September 25, 2023

News: Berkshire Hathaway Decreased Stake in Activision Before Microsoft Merger Approval

Warren Buffett’s Berkshire Hathaway has sold a significant portion of its investment in video game giant Activision Blizzard, according to regulatory filings. During the second quarter, the conglomerate offloaded 70% of its stake in the company.

Berkshire Hathaway owned approximately 14.7 million shares of Activision, amounting to 1.9% of the company, with a value of $1.24 billion as of June 30. This marked a significant decrease from the 49.4 million shares, corresponding to a 6.3% stake, that Berkshire held on March 31.

The regulatory filing did not provide details about the prices at which the sales were conducted or any transactions involving Activision stock in July.

Buffett’s investment in Activision was considered a form of arbitrage. He believed that investors were unduly pessimistic about regulators approving Microsoft’s acquisition of the video game maker. Berkshire first acquired shares in Activision toward the end of 2021, and Buffett subsequently increased the stake to nearly 10% in 2022.

The decision to sell a substantial portion of the investment suggests that Buffett may have exited his arbitrage bet. However, Berkshire Hathaway still holds a remaining stake in Activision.

Activision’s shares experienced a boost of 10% on July 11, reaching $90.99, following a federal judge’s ruling against the U.S. Federal Trade Commission’s arguments opposing the merger with Microsoft.

While the merger faced challenges, including opposition from the Competition and Markets Authority in the UK, Microsoft was granted a stay on its appeal.

Berkshire Hathaway, headquartered in Omaha, Nebraska, comprises various businesses and a diverse portfolio of stocks, including Apple and Bank of America.

The decision to reduce its position in Activision demonstrates Berkshire Hathaway’s ever-evolving investment strategy, reflecting its ongoing efforts to optimize its portfolio and capitalize on market opportunities. Investors will be closely watching to see how this move aligns with Buffett’s broader investment philosophy going forward.