We reprint with permission a recent email from a sell-side colleague who we hold in high regard, despite his familiarity with the institutional investment consulting industry. (Laugh here.) Like any number of experienced investment people, he has seen a lot of what passes for money management and thus he has always harbored a sneaking suspicion that he could do it at least as well as any number of individuals he has witnessed.

But as a universal truth of managing money, sometimes things just don’t go our way, despite however many hours or bodies are thrown at the issue. ANYONE who has tried to take investing seriously has felt what is expressed below.

And jumping ahead, while we are looking gingerly at RIMM and Nokia, (Who doesn’t have the rubbernecking gene?) we have nothing intelligent to contribute to the conclusion at the current time.

Dear Oracle of all things squat and curious (unfortunately he means me):

I could use some help. I’m struggling with my faith. Can you help me with perspective on what I’m not doing in my analysis, or not looking at in my analysis? I don’t mean technically on the math, but conceptually on the approach.

I’ve labored extensively on RIM working tirelessly to understand NAV, EPV, WACC, ROIC, the nature of their business, the competition and the future for that space and this company. I’m getting pummeled mercilessly. I’ll have to update my calculations based on the earnings release yesterday but if I’m right the NAV is just over 20, an ROIC of about 60 and even if I used WACC at 20 (although I really think it should be about 15) I see this as a compelling valuation at under 20 let alone 14$ today! And that doesn’t even deal with ANY EPV which I calculated this summer at 60$/share—setting a probability of surviving at even a meager 15%, that adds another 9$/share of value. See my crude math/report attached. This one is to fiscal year end. I need to update it in the next week or two.

Back to the point. I understand that my calculations aren’t perfect. I know math is only 20% of the answer and the other 80% is where the secret sauce lies. So I took the advice that was in an email from one of your friends on the NOK spreadsheet I sent. In his reply he said you have to put your ear to the rail and listen. So I set up a twitter feed for all things RIM, read RSS news feeds, developer blogs, research reports (almost universally negative), thoughtfully reflected and thought again.

I know that there are material troubles with RIM. Jim and Mike are on the cusp of going supernova with this thing and imploding (which is ironic given that Mike is funding the perimeter institute on theoretical physics). They have one last chance, if that, after last night. I can write you a big list of reasons why I like the name, notwithstanding the problems. For that matter I can write you a big list of the problems. The whole world is piling on against this stock (almost). Every analyst is pounding them in the side of the head. In Canada at least, there is a negative RIM article every single week. And the onslaught seems relentless. And yet my brain tells me hang on. I ruminate on Buffett and Graham quotes on ignoring share price and the entire world telling me I’m wrong, which is easier for me than clients. I see hope in Prem Watsa loading up to an 8% weight to the end of August having bought through the year and a lot in the summer months.

But I just don’t know. At what point do I throw in the towel? Is this one of those Cundill back up the truck situations—is that what Prem is doing? How do I know if I’m wrong? I keep worrying that I’m falling in love with the name or not wanting to admit defeat?! I’m trying to be intellectual rather than emotional. My brain says sit tight. But last night reading the numbers the angst in the pit of my stomach was palpable. Not because of the financial loss. I’ve been here before with much less work on other names. But yes financial is very, very important with client’s money. But I want to make sure I’m not looking at this incorrectly. I’m not sure how to know what I should be doing/thinking in this situation.

WWJB do? Any advice is appreciated. Thanks. – Anonymous

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