Warren Buffett bought 9.5% of this company in 2022. Should I buy in now?

Last year, Warren Buffett announced that he bought 9.5% of Activision Blizzard (NASDAQ:ATVI) through Berkshire Hathaway. Wall Street moguls buy massive shares after Microsoft announced that it will acquire the game specialist.

Buffett has bet almost $5bn in acquisitions going ahead. Should I do the same with the smaller amount of cash available?

Microsoft’s monopoly

To the surprise of the entire video game industry, technology specialist Microsoft announced that it will acquire Activision Blizzard in January 2022. The all-cash purchase is set to cost the Xbox maker $68.7bn at a price of $95 per share.

On the announcement, the stock price jumped nearly 40% before falling slightly to $72-$80 per share in the past year.

The stock price hasn’t reached the price Microsoft plans to pay because of regulatory issues.

Activision Blizzard is a giant video game publisher. The company is so big that no other independent company comes close to its output and influence on the console gaming market. The biggest rival Electronic Arts‘ The market capitalization ($35.65bn) is about half of the value proposed by Activision Blizzard.

The purchase would make Microsoft the third largest gaming company in the world. But, Sony (the second largest) has fought hard against acquisitions.

Regulators around the world have been scrutinizing these acquisitions to see if they violate antitrust laws. But Microsoft says that because it is only the third largest player by revenue, it is not a monopoly. However, regulators do not always agree.

Buffett bet

Warren Buffett’s massive purchase of Activision Blizzard shares shows he’s putting his money where his mouth is. He believes that the deal will be subject to regulatory scrutiny, so in his opinion, there is a possibility of easy money to be made.

Currently, the stock price is around $75. If the acquisition goes ahead, there is a profit of about $20 per share that can be bought now. Buffett stands to make north of $1bn if the deal goes through.

So should I follow him and invest my own money in Activision Blizzard stock? Yes, I actually bought shares in the company a week before the acquisition announcement at $62.35 per share. I sold the positions on the day of the announcement for $84.95 each. This is a quick change for me as I am generally a long-term investor.

I have no desire before the company will be acquired, but I like to take a quick profit.

Early last year, I was convinced that the deal would go through, just like Warren Buffett. But, now I’m not sure. Microsoft has tried hard to convince regulators in Europe and the US that the deal is good for the industry. However, as mentioned, they disagree.

The US Federal Trade Commission is trying to block the acquisition, although Microsoft intends to fight it in court. In short, the deal went awry.

I still think that I will buy the stock again because the price has dropped to $72. However, I am not as confident as Warren Buffett, and I am investing now, it will be a pure gamble. I’m glad I sold the stock on the day of the announcement. I think I’ll stop as I go along with this.