4. Activision Blizzard, Inc. (NASDAQ:ATVI)
Paloma Partners Stake Value: $22,111,000
Percentage of Paloma Partners’ 13F Portfolio: 0.39%
Number of Hedge Fund Holders: 78
Activision Blizzard, Inc. (NASDAQ:ATVI), which is on the list of top 10 stock picks of Donald Sussman’s Paloma Partners, announced its third-quarter 2021 results on November 2. The American video game holding company’s revenue grew by 6.2% to $1.88 billion in the third quarter. Total MAUs for the third quarter was 390 million, compared to 408 million in the second quarter.
On November 3, MKM Partners analyst Eric Handler downgraded Activision Blizzard to “Neutral” from “Buy” with a price target of $75, down from $108. According to the analyst, the company’s reported delays of Overwatch 2 and Diablo 4 are no longer major growth drivers for 2022.
As of the end of the second quarter, 78 hedge funds tracked by Insider Monkey reported owning stakes in Activision Blizzard, Inc. (NASDAQ:ATVI). The total worth of these stakes is $3.65 billion. Paloma Partners holds 231,673 shares in the firm, worth over $22.11 million. The latest data reveals that the hedge fund’s stake in Activision Blizzard, Inc. stock increased by 3256% in the second quarter of 2021.
In its third-quarter 2021 investor letter, Cooper Investors mentioned Activision Blizzard, Inc. (NASDAQ:ATVI). Here is what the fund said:
“In late July the California Department of Fair Employment and Housing filed a complaint against Activision Blizzard. Based on a two-year investigation, it accused the company of failing to comply with the state’s workplace protection laws. Specifically: the unfair treatment of women including the lack of women in leadership positions, the difficulties they have faced in gaining promotions and discrepancy in pay. The suit also described Activision Blizzard’s culture as a “breeding ground” for harassment against women. The US Equal Employment Opportunity Commission also launched a lawsuit against the company along similar grounds.
Our investment in Activision Blizzard is predicated on an attractive industry backdrop for video game publishers, with positive trends for the owners of the best intellectual property as they monetise their content across multiple vectors (console/PC, mobile, Free to Play, Live Services etc.). It is our belief that they are the owners of the best portfolio of IP in gaming, and their strategy to focus resource here would lead to a significant increase in free cash flow generation over the coming years.
However, this is a moot point if the company is culturally unsound. Attractive financial outcomes cannot persist without the company culture necessary to support them. Further, Cooper Investors’ Responsible Investing framework codifies our belief that financial or shareholder outcomes, whilst important, are not the solitary performance indicator of a company.”
