Yesterday Microsoft announced it would buy Activision Blizzard for $95/share. I bought shares of Activision in the Pawleys Dividend Fund, LP, and for clients in Separately Managed Accounts in late December for around $66.40/share. This means in three short weeks, we have a gain of +43% to the cash buy-out price. This is a phenomenal result!
Activision marks the 11th buy-out of stocks we have invested in for clients, which is incredible given that at any time I am managing only 30-35 individual stocks. I am not trying to pick potential buy-outs, but it validates my selection criteria, which is identifying stocks that others deem to be very valuable, and are willing to pay big premiums to what we are paying. I continue to believe that investing in stocks of companies with little or no debt, good earnings growth, and rock-solid cash-flow will best position portfolios to outperform the markets in a myriad of economic environments.
Proper portfolio construction and disciplined rebalancing is key to achieving good performance, but selecting quality stocks is just as critical. The average gain on these buy-outs has been +40% – the list is attached below for those who are curious to see the history. I am very thankful to have the trust and confidence of everyone, and am so happy to have delivered a nice result to start 2022.