Here's Why Buffett's Activision Arbitrage Play Isn't Really a Gamble

At Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) annual shareholder meeting on April 30, Warren Buffett revealed that Berkshire had increased its stake in Activision Blizzard (NASDAQ: ATVI) to 9.5% of the company. And most of this stake was accumulated after Microsoft (NASDAQ: MSFT) had agreed to buy the video game maker for almost $69 billion.

Buffett's move drew criticism from some investors, especially since he had just made negative comments about the stock market turning into a casino. After all, a merger arbitrage play (more on what that is in a bit) is certainly a more bet-like investment than Buffett typically makes. However, when you take a step back from the deal, it starts to make a lot more sense.

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Source Fool.com