Amid a period when many investors opted to remain on the sidelines, notable strategic investors made significant wagers on media and tech companies in the previous year. To gain insights into where major money managers like Warren Buffett hold substantial ownership stakes, look no further than the annual influx of Schedule 13D and 13G reports.
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For those not well-versed in the intricacies of corporate finance, it’s worth noting that 45 days after the end of each year, companies are required to have submitted their 13D and 13G disclosure forms with the Securities and Exchange Commission (SEC). These reports are mandatory for investors who accumulate 5% or more of a company’s total stock issue (though even those with slightly less than 5% typically disclose). Beginning with this guide on monitoring significant investment moves, Variety will present a quarterly overview of the media and entertainment sector’s performance among the world’s most sophisticated stock pickers.
The importance of these annual filings (with a few additional ones mandated during the calendar year if a substantial stake is acquired) lies in their ability to provide a visual representation of the fluctuations, stability, and status quo among top stockholders, both for individual corporate giants and entire business sectors. The flow of capital among institutional investors, major hedge funds, and high-net-worth individuals offers a clear signal of the level of confidence in a company’s future prospects.
Sentiment holds a vital place in the world of investing. Moreover, understanding who owns what—and to what extent—is essential for gauging the sphere of influence wielded by these beneficial owners.
Before delving into findings from the 2022 filings, it’s worth mentioning that these filings don’t include prominent figures such as Fox’s Rupert Murdoch, Netflix executives Ted Sarandos and Reed Hastings, Disney’s Bob Iger, AMC Networks owner James Dolan, Warner Bros. Discovery’s David Zaslav, Apple’s Tim Cook, or Comcast’s Brian Roberts. The SEC requires specific individuals classified as “insiders,” which includes “officers, directors, and those that hold more than 10% of any class of a company’s securities,” to report using Forms 3, 4, and 5.
However, exceptions do exist. In 2022 and 2021, Meta CEO Mark Zuckerberg filed a 13G for his stake in the social media giant, having previously stuck to filing Form 4 in earlier years. Some situations necessitate the filing of both forms, such as Shari Redstone and National Amusements, the owner of Paramount Global.
But what are Schedule 13G and 13D forms?
Both Schedule 13G and Schedule 13D filings are commonly referred to as “beneficial ownership reports.”
While both are utilized to report ownership exceeding 5% of a publicly traded company’s total stock issue, the 13G is for those holding a passive stake, whereas the 13D is for an active stake. Owning 5% or more of publicly traded stock is considered a significant investment, prompting the SEC to mandate separate reporting. Any changes to the information within a 13G filing must be reported through an amendment.
Schedule 13G filings are shorter, streamlined versions of Schedule 13D filings. They have fewer reporting requirements compared to 13D filings, and the filer must meet specific SEC-listed exemptions to submit a 13G instead of a 13D. A 13G filing is allowed for both institutional investors and individuals who acquired a stake with no intention of influencing control.
Schedule 13G filings enhance transparency regarding major shareholders and aid other investors in making informed investment decisions.
While examining the 13G filings of prominent media giants, one can observe certain recurring names, including BlackRock and Vanguard Group. These asset management firms are prolific issuers of large passive index funds and invest on behalf of their clients.
As of 2022, BlackRock managed assets exceeding $8.5 trillion, while Vanguard’s assets under management (AUM) were approximately $8 trillion. Both firms frequently submit numerous 13G filings across a wide array of companies.
The surge in popularity of passive investing through index funds has led to concentrated corporate ownership. Even in their passive role, it’s undeniable that these major funds can exert substantial influence over the companies they hold in significant volume.
Unsurprisingly, companies such as Netflix, Microsoft, Comcast, Meta, Alphabet (Google), Amazon, Fox, Disney, Lionsgate, Roku, Paramount, AMC Networks, Warner Bros. Discovery, Nexstar, and Live Nation all feature Vanguard and BlackRock among their 2022 13G filers.
Additional indexes that appear frequently as significant investors in technology and media firms include Capital Research Global Investors, Fidelity Investments led by Abigail P. Johnson, and T. Rowe Price Associates.
What becomes intriguing is the subtle shifts in how much these indexes invest in these companies year after year. For instance, Vanguard increased its share in Nexstar from 8.93% to 9.17% in 2022, and BlackRock, which held no stake in the TV station group giant in 2021, claimed an 8.9% share in 2022.
However, the true value in these disclosures lies in identifying the individuals involved, such as Warren Buffett. Berkshire Hathaway, under Buffett’s stewardship, reported a 6.7% stake in Activision Blizzard—a new investment in the gaming company, which was pending acquisition by Microsoft as of 2022—and a 5.8% stake in Apple, an increase from the 5.1% reported for 2020.
Executive Filers: 2022 vs. 2021
Returning to the exceptions mentioned earlier, there are cases where high-level individuals within companies are among the 13G filers. This is where you’ll find CEOs, founders, chairpersons, and board members listed. They must also indicate their level of ownership in their respective companies and how it has changed year-over-year. Here’s a summary of notable names from the media and entertainment industry:
- Daniel Ek (Spotify): 16.5% stake (down from 16.7%)
- Martin Lorentzon (Spotify): 10.9% stake (down from 11.1%)
- Mark Zuckerberg (Meta): 14% stake (up from 13.6%)
- Sergey Brin (Alphabet): 5.82% stake (down from 5.9%)
- Lawrence Page (Alphabet): 6.12% stake (unchanged)
- Eric Schmidt (Alphabet): 1.13% stake (down from 1.16%)
- Jeff Bezos (Amazon): 12.3% stake (down from 12.7%)
- Stephen Cooper (Warner Music Group): 4.4% stake (unchanged)
- Anthony Wood (Roku): 12.1% stake (down from 13.2%)
- Shari Redstone/National Amusements (Paramount): 23.7% stake (unchanged)
- Richard Gelfond (IMAX): 5.66% stake (up from 5.1%)
- Kevin Douglas (IMAX): 5.8% stake (did not file in 2021)
With increasing macroeconomic uncertainties on Wall Street, there will likely be a considerable volume of shares changing hands in the coming months. We will continue to monitor the SEC website and return with an update on the latest batch of disclosures for the media and entertainment sector in late May.