1. Activision Blizzard, Inc. (NASDAQ:ATVI)
Number of Hedge Fund Holders: 129
Activision Blizzard, Inc. (NASDAQ:ATVI)’s second quarter of last year report showed that the company’s mobile gaming division raked in more revenue than the console and PC divisions combined. Activision Blizzard, Inc. (NASDAQ:ATVI) is behind some of the biggest and most famous mobile games in the world, including COD Mobile and Candy Crush.
As of the end of the fourth quarter of 2022, 129 hedge funds tracked by Insider Monkey had stakes in Activision Blizzard, Inc. (NASDAQ:ATVI). The biggest stakeholder of Activision Blizzard, Inc. (NASDAQ:ATVI) is Berkshire Hathaway of Warren Buffett with a $4 billion stake.
Broyhill Asset Management made the following comment about Activision Blizzard, Inc. (NASDAQ:ATVI) in its Q4 2022 investor letter:
“Shares of Activision Blizzard, Inc. (NASDAQ:ATVI) gained 14% for the twelve months ending December 2022, but we managed to lose money on our investment, purchasing shares after Microsoft’s announced acquisition. In hindsight, we were too quick to establish our position upon announcement of the deal. What we initially saw as an attractive spread became much more attractive throughout the year. That being said, we’ve learned by experience that passing up fifty cent dollars laying on the street because they may be later mistaken for quarters, usually results in leaving a lot of money on the table. Most of the time, it’s not long before others come to the realization that they were, in fact, dollars all along. While we have to sometimes remind ourselves of this particular market peculiarity, we’ve also learned that the best approach is to pick up some of those fifty cent dollars when you see them, leaving some on the street to be picked up later should they be mistaken for quarters. In the case of Activision, we continued picking up shares on weakness throughout the year.
While seemingly daily headlines concerning the trials and travails of the pending acquisition have captivated investors and driven short-term volatility in the stock, we think consensus has completely overlooked the exceptional fundamentals of the business, which have inflected sharply higher. Activision recently reported fourth-quarter earnings per share of $1.87 or nearly 25% higher than the average analyst estimate of $1.52, which barely budged over the past three months. Performance was largely driven by the company’s flagship Call of Duty franchise, as Modern Warfare II posted record sales for an opening quarter. Management expects full-year revenue growth of “at least high teens,” which will likely be an outlier in a market full of declining estimates (more on this next). Bottom line: while shares have been rangebound, held at the mercy of regulators, we believe our margin of safety has increased during the year as investors appear uninterested or unaware of the company’s increasing long-term intrinsic value.”
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