Research In Motion Limited
Thesis
Research in Motion is undervalued at $47, reflecting market skepticism about its ability to sustain earnings. The company has a strong return on equity, significant cash reserves, and generates substantial free cash flow, suggesting that the market is overly pessimistic about its future earnings potential.
Did it work?
The long thesis argued RIM was undervalued at $47 because market skepticism about earnings sustainability was overdone, but the opposite occurred: RIM's earnings power was indeed broken by competitive disruption, and the stock fell 82.6% over the ~16 years since the pitch. The market's pessimism proved justified, decisively invalidating the core claim that fundamentals (ROE, cash, free cash flow) would sustain earnings. With far more than the implied horizon elapsed and a deeply negative return against a long position, the thesis clearly failed.