SportsFan581
Member
I would certainly hope that retail buy-in would be low after a failed merger attempt, but they do say that common sense isn't all that common, so who knows.
Microsoft / Activision Deal Approval Watch |OT| (MS/ABK close)
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I would certainly hope that retail buy-in would be low after a failed merger attempt, but they do say that common sense isn't all that common, so who knows.
ChiefDada
Gold Member
Hmm I'm having a difficult time understanding you guys' perspective. I agree market cap usually doesn't mean much but in the case of Activision, market price was derived precisely from MS purchase offer, so in the here and now it's far more useful than literally any other academic valuation you could apply to a firm. If EA's valuation multiple is more favorable than Activision right now (haven't dug in myself) that's great. But we wouldn't know how grounded in reality it truly is unless/until a hypothetical acquirer makes an offer. Finally, the earnings multiple becomes more insignificant imo because Microsoft doesn't intend to maintain Activision operations in the same manner that current management does today; the business model will change dramatically with Microsoft's push towards Gamepass. For these reasons, I would say that MS valuation was art heavy/science-lite, therefore any similar company (mega game publishers) that experienced a valuation uptick as a result of this deal is a shift away from reality. Unless someone can prove to me otherwise, I'll say there are no similar companies who have the clear operational priority and liquidity access that Microsoft has/had that would seek a similar purchase with the remaining large publisher targets available in the market.
GHG
Member
I'm just going to say this, the order book today on the buy side was predominantly retail.
Lemmings are buying at the top.
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SportsFan581
Member
Kilau
Member
Yep, he said it was for the money. For sure I would probably die laughing if Bobby double crossed MS at the last second, but I think that is a very small to nonexistent chance. He could be running all of Xbox within a year.
bitbydeath
Member
Why would he do that if this was a sure thing?Told you guys Buffet was unloading:
Berkshire Hathaway cuts stake in Activision to 1.9% from 6.7% By Investing.com
Berkshire Hathaway cuts stake in Activision to 1.9% from 6.7%m.investing.com
Bitmap Frogs
Mr. Community
Considering the offer was made after a storm of sexual offenses tanked the valuation, with these in the past and a new live service game launched with great success, if I were in the ATVI board I would put the screws to microsoft and squeeze some more money from them: a) they can pay it b) they've sunk a year and a half of massive pr, consultancy and lawyer expenses into the deal.
mayham2199
Member
No chance he's running Xbox. I would be shocked to see him leave this deal behind.
Kilau
Member
He can make more money moving that investment to something else rather than waiting weeks for the extra $1-2 per share.
bitbydeath
Member
What?
He'd be intentionally losing millions of dollars.
DryvBy
Member
Because the stock is about to go bye bye?
kvltus lvlzvs
Member
Kilau
Member
Not if that money invested in ABK right now could grow better in a different opportunity.
bitbydeath
Member
If the acquisition went through it would have shot up right? That's what everyone like Lulu is waiting on.
bitbydeath
Member
Better than a 67B buyout?
Pop
Member
It's a wrap guysTold you guys Buffet was unloading:
Berkshire Hathaway cuts stake in Activision to 1.9% from 6.7% By Investing.com
Berkshire Hathaway cuts stake in Activision to 1.9% from 6.7%m.investing.com
DryvBy
Member
It depends I'd think. If this is peak because the stock is about to become MS then he probably is good pulling it. I really don't know. One of my friends works in Wall St so I'll ask his take on that.
Sleepwalker
Member
You dont get to where he is at by not realizing gains.
bitbydeath
Member
And losses.
ToadMan
Member
Markets are rallying and right now ATVI is a dead stock. It cannot go any higher while the acquisition price caps it.
From the perspective of investment, ATVI is not a viable stock now, so I think it makes sense to move that capital to other stocks which will show growth.
Bear in mind Warren Buffet is a value investor - he buys and keeps stock long term. As things stand ATVI has no long term.
Kilau
Member
Well, this all happened by June 30th, so hard to say why exactly unless he was spooked by the amazing case the FTC presented. Maybe he was betting on it failing lol.
ToadMan
Member
Buffet hasn't made a loss on ATVI.
Sleepwalker
Member
He or rather they defined a strategy when entering the position with a defined risk and a defined profit goal, that goal has at least partially been achieved, so a portion of the position has been closed. Any other external factor is just noise.
IntentionalPun
Ask me about my wife's perfect butthole
Because it's:
- Not a sure thing, just really close to it
- The valuation of ATVI is going to be stuck where it's at for probably 4-6 weeks
Moving the money now means they don't think it's closing imminently would be my guess.
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GHG
Member
At least today you have that sense of a sure thing, even if it's just a dollar or two per share. If the whole thing blows up what would these "lemmings" even be looking at?
But this isn't really something I watch or pay that much attention to.
My guess is that those that got in today were hoping for a quick win (albeit a small one) and the deal closing today or tomorrow. I call them "lemmings" because most of these people will not get out despite a change in circumstance (should it not formally go through tomorrow before the deadline is up). The psychology is important to understand, nobody likes to admit they are wrong so they will stubbornly stay in it until it hits 95. You see this time and time again across the market, people turning what as originally a "trade" into and "investment" and thus a new bagholder is born.
Buying shares in the 93 range for a stock that effectively has a cap of 95 for the forseeable future is a nonsensical way to tie up your money. You can look at any stock in the S&P and find better intra-day movement than that.
Greed kills and he understands that better than most (which is why he's been so successful). He got in just before the deal was announced and has been gradually offloading since - 10-15% return in about a year, thank you very much and goodbye. This is a stock that has a "cap" on any potential profit while this is going on since it's not going above 95, so he knows exactly how much he's potentially leaving on the table at any point.
When you have the ability to amass positions of the size that he's able to you have no choice but to get in and out gradually because the liquidity simply isn't there on most days to be able to adjust your position without spooking the market (in the event of a large sell-order).
His recent decisions are disconnected to the current state of the deal but it serves as a lesson and demonstration in risk management. He offloaded most of his position on the way up locking in sizable amounts of profit and has now left a remaining 1.9% in for "bonus money".
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Headline is misleading. Makes you think they just unloaded almost 5% today. They've been unloading all year particularly when things were looking grim. At this point where the stock is only $2-$3 from the $95 acquisition price selling wouldn't be such a bad idea. Managing the risk with not too much downside.Told you guys Buffet was unloading:
Berkshire Hathaway cuts stake in Activision to 1.9% from 6.7% By Investing.com
Berkshire Hathaway cuts stake in Activision to 1.9% from 6.7%m.investing.com
bitbydeath
Member
So he either expects to buy back-in before closure later or has lost confidence it will happen?
Sleepwalker
Member
He's still in the position, just not fully sized. Will just sit back and relax now most likely.
Unknown Soldier
Member
Which makes literally no sense when the difference between SP and buyout price is less than $1 now. You're supposed to play merger arbitrage when the differential is $20, not $1
I've personally only played merger arbitrage once in my life and what I found was the time from announcement to actual closing was so long that I didn't really even make that much money. For anyone who cares, it was when Nvidia acquired a company named Mellanox, I think I bought some at $107 and the agreed acquisition price was $120, and the regulatory muster for that one dragged on over a year too, ultimately it cleared and I got to fill out some fun forms and I was paid out at $120 per share and it wasn't worth it more than year later.
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gametimedecision
Gold Member
I'm convinced this deal could close and we will still have people in here confident that it's dead
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GHG
Member
Last year, they were selling from Q3 onwards last year.
He's made his money on this one, not much more juice to be squeezed, on to the next.
bitbydeath
Member
bitbydeath
Member
Maybe, you're wrong?
It's the smart thing to do if you ask me. It's pretty much at the offer price. If it fails or goes through it's no risk to offload but a risk no matter how small to keep it for little gain. If on the small chance it fails and it drops again he can buy back up. The question is when he unloaded between that date range.Told you guys Buffet was unloading:
Berkshire Hathaway cuts stake in Activision to 1.9% from 6.7% By Investing.com
Berkshire Hathaway cuts stake in Activision to 1.9% from 6.7%m.investing.com
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Thirty7ven
Banned
Waiaminut
What's going on here, people saying the deal is dead what?
What's going on here, people saying the deal is dead what?
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CoreyFlawless
Member
I'm still surprise this going thru or sound like it is. Since when first cma block it. I assume it was a done deal that it more likely done
GHG
Member
Meaningless to him. He will look at percentage returns and percentage returns only, the money takes care of itself when you do it on that basis.
Right now the percentage return opportunity is very low, has a poor time horizon for said return (money will potentially need to be tied up for the remainder of the year) and has a poor risk profile. The stock was trading at $93 today and we know the max this can go to is $95. Let's also make a conservative assumption that the lowest this falls to is $85 should the deal fall through:
- Max return - 2.1% gain ($93 - $95)
- Risk - 9% loss ($93 - $85)
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UPDATE 2-Microsoft in talks to extend deal contract with Activision -source
Microsoft Corp is in talks about an extension of its acquisition contract with video game maker Activision Blizzard, which is set to expire on Tuesday, so the parties can overcome the remaining regulatory hurdles to their $69 billion deal, a person familiar with the matter said on Monday...
finance.yahoo.com
Seems like the parts are trying to negotiate an extension to the deal. Will Kotick try to ask for more money?
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adamsapple
Or is it just one of Phil's balls in my throat?
Aeyoooo
"The Gamers" are taking their lawsuit to the supreme court
"The Gamers" are taking their lawsuit to the supreme court
HeisenbergFX4
Member
GHG
Member
adamsapple
Or is it just one of Phil's balls in my throat?
Mr. Boofing's gonna give an opinion on this one personally, I have a feeling.
Mr Moose
Member
Topher
Identifies as young
Aeyoooo
"The Gamers" are taking their lawsuit to the supreme court
They will do what the FTC was incapable of, it's obvious
Varteras
Gold Member
Aeyoooo
"The Gamers" are taking their lawsuit to the supreme court
Do not underestimate Clarence Thomas. That man gives no fucks and is undoing everything.
That is the face of a man who wants to watch it all burn before he dies.
Aguero9320
Member
There's a secret clause in the final agreement inserted by Bobby that will trigger five minutes before COD appears on Game Pass - it reverses the sale and transfer all of Microsoft's bank account into Sony's and all of the screens in Redmond show a video of Jim Ryan laughing maniacally like the joker.
Seriously, this needs to end. I can't take many more QAnon style conspiracy theories.
ChorizoPicozo
Member
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