Blue Horseshoe Loves Research in Motion?

Research in Motion RIMM shares are spiking up again this morning, up another 2% continuing their run from earlier in the week. What's behind the sudden move into a company some have called a "headless horseman"? There were rumors yesterday that Vodafone VOD was thinking about making a bid for the company. There were also rumors that Microsoft MSFT was once again looking to get into the mix, though that idea has been bandied about for what seems like forever. There were also rumors yesterday that Carl Ichan was looking to shake things up, potentially for the company's valuable patents in smartphone and wireless technology. The rumor mill went so far yesterday as to say that the Ontario-based company hired Goldman Sachs to explore strategic alternatives. What those alternatives are is anyone's guess right now, if it has even happened at all. It could be for the patents, as some have suggested, it could be to break up the company into a software and a hardware company, or it could be for a full sale of the near $13 billion company. There does appear to be some interest in the name recently, as the stock trades at five times 2012 estimates, indicating potential value. Earnings estimates have come down recently, as the company is losing market share, but five times next year's earnings may be too enticing for some activist investor or large hedge fund to pass up. With the revelation the other day that over 90% of the Fortune 500 companies have implemented or are looking at bringing in the Apple AAPL iPhone into the workplace, it does appear that RIM's time as the leader in enterprise is quickly coming to an end, if it has not already happened. Generally where there is smoke there is fire, and we are seeing an increased amount of smoke in the past few days. Perhaps it is all a big nothing, and when the market resumes its downtrend, the gains in Research in Motion will be nothing but a passing memory. This outcome seems less likely with each tick higher on ever stronger volume. Someone big, or a few people want in on this name. Little known Jaguar Financial has already expressed their thoughts on the state of the company run by Mike Lazaridis and Jim Balsillie. The activist fund wants something done. Now it increasingly appears that someone else does too. The heavy action in the options market appear to signaling something or somebody. Maybe it's even Blue Horseshoe. ACTION ITEMS:

Bullish:
Traders who believe that the recent money moving in RIM is a precursor might want to consider the following trades:

• RIM could receive a buyout anywhere between $35-$45 per share, which is almost 50-100% upside from these levels. Traders could initiate positions in the common stock or go long out of the money calls to benefit if they believe something gets done.

Bearish:
Traders who believe that the recent move is nothing more than short term buying and nothing major may consider alternate positions:

• RIM is still a $13 billion company. Not many companies or private equity firms can handle that size of an acquisition. This could be nothing, and if traders believe, that shorting the recent run up could be profitable.
  
  

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