Berkshire Hathaway, in a regulatory filing on Monday, July 17, 2023, announced that it sold 70% of its investment in Activision Blizzard during Q2. This reduces Berkshire’s ownership to 14.7 million shares, equivalent to 1.9% of the company.
The sale occurred prior to a federal judge granting approval for Microsoft’s $68.7 billion acquisition of Activision Blizzard. This ruling represents a significant win for Microsoft and is expected to positively impact Activision’s stock price. However, Warren Buffett chose to sell his stake in Activision before the merger’s completion.
There are a few potential reasons behind Buffett’s decision to sell his Activision stake. One possibility is that he opted to secure profits, as Berkshire Hathaway’s investment in Activision nearly doubled in value since its purchase in late 2021. Another reason could be concerns about regulatory risks associated with the Microsoft merger. The Federal Trade Commission (FTC) filed a lawsuit to halt the merger, which might have prolonged the process.
Regardless of the motivation, it is evident that Buffett’s confidence in Activision has waned. This sale significantly deviates from his typical long-term investment strategy. However, it is worth noting that Buffett has previously sold stocks before major events, including mergers and acquisitions.
Only time will reveal whether Buffett’s decision to sell his Activision stake was prudent. Nevertheless, this sale signifies a notable shift in Buffett’s investment approach.
