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Warren Buffett’s Berkshire Hathaway bought $1 billion of Activision shares, just weeks before Microsoft’s surprise acquisition

February 15, 2022, 1:02 PM UTC

Just weeks before Microsoft announced it would acquire Activision Blizzard—the gaming company behind World of Warcraft, Call of Duty, and Candy Crush—in a surprise $68.7 billion acquisition, Berkshire Hathaway acquired a $1 billion stake in the video game company.

The wide-reaching conglomerate with a $703 billion stock portfolio purchased 14.7 million shares in Activision Blizzard in the fourth quarter of 2021, according to a regulatory filing released Monday. At the end of last year, those shares were valued at $975 million.

The stock bet has certainly been a good one for Buffett so far, as Activision share price jumped around 26% on the day of the deal’s announcement, on Jan. 18—and has overall ratcheted up more than 20% since the end of 2021, outpacing the broader market. Berkshire Hathaway’s newly added shares are now worth around $200 million more than they were at the end of 2021.

It is unknown if Warren Buffett or one of his two investment managers, Todd Combs or Ted Weschler, made the investment, but Buffett’s longstanding ties with Microsoft and its cofounder Bill Gates have raised eyebrows. Warren Buffett is one of Bill Gates’ favorite bridge partners, and the two billionaires once sat on each other’s boards. Gates served on the Berkshire board, while Buffett sat on that of the Bill & Melinda Gates Foundation.

Buffett doesn’t own any shares in Microsoft and has said in the past that this was in order to quell fears that he was participating in any insider trading. If any news was announced after Berkshire Hathaway took a stake, he “would be the target of suggestions, or accusations even, that [Gates] had told me something or vice versa,” Buffett said, adding that he told his stock pickers to also avoid buying Microsoft shares.

Other than the well-timed $1 billion acquisition, little was changed in Berkshire’s sprawling stock portfolio, with minor adjustments in stock holdings and a continued sell-down in pharmaceutical companies including Teva, AbbVie, and Bristol Myers Squibb. Berkshire Hathaway has said it has struggled to find appealing investments in recent years, but it seems the Activision acquisition may have changed its mind.

Berkshire Hathaway has yet to respond to a request for comment.

The deal

Microsoft’s $69 billion acquisition of Activision was by far the largest gaming deal ever and roughly equaled the amount Microsoft set aside for its five largest past acquisitions combined, including the $26 billion LinkedIn deal in 2016. 

In the aftermath of the news, Microsoft competitor Sony’s shares sank 12.8%—wiping $20 billion off its market value in one day—over fears that highly sought games owned by Activision wouldn’t be able to be played on Sony’s PlayStation console. Microsoft has since pledged that Activision’s Call of Duty franchise will continue to be available on PlayStation.

But the deal came with a caveat. Activision Blizzard has been mired in controversy over a series of allegations that its chief executive Bobby Kotick has created a toxic and sexist work environment. A Fortune investigation published days after the acquisition detailed years of harassment when women say they were routinely belittled and discriminated against

Buffett acquired his Activision Blizzard shares during a price dip that followed the news of the July 2021 lawsuit brought against the company by California’s Department of Fair Employment and Housing (DFEH) alleging the gender discrimination, harassment, and retaliation—a suit that was two years in the making. 

Buffett is expected to provide an update on Berkshire’s investments in his closely watched shareholder letter and annual report, due in late February.

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