April 2022 Pricing Commentary Equity and fixed income markets declined precipitously during the month of April as investor pessimism grew due to fears of rising interest rates, central bank monetary tightening, and Eastern European turmoil. Although corporate earnings have been consistently positive, investor skittishness has enveloped the marketplace, putting investment fundamentals, no matter how positive, as virtually irrelevant. A perfect example is the common stock of Activision Blizzard, held in all three ABC Funds. Activision Blizzard is the object of a $95.00 US cash takeover by Microsoft, which represented a premium of over 45% to Activision’s closing price in mid January 2022. However, the April 29th month end close of $75.60 was a 20% discount to the merger proposal. More importantly, one day later on April 30th, Warren Buffet announced at the Berkshire Hathaway annual meeting that Berkshire had purchased 9.5% of Activision’s shares as an attractive arbitrage deal. At this point, we believe that the takeover, already approved by Activision’s shareholders, will likely succeed. Overall, it is our view that within the present risk-off financial environment, in numerous cases, the “baby is being thrown out with the bathwater”. Consequently, despite the current market turmoil we are sticking to our optimistic investment stance and our diversified portfolio holdings with the expectation of improved market sentiment and performance by year end 2022. Irwin A. Michael, President I.A. Michael Investment Counsel Ltd.
