stonks
What’s your point?
1 Like
stonks
2 Likes
that company hasn’t made a good game in a long time MSFT way overpaid
The chances of the deal going through are waaaaay better than 50%, so either you are swimming in alpha or your ‘floor’ is wrong.
That is very possible, I mean I certainly wouldn’t have bought ATVI at $95 as an individual investor. MSFT’s ownership makes it more valuable through synergy, but if I were a MSFT shareholder I definitely wouldn’t be thrilled with this.
I do wish I were scrounging for value stocks a few months back, because in December when Buffett bought it, it would have popped up based on my criteria and been borderline at worst. Oh, well. Who knows whether Buffett bought it for value or because his buddy Bill Gates told him what was about to happen.
Yeah I’m estimating 90% based on what I’ve read, and maybe more like 95%, but I wouldn’t bet on it if it were priced anywhere close to that - I have plenty of room to be waaaay wrong on that estimate and still be +EV.
Well, I should be clear on the “floor.” I’m just saying absent the acquisition in a vacuum. It was trading at $65 before the deal was announced, I suppose it could be argued that there was some insider trading at the real floor is like $60 plus the MSFT penalty fees, so like $63. Either way, there’s enough room here that the precision isn’t that important in determining how profitable it is. Plus a few big funds clearly agree on this being a good price to buy at. If there weren’t any 13G’s filed in the last couple weeks, I’d be more skeptical.
So if the deal evaporated and nothing else changed, I’d expect it to go back to $57 to $65 plus the penalty fees. Of course if the entire market is in the shitter, the downside risk gets bigger because it would get pulled down with it.
Like to clarify what I’m getting at here. If @grue’s point is that the CEO is a piece of shit, I mean, I was able to deduce that by the company culture at Activision and the seual harassment lawsuit. I don’t see where making a merger arb play amounts to condoning that in any way. It’s not like if the merger falls through the company is going to go to zero, and there will be plenty of pressure on Microsoft to clean things up there.
If grue’s point is that he’s a MAGA Republican, and it’s immoral to invest in his company, then I’d say:
A) It’s not like I’m enriching him in any way by buying.
B) I hope you don’t own any stocks/index funds, cause probably somewhere between 70% and 90% of CEOs are Republicans.
If the point is just that he’s a piece of shit and that has nothing to do with the investment, then yeah, dunk away, he sucks. Hopefully Microsoft pushes him out ASAP.
CW,
I absolutely love you and your posting.
Do you really think after an afternoon of research you have an edge over the dozens of hedge funds that exclusively do merger arbitrage? Do you see how preposterous that is?
1 Like
No, I don’t think I have edge on them on a trade like this, but BlackRock bought it at $79 and Capital Group bought it at $81.50. I got it at $81.08. I’m betting with big hedge funds, not against them.
BlackRock’s position was for over $3B, Capital Group’s is around $3.4B. Vanguard’s is around $5.25B.
I think any stock that has a P/E ratio of - is going to have a bad year.
Good thing there were no large institutions selling!
2 Likes
I don’t really have a point just that um blizzard sucks and I would never put $ on a company that sucks if there was any way to avoid them in mutual funds but it doesn’t appear to.
The $65 pre deal included the possibility of a Microsoft takeout so the floor post a failure wouldn’t be 65.
1 Like
I could be totally ignorant here, but you’re saying that Fidelity and Vanguard are doing M&A arbitrage? Aren’t these pretty much just market cap weighted index fund shops? I guess I assume they probably had to buy ATVI because it’s big and it went up a lot.
What difference does it make? Whether or not I own some of their stock makes no difference whatsoever for their CEO or the company. At some point in the next 15 months, the stock is going to $95 no matter what any investors do.
Perhaps, but I found no news coverage of a possible acquisition before it was announced on 1/18, and some coverage called it a surprise.
I could be wrong and they could be index fund buys, but Vanguard’s stake was north of 8% of the shares, so I thought they must have a subsidiary investment fund. I guess their index funds could easily be large enough to hold that big of a position.
Cathie Wood still making 9 gigs annually on her dogshit fund. Stonks.
https://twitter.com/fattailcapital/status/1494451588798332932?s=21
1 Like
Not at all.
Do you have any specific [quote=“commonWealth, post:5719, topic:3997, full:true”]
No, I don’t think I have edge on them on a trade like this,
[/quote]
Do you have a time frame for how long you would like to hold atvi, or a sell point?
I mean, it’s around 17% over ~16 months (or less). I think in the current market that’s fantastic, but I could see some funds being non-plussed by ~13% a year. Even at 90% likelihood, that gets pretty close to the average annual returns of the market.
So if you are not bearish on the market like I am, maybe this doesn’t look so great to you.
I mean over a lifetime, finding ways to beat the S&P by a couple percent translates pretty well.
That’s my preference, but in looking for more of that I found this.