Research In Motion

I don't own it.

In picking a stock I think it makes sense to avoid names that have huge tangible uncertainties. Research In Motion (RIMM) has had this patent infringement lawsuit dangling out there for a long time. News came yesterday that looks bad for RIMM. It looks like they may have to pay fines/royalties to NPT. I'm not sure how bad this is or isn't, the point of this posting is about process not whether RIMM is a buy, sell or hold.

This will not really pertain to short term traders that try to game events like this.

RIMM is clearly a stock that can skyrocket. To think the price could double or triple in a year is not a stretch. Every properly constructed portfolio should have at least a couple of names that are capable of that kind of move. Usually those stocks are in tech or biotech but they can come from any sector. In the portfolios I manage, I have three names that have about doubled over the last year. I also have a few more that are up 50%. This is not to boast, because I think anyone that spends time putting together 35 or 40 diversified stocks will always have some huge winners. The point is as RIMM has a little more than doubled since the beginning of the year there were plenty of stocks that gave similar returns without taking the litigation risk that RIMM has. Infospace (INSP), another name I don't own, has had a similar return as RIMM in 2004 but the only risk taken there was the company's ability to execute.