In my previous blog post Taking Profits in Towerstream (TWER), I mentioned that I would reinvest half the proceeds from Towerstream into the gaming industry leader Activision Blizzard (ATVI), making the company not only the largest position in the SINLetter Model Portfolio but also the largest position in my personal (after tax) portfolio.
While I occasionally make some risky trades, for the most part I am a conservative long-term oriented investor with the stock portion of my portfolio spread out between 15 to 25 stocks. Excluding company stock, I tend to keep individual position sizes to no more than 5% of the overall portfolio. Research has demonstrated that the benefits of diversification diminish once you have over 30 stocks in your portfolio. However in the case of Activision Blizzard, I have started building a more concentrated position that I expect to pay off in the next two to three years.
This post is about the key reasons I personally believe Activision Blizzard appears to be an attractive investment and why it now accounts for 13% of the SINLetter model portfolio and 10% of my personal portfolio. My goal is to eventually build this position until it represents 20% of my personal portfolio. Since I have already covered the basics of why I like Activision Blizzard in the September 2008 investment newsletter, here are 10 reasons for making Activision Blizzard a core holding.
Activision released the highly anticipated game Call of Duty: Modern Warfare 2 last week and racked up $310 million in sales from the United States and United Kingdom over a 24 hour period. To put this in perspective the blockbuster Batman movie "Dark Knight" brought in $155 million during its opening weekend. With Christmas right around the corner, the final sales numbers for this edition of Call of Duty are going to be much bigger.
World of Warcraft: Cataclysm for the MMORPG (Massively Multiplayer Online Role Playing Game) World of Warcraft (WOW) is expected to be released in 2010, bringing two new playable races to the 11.5 million active users who pay every month (or by the hour in China) to continue playing World of Warcraft.
The Blizzard division of Activision that created WOW also has another potential blockbuster game called Starcraft 2 scheduled for release in the first half of 2010.
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