Warren Buffett Cashes in Monster Bet on Microsoft Buying Activision[ad_1]
- Warren Buffett exited his wager on Microsoft buying Activision Blizzard last quarter, filings show.
- Buffett built a $5 billion Activision stake, wagering the stock would hit Microsoft's offer of $95.
- He's now sold the shares he bought, reducing Berkshire's stake to its pre-arbitrage size.
Warren Buffett closed out his bet on Microsoft buying Activision Blizzard last quarter, and likely left some money on the table.
Buffett's Berkshire Hathaway slashed its Activision stake by 70% to 14.7 million shares or 1.9% of the company last quarter, a Securities and Exchange Commission filing revealed on Monday.
One of Buffett's deputies oversaw Berkshire's purchase of 14.7 million Activision shares in 2021. After Microsoft bid $69 billion for Activision in January 2022, Buffett scooped up nearly 50 million shares as an arbitrage.
In other words, Buffett wagered that the merger would go through, and Activision stock would rise to Microsoft's offer price of $95 a share.
Berkshire's Activision stake peaked at over 68 million shares or roughly 9% in the second quarter of last year — a stake worth over $5 billion. However, Buffett and his team pared it to 49.4 million shares or 6.2% by the end of March this year, then reduced the bet to its pre-arbitrage size by June 30, SEC filings show.
The mega-merger ran into trouble in late April, when UK regulators blocked it out of concern that it would dampen innovation and reduce consumer choice in the cloud-gaming market. The US Federal Trade Commission also opposed the deal, but a federal judge ruled on July 10 that it could proceed, and UK officials have also agreed to consider a modified deal.
The good news has sent Activision stock up 11% this month to $93, less than 2% below Microsoft's offer price. Berkshire's latest disclosure indicates it cashed out most of its shares last quarter, suggesting it largely missed out on the stock's climb in recent days.
Buffett was asked during Berkshire's annual meeting this year whether he'd reduced or sold the Activision position given the regulatory opposition to it. Seated next to his business partner, Charlie Munger, he demurred but went on to criticize officials for blocking the deal.
"I think the British government's making a mistake in this case," he said. "But that's life in the big city, as Charlie would say."
Buffett joked during last year's shareholder meeting that Munger questions why he even bothers with arbitrage anymore, given the upside is limited and there's a risk of significant loss.
"His general feeling is, 'Why is Warren fooling around with this kind of stuff, even,'" Buffett said.
"But it's the old fire horse," he continued. "Occasionally it looks like the odds are in our favor."