How Much Did Warren Buffett Pay for Activision Blizzard?
Determining the precise average price Warren Buffett’s Berkshire Hathaway paid for its shares of Activision Blizzard is complex. It’s not a single figure, as they acquired their stake in multiple tranches over time. However, we can say with certainty that the price varied significantly based on the timeline of purchases and the significant influence of the pending Microsoft acquisition. Let’s delve deeper into the specifics.
Berkshire began purchasing Activision Blizzard stock in late 2021. At that time, the stock price was fluctuating based on the company’s performance. It’s critical to remember that Microsoft’s announcement on January 18, 2022, to acquire Activision Blizzard for $95 per share dramatically impacted the stock’s value.
- Pre-Microsoft Announcement: Berkshire Hathaway made initial investments before the announcement, likely at a lower average price than $95 per share. Details of these specific buy prices were not made public, however, the shares would have traded according to their market price, pre-acquisition announcement.
- Post-Microsoft Announcement and Arbitrage: Following the announcement, the arbitrage spread emerged. This spread represents the difference between the current market price of the stock and the announced acquisition price of $95, reflecting the risk that the merger would not complete. Berkshire significantly increased its stake following the acquisition announcement, capitalizing on this arbitrage opportunity, likely paying slightly under the $95 target based on how close the deal was to being finalized. Buffett specifically stated that he invested in Activision to take advantage of this arbitrage opportunity. The price they paid at this point was contingent on the market price of the stock at the time, but this was always under $95.
Therefore, it’s impossible to pinpoint one average price paid for all the shares. Berkshire Hathaway’s holdings peaked at almost 10% of Activision’s stock, representing a substantial investment. However, due to the merger closing on October 13th 2023, Berkshire now no longer owns any shares in Activision Blizzard. Their average price paid would vary depending on when each tranche of shares was purchased. Some were bought before the merger announcement, some were bought after.
The Timeline of Berkshire Hathaway’s Activision Blizzard Investment
Understanding the timeframe of Berkshire Hathaway’s investment in Activision Blizzard is crucial for understanding the fluctuations in the price they likely paid:
Late 2021: Initial Investments
One of Berkshire’s portfolio managers initiated the first investments in Activision Blizzard stock. Specific details of this period and how many shares they obtained at what price are unknown, but the average stock price would have been based on the stock price in 2021.
2022: Increase in Stake
Following Microsoft’s acquisition announcement in January 2022, Warren Buffett significantly increased Berkshire’s stake, bringing it up to nearly 10%. This is where the arbitrage play comes in, with the price potentially being just slightly below the merger price.
Second Quarter 2023: Significant Reduction
Berkshire Hathaway slashed its stake by 70% during the second quarter of 2023. This large sale occurred as the Microsoft deal appeared more likely to close, and the arbitrage spread narrowed. As the deal became more certain, the benefit of holding the stock for the deal diminished.
Post-Merger: Berkshire No Longer Owns Activision Blizzard
As of the completion of the merger on October 13th, 2023, Activision Blizzard stock is no longer publicly traded. Microsoft completed its purchase of Activision Blizzard for $68.7 billion in an all-cash deal, at $95 per share. Investors that owned Activision Blizzard stock at the time of the deal, received $95 in cash for each share they owned. This means that Berkshire Hathaway would have been required to sell its remaining stake at $95 a share, and would no longer hold any shares in the company after the acquisition was complete.
FAQs: Further Insights into Warren Buffett’s Activision Blizzard Moves
Here are 15 frequently asked questions to further illuminate Berkshire Hathaway’s investment in Activision Blizzard:
- What was the total value of Berkshire’s Activision Blizzard holdings at their peak?
At its peak, Berkshire Hathaway held 14.7 million shares of Activision Blizzard, valued at approximately $1.38 billion. This represented around 0.44% of their equity portfolio, which was their 19th largest holding at the time. The actual total value changed as their stake increased and decreased. - Why did Warren Buffett invest in Activision Blizzard?
Buffett’s investment was primarily driven by the arbitrage opportunity created after Microsoft’s acquisition announcement. The stock was trading at a lower price than the announced buyout of $95 per share, reflecting merger risk. - How much did Microsoft pay per share for Activision Blizzard?
Microsoft paid $95 per share in an all-cash deal for Activision Blizzard. - When did Microsoft announce its intent to acquire Activision Blizzard?
Microsoft announced its intent to acquire Activision Blizzard on January 18, 2022. - How much did Activision buy Blizzard for in 2008?
Activision merged with Blizzard in 2008, with an estimated transaction amount of US$18.9 billion. - Who are the largest shareholders of Activision Blizzard?
Before the merger, major shareholders included Vanguard Group Inc, BlackRock Inc., Public Investment Fund, State Street Corp, and Fmr Llc. - Why did Berkshire Hathaway reduce its Activision Blizzard stake?
Berkshire reduced its stake by 70% as the Microsoft merger became more likely to close and the arbitrage spread narrowed. They wanted to capitalize on that price gap while it was still present. - What is an arbitrage spread?
An arbitrage spread is the difference between the current market price of a stock and the anticipated price in a future transaction (like a merger). It reflects the risk of the deal not going through. - Does Berkshire Hathaway still own any Activision Blizzard stock?
No, Berkshire Hathaway no longer owns any Activision Blizzard stock, as the company was acquired by Microsoft on October 13th, 2023 and is no longer a publicly traded company. - What other significant stock moves has Buffett made recently?
Buffett has recently trimmed his position in HP, sold his entire stake in Vitesse Energy (VTS), increased his stake in BYD, and has also invested in five major Japanese trading houses: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. - What are some of Warren Buffett’s biggest stock holdings?
Warren Buffett’s largest stock holdings include Apple (AAPL), Bank of America (BAC), American Express (AXP), and Coca-Cola (KO). - What is Warren Buffett’s biggest stock holding?
Apple is Warren Buffett’s biggest holding. - Does Warren Buffett invest in tech companies?
Buffett has historically avoided tech stocks but has invested in Apple, demonstrating a willingness to adapt his investment strategy over time. His position on tech has evolved as he has come to understand more of the tech space and how it functions. - What was Warren Buffett’s first stock?
Warren Buffett bought his first stock, shares of Cities Service, at age 11. He was always interested in the market. - What is the impact of the merger on Activision Blizzard shareholders?
Shareholders who owned Activision Blizzard shares at the time of the deal were paid $95 per share in cash once the deal finalized, and the stock was no longer publically traded.