FRI, JUL 14, 2023
Game (almost) over! Buffett close to winning Activision bet
At the May shareholders meeting, Warren Buffett sounded resigned to losing his arbitrage bet on Activision Blizzard.
A year before, at the 2022 meeting, Buffett revealed that he bought 50 million shares of the video game maker for Berkshire's portfolio.
Microsoft had announced a deal to buy Activision for $95 per share, but the stock was trading around $80 due to concerns anti-trust regulators might block the acquisition.
Buffett was, in effect, betting the deal would go through, and if it did, "we make some money." If it didn't, the stock could fall substantially.
And, two months ago, it wasn't looking good. Buffett said he thought U.S. and U.K. regulators were making a mistake by opposing the combination, but "that's life in the big city, as Charlie [Munger] would say."
Microsoft CEO Satya Nadella arrives on June 28 to testify at a trial in a San Francisco federal courthouse over the FTC's attempt to block his company's deal to buy Activision Blizzard. REUTERS/Carlos Barria
Tonight, it's a very different picture. Berkshire appears to be close to realizing a profit of around $1 billion.
Just a few hours ago, the U.S. Appeals Court for the 9th Circuit sided with a federal judge who on Tuesday rejected the Federal Trade Commission's attempt to temporarily block the companies from completing the deal before it could be considered by an FTC administrative law judge.
Microsoft is still trying to resolve the U.K.'s concerns, but the companies are hoping to close the deal by its July 18 deadline.
Investors think they will be successful. Even before the appeals court ruling, Activision shares ended the week up more than 9% at $90.07.
Berkshire invests $3.3B in LNG export facility
Berkshire Hathaway is again demonstrating that it will continue to invest in fossil fuels, even as it touts its substantial renewable energy assets.
This week, its utility subsidiary agreed to buy half of one the seven facilities in the United States that can export liquified natural gas.
It already owns 25% of Cove Point LNG in Maryland, so the $3.3 billion cash purchase from Dominion Energy will give it a controlling 75% limited partnership stake. A unit of Brookfield Infrastructure Partners holds the remaining 25%.
The U.S. has become Europe's primary source of natural gas in the wake of Russia's decision to stop exports in response to sanctions over its invasion of Ukraine.
Glenview Trust CIO Bill Stone is quoted by CNBC.com as saying the move "builds on [Berkshire's] long-term theme of energy resources becoming more valuable and ownership of one of only a few U.S. LNG exporters."
Photo: Berkshire Hathaway Energy
Berkshire has also been building a stake in Occidental Petroleum, recently topping 25% with a series of purchases that began early last year. It is currently valued at $13.3 billion.
In addition, it reported owning a 7% stake in Chevron as of the end of March, currently worth more than $20 billion. It is the oil giant's second-largest shareholder, after Vanguard Group.
Last month, as part of an investigation into big insurers' "support" of fossil fuel, Senate Budget Commitee Chairman Sheldon Whitehouse (D-RI) wrote in a letter to Warren Buffett that Berkshire "sticks out as a key laggard that has not taken any steps to restrict its underwriting of investments of fossil fuel projects" and specifically noted its large Chevron position.
Buffett has said that he personally believes climate change is a "terribly important subject," but adds, "I don’t believe in imposing my political opinions on the activities of our businesses."
And on the business side, he doesn't believe climate change will happen quickly enough to hurt bottom lines in the foreseeable future.
At the 2014 Berkshire annual meeting he told shareholders, "I don’t think in making an investment decision on Berkshire Hathaway, or most companies — virtually all of the companies I can think of — that climate change should be a factor in the decision-making process."
VIDEO: Buffett: Climate change is not a factor in Berkshire's investing decisions (2014)
BUFFETT AROUND THE INTERNET
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HIGHLIGHTS FROM THE ARCHIVE
“Don’t go overboard on delayed gratification” (2019)
Warren Buffett has cultivated an almost miserly image over the years. While he says he was very frugal when he was younger, he has come to believe that all saving and no spending may not be the best way to enjoy life.
BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Jul. 14, 2023
Berkshire's top holdings of disclosed publicly-traded stocks in the U.S., Japan, and Hong Kong, by market value, based on today's closing prices.
Holdings are as of March 31, 2023 as reported in Berkshire Hathaway’s 13F filing on May 15, 2023, except for:
The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.
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Also, Buffett's annual letters to shareholders are highly-recommended reading. There are collected here on Berkshire's website.
-- Alex Crippen, Editor, Warren Buffett Watch
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