ATVI: Votes of Confidence From Buffet and Gates

Bill and Warren like Call of Duty...

"Warren Buffett’s Berkshire Hathaway purchased about $1 billion worth of shares in Activision Blizzard in the fourth quarter, according to a regulatory filing, jumping in before Microsoft agreed to buy the video game publisher for $68.7 billion", wrote Jordan Novet from CNBC.

The fact that Buffet, a long-term investor who does the best due-diligence before buying companies, bought a huge stake in ATVI is like a stamp of high quality. Here is the story of ATVI.

- The company's stock went down after lawsuits for "numerous complaints about unlawful harassment, discrimination, and retaliation". It was filed on July 20th, 2021, by California's Department of Fair Employment and Housing. As a result, some top managers resigned.

- On November 7, the company announced that it will delay two of its biggest launches that were planned for 2022. Share price went down even further.

- In the middle of January, Microsoft announced plans to acquire Activision Blizzard for $68.7 billion ($95 per share). The deal is to be finalized in the middle of 2023, subject to all required regulatory approvals. This is the largest ever deal for the US Tech sector.

Currently the stock is trading at $81.52, approximately a 14% discount to the acquisition price. This discount reflects the risks of the deal not being approved. However, this risk is minimal as Microsoft has a strong track record with the regulators. On the other hand, if the deal is not approved, the company's shares might have an even higher upside. After the delayed blockbuster games are finally published, the stock price might return to above $100 per share, where it was a year ago.

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