Warren Buffett’s Berkshire bought about $1 billion worth of Activision shares before the Microsoft deal

Published: February 17, 2022
Updated: February 23, 2022
Warren Buffett's Berkshire bought about $1 billion worth of Activision shares before the Microsoft

Warren Buffett's Berkshire bought about $1 billion worth of Activision shares before the Microsoft deal

 

Warren Buffett’s Berkshire bought about $1 billion worth of Activision shares before the Microsoft deal

 

According to a regulatory filing, Warren Buffett‘s Berkshire Hathaway bought approximately $1 billion worth of Activision Blizzard stock in the fourth quarter, stepping in before Microsoft decided to buy the video game publisher for $68.7 billion. According to the report, Berkshire owned 14.66 million shares worth $975 million at the end of 2021.

In mid-January, Microsoft revealed its plan to buy Activision Blizzard for $95 per share, driving the stock up 25% to above $82, though it has since declined. It would be the largest deal ever made by a technology company in the United States.

Should the deal go through, Buffet stands to make a tidy profit. After the California Department of Fair Employment and Housing filed a lawsuit alleging that Activision and its subsidiaries promoted a sexist atmosphere and paid women less than men, the stock fell as low as $56.40 in the fourth quarter.

In November, Activision announced that Diablo IV and Overwatch 2 would be delayed. It also received mixed reviews for its latest game, Call of Duty: Vanguard, which was launched the same month. In 2020, Bill Gates, the co-founder and former CEO of Microsoft, resigned from the boards of Berkshire Hathaway and Microsoft. Buffett, the chairman and CEO of Berkshire Hathaway, has known Gates for a long time. 

According to Forbes, they are the fourth and sixth richest persons in the world, respectively. Berkshire Hathaway filed a Form 13F with the Securities and Exchange Commission today, revealing that in the last months of 2021, Berkshire Hathaway amassed an Activision Blizzard holding totalling around 14.7 million shares valued close to $1 billion. 

 

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Following a complaint filed by the California Department of Fair Employment and Housing alleging that the firm and its subsidiaries promoted a sexist culture that underpaid female employees relative to male employees, Activision’s shares dropped to a low of $56.40 late in the year. The stock may have also been harmed by poor reviews for the company’s popular Call of Duty franchise, which was published in November.

Microsoft revealed its intention to buy Activision Blizzard for $68.7 billion, or $95 per share, in January 2022. The shares of the video game maker temporarily rose above $82 per share as a result of this announcement. Berkshire’s holding in Activision Blizzard as of Q4 would be worth approximately $1.4 billion at a price of $95 per share, representing a significant profit.

Activision Blizzard’s acquisition by Microsoft is planned to be completed in the fiscal year 2023. Buffett is known for investing in stodgy, more value-oriented industries like banks, consumer staples like Buffett’s beloved Coca-Cola (KO), and oil stocks, so the purchase in Activision Blizzard is a touch out of the left field for Berkshire.

Nonetheless, prior to the Microsoft acquisition, Activision Blizzard was the type of classic, out-of-favor value investment that Buffett adores. Due to a sexual harassment incident and the delayed release of several key games, Activision Blizzard’s stock dropped about 30% in 2021. Despite the fact that Buffett is acquainted with Microsoft co-founder Bill Gates, Berkshire has no ownership in the company.

Last year, shortly after Bill and Melinda Gates revealed their divorce plans, Buffett stepped down as a trustee of the Bill and Melinda Gates Foundation. In 2020, Gates stepped down from the boards of both Microsoft and Berkshire Hathaway.

Bill Gates has also stepped down as a Microsoft executive and given a big amount of his company’s stock to charity. According to Forbes, Gates and Buffett are the fourth and sixth richest people on the planet, respectively.

 

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