Warren Buffett cut Activision stake before US judge approved Microsoft merger
Warren Buffett’s investment firm, Berkshire Hathaway, has sold 70% of its stake in Activision Blizzard in the second quarter, potentially missing out on gains following a federal judge’s approval of Microsoft’s $75 billion acquisition of the video game maker. According to a regulatory filing on Monday, Berkshire disclosed that it now holds about 14.7 million Activision shares, or 1.9% of the company, valued at $1.24 billion as of June 30. This is a significant decrease from its previous holdings of 49.4 million shares, or 6.3%, as of March 31. The filing did not provide information on the sale prices or whether Berkshire bought or sold Activision stock in July. Berkshire has yet to respond to requests for comment.
Buffett’s investment in Activision was seen as a form of arbitrage. Buffett believed that investors were overly pessimistic about regulators approving the merger between Microsoft and Activision, which would combine Microsoft’s Xbox gaming console business with the publisher of popular franchises like “Call of Duty” and “Candy Crush”. One of Berkshire’s portfolio managers initially invested in Activision in late 2021, and Buffett subsequently increased the stake to nearly 10% in 2022. However, it seems that Berkshire has now exited the arbitrage bet, as its remaining stake in Activision remains exactly the same size as it was before the buying began.
Following the news of the federal judge’s decision in favor of the merger, Activision shares surged 10% to $90.99 on July 11. The stock hit a 52-week high of $93.67 on Monday before closing at $93.21, up 3.5%. The decision by US District Judge Jacqueline Scott Corley in San Francisco rejected arguments from the Federal Trade Commission that the merger would harm competition in cloud gaming, consoles, and subscription services.
While the merger faced opposition from the UK’s Competition and Markets Authority, the authority has agreed to a stay on Microsoft’s appeal, allowing more time to resolve their dispute.
Berkshire Hathaway, headquartered in Omaha, Nebraska, is known for owning a wide range of businesses such as the BNSF railroad and Geico car insurer, along with a diverse stock portfolio that includes holdings in Apple and Bank of America.
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FAQs:
Q: Why did Berkshire Hathaway sell 70% of its investment in Activision Blizzard?
A: Berkshire Hathaway likely sold its stake in Activision Blizzard due to the approval of Microsoft’s acquisition of the video game maker. The sale may have been motivated by concerns about missing out on potential gains.
Q: How much of Activision Blizzard does Berkshire Hathaway still own?
A: As of June 30, Berkshire Hathaway holds about 14.7 million shares of Activision Blizzard, which represents a 1.9% stake in the company.
Q: Did Warren Buffett comment on the sale of Activision Blizzard shares?
A: Berkshire Hathaway has not yet responded to requests for comment on the sale of its Activision Blizzard shares.
Q: What was Warren Buffett’s view on the merger between Microsoft and Activision Blizzard?
A: Warren Buffett initially viewed the merger as a form of arbitrage, believing that investors were too pessimistic about regulators approving the combination of Microsoft’s Xbox gaming console business with Activision Blizzard.
Q: How did the federal judge’s decision impact Activision Blizzard’s stock price?
A: Following the federal judge’s approval of the merger, Activision Blizzard shares surged 10% to $90.99 on July 11. The stock reached a 52-week high of $93.67 before closing at $93.21.
Q: Did the merger face any opposition in the UK?
A: The UK’s Competition and Markets Authority opposed the merger; however, it agreed to a stay on Microsoft’s appeal to allow more time for the dispute to be resolved.
Q: What other businesses does Berkshire Hathaway own?
A: In addition to its holdings in Activision Blizzard, Berkshire Hathaway owns a diverse range of businesses, including the BNSF railroad and Geico car insurer. It also has investments in companies such as Apple and Bank of America.
US Judge Approves Microsoft Merger as Warren Buffett Reduces Activision Stake
Warren Buffett’s investment firm, Berkshire Hathaway, has sold 70% of its stake in Activision Blizzard during the second quarter. This move potentially caused the firm to miss out on gains after a federal judge ruled that Microsoft could proceed with its $75 billion acquisition of the video game maker. According to a regulatory filing on Monday, Berkshire Hathaway owned approximately 14.7 million Activision shares, or 1.9% of the company, valued at $1.24 billion as of June 30. This is a significant decrease from the 49.4 million shares, or 6.3%, they held on March 31. The filing did not disclose the specific details of the sales, nor did it mention if Berkshire Hathaway bought or sold any Activision stock in July. Requests for comment from Berkshire Hathaway have gone unanswered as of now.
Berkshire Hathaway’s investment in Activision was considered a form of arbitrage by Buffett, who believed that investors were overly pessimistic about the approval of the merger between Microsoft’s Xbox gaming console business and Activision, the publisher of popular franchises such as “Call of Duty” and “Candy Crush.” In late 2021, one of Berkshire’s portfolio managers invested in Activision, while Buffett increased the stake to nearly 10% in 2022. However, during Berkshire Hathaway’s annual meeting in April 2022, Buffett expressed uncertainty about whether regulators would approve the merger, stating, “one thing we do know is Microsoft has the money.”
After reducing its stake in Activision to 1.9%, Berkshire Hathaway’s remaining shares remain unchanged, indicating that Buffett may have exited the arbitrage bet. Following the ruling by US District Judge Jacqueline Scott Corley in San Francisco, which dismissed the Federal Trade Commission’s arguments against the merger, Activision shares rose 10% to $90.99 on July 11. The stock reached a 52-week high of $93.67 before closing at $93.21, reflecting a 3.5% increase.
Aside from the legal battles surrounding the merger, Britain’s competition regulator, the Competition and Markets Authority, also opposed the merger but agreed to a stay on Microsoft’s appeal to allow for further resolution. Berkshire Hathaway, headquartered in Omaha, Nebraska, is a conglomerate that owns various businesses including the BNSF railroad and Geico car insurer, as well as stocks in companies such as Apple and Bank of America.