’ve never heard of Jaguar Financial. Its website says the firm invests in undervalued small cap companies. In other words: we fish for minnows. RIM is not a minnow.

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