Berkshire Hathaway, the renowned investment firm led by Warren Buffett, has decided to reduce its stake in video game maker Activision Blizzard by a significant 70%. This move comes amidst speculations of Microsoft’s potential acquisition of Activision.
Decrease in Investment
According to a recent filing with the Securities and Exchange Commission, Berkshire Hathaway now holds only 14.7 million shares in Activision Blizzard, compared to the 49.4 million shares it held on March 31. This reduction in investment has caused Berkshire Hathaway’s ownership in the company to drop below the 5% ownership threshold.
Ownership Percentage
The new filing reveals that Berkshire Hathaway currently owns approximately 1.9% of Activision Blizzard. However, it is unclear whether the firm has completely divested its stake in the company or if it still retains some holdings. Once ownership falls below the 5% mark, there is no obligation to disclose stock sales.
Timeline and Price Details
Unfortunately, the filing does not provide specific details about when the Activision shares were sold or the price received by Berkshire Hathaway for the transaction. It does, however, confirm that the ownership dipped below 5% as of June 30.
Positive Developments for Activision
In recent news, Activision stock experienced a noteworthy 9% surge, reaching $90 per share. This boost came after a federal judge ruled in favor of Microsoft’s merger with Activision. Furthermore, Microsoft’s deal to ensure that the popular Call of Duty videogame franchise remains available on Sony PlayStation consoles post-acquisition has been seen as a significant development from an anti-trust perspective.
Stay tuned for more updates on these market developments.
Activision Shares Surge as Microsoft Deal Nears Closing
Activision shares saw a significant increase of 3.5% on Monday, closing at $93.21, as investors eagerly await the potential completion of the $75 billion deal. In early 2022, Microsoft announced its agreement to acquire Activision for $95 per share in cash.
Renowned investor Warren Buffett, CEO of Berkshire Hathaway at the age of 92, seized the arbitrage opportunity presented after the deal was unveiled due to noticeable discrepancies in trading prices – a reflection of antitrust concerns. With over 60 years of experience in investing in arbitrage situations, Buffett found Activision’s stock trading in the high $70s, well below the $95 per share takeover price. Recognizing an attractive risk/reward ratio, Buffett made a substantial investment in Activision. Additional holdings were acquired by one of his trusted lieutenants, Ted Weschler or Todd Combs, who manage around 10% of Berkshire Hathaway’s equity portfolio.
Buffett openly discussed the Activision holding during the Berkshire Hathaway annual meeting last year. He acknowledged the uncertainties regarding the actions that the Justice Department and other jurisdictions may take but expressed confidence in Microsoft’s financial capabilities, further mitigating one of the risks involved. It is worth noting that Berkshire Hathaway reduced its stake in Activision from a peak of 68 million shares in June 2022.
