At a time when many investors were sitting on the sidelines, some well-knownstrategic spendersmade massive bets on media and tech companies last year. To get a better sense of where the largest money managers like Warren Buffett have sizable ownership stakes, look no further than the annual flood of Schedule 13D and 13G reports.
For those outside of the inside-baseball world of corporate finance: Forty-five days out from the end of the year, companies are required to have filed 13D and 13G disclosure forms with the Securities and Exchange Commission. These reports are required for investors who amass 5% or more of a company’s total stock issue (though investors that hold a stake slightly under 5% typically disclose, as well). Starting with this primer on how to monitor big-dollar investment bets, PvNew will offer an a quarterly survey of how the media and entertainment sector is faring among the world’s most sophisticated stock pickers.
The significance of these annual filings (with a few one-offs required to be filed with the SEC during the calendar year, if a very large stake is acquired) is that they offer a line chart to track the ups and downs and status quo among top securities owners, both for individual corporate giants and for business sectors in general. The movement capital among institutional holders, giant hedge funds and pools of high-net worth individuals send a strong signal about how much faith there is in a company’s future performance.
Sentiment is key in the investing world. And knowing who owns what — and how much — is also crucial to understanding the scope of influence of these beneficial owners.
Before we dive into some findings from the 2022 filings, we should note that what you won’t see in these filings are the likes of Fox’s Rupert Murdoch, Netflix bosses Ted Sarandos and Reed Hastings, names like Disney’s Bob Iger, AMC Networks owner James Dolan, Warner Bros. Discovery’s David Zaslav, Apple chief Tim Cook or Comcast CEO Brian Roberts. That’s because the SEC requires certain people deemed “insiders,” namely “officers, directors, and those that hold more than 10% of any class of a company’s securities” to report instead with Forms 3, 4, and 5.
But there are exceptions. meta CEO Mark Zuckerberg filed a 13G in 2022 and 2021 for his stake in the social media behemoth, when he’d stuck to filing Form 4s in previous years. There are also situations where both forms are filed, as is the case for Shari Redstone and National Amusements, owner of Paramount Global.
What are 13G and 13D forms?
Both Schedule 13G and Schedule 13D filings are also known as “beneficial ownership reports.”
While both are used to report ownership of 5% or more of a publicly traded company’s total stock issue, the 13G is for those with a passive stake, and the 13D is for an active stake. Owning 5% or more of a publicly traded stock is considered a sizable investment, and thus the SEC requires separate reporting. Any changes to the information within a 13G filing must be reported through an amendment.
Schedule 13G filings are shorter, alternative versions of Schedule 13D filings. There are fewer reporting requirements in a 13G compared to a 13D, and the filer must qualify for the SEC’s listed exemptions in order to file a 13G in lieu 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 provide transparency about the significant shareholders and allow other investors to make informed investment decisions.
Looking through the 13G filings of the largest media giants, certain names pop up frequently, such as BlackRock and Vanguard Group. Both asset management firms are large passive index fund issuers, and they invest in companies on behalf of their clients.
BlackRock’s assets under management (AUM) exceeded $8.5 trillion in 2022, while Vanguard’s AUM was around $8 trillion. Both firms often report many 13G filings across a wide range of companies.
The rise in popularity of passive investing index funds has created concentrated corporate ownership. Even in their hands-off role, there’s no denying the largest funds can exert enormous pressure on the companies they own in great volume.
It should be no surprise that Netflix, Microsoft, Comcast, meta, Alphabet (Google), Amazon, Fox, Disney, Lionsgate, Roku, Paramount, AMC Networks, Warner Bros. Discovery, Nexstar and Live Nation all count Vanguard and BlackRock among their 2022 13G filers.
Other indexes that pop up multiple times as significant investors in tech and media companies are Capital Research Global Investors, Abigail P. Johnson’s Fidelity Investments and T. Rowe Price Associates.
Where things start to get interesting is in the subtle movements between how much these indexes are investing in these companies year to year, with an example being Vanguard’s share of Nexstar increasing from 8.93% to 9.17% in 2022 and BlackRock, which had no stake in the TV stations group giant (which acquired the CW last fall) in 2021, taking an 8.9% share in 2022.
But the real meat to be found in these discloures is knowing the individuals who are in play, like Warren Buffett, whose Berkshire Hathaway reported a 6.7% stake in Activision Blizzard (a new investor in the gaming company, which is pending acquisition by Microsoft, as of 2022) and 5.8% in Apple, an increase of his 5.1% last reported for 2020.
Executive Filers: 2022 vs. 2021
Now back to those exceptions we mentioned above, where a few high-level people within companies are present among the 13G filers. This is where you’ll see many a CEO, founder, chairman and board member listed. They must also indicate the level of ownership in their respective companies and how it changes year-over-year. Here’s a rundown of boldface names from media and entertainment.
- Daniel Ek (Spotify) — 16.5% stake (down from 16.7%)
- Martin Lorentzon (Spotify) — 10.9% (down from 11.1%)
- Mark Zuckerberg (meta) — 14% (up from 13.6%)
- Sergey Brin (Alphabet) — 5.82% (down from 5.9%)
- Lawrence Page (Alphabet) — 6.12% (flat)
- Eric Schmidt (Alphabet) — 1.13% (down from 1.16%)
- Jeff Bezos (Amazon) — 12.3% (down from 12.7%)
- Stephen Cooper (Warner Music Group) — 4.4% (flat)
- Anthony Wood (Roku) — 12.1% (down from 13.2%)
- Shari Redstone/National Amusements (Paramount) — 23.7% (flat)
- Richard Gelfond (IMAX) — 5.66% (up from 5.1%)
- Kevin Douglas (IMAX) — 5.8% (did not file in 2021)
With macroeconomic jitters continuing to rise on Wall Street, there’s sure to be a lot of shares trading hands in the coming months. We’ll keep refreshing the SEC website and be back in late May with another report on the latest round of disclosures for the media and entertainment sector.
(Pictured top: Warren Buffett, Mark Zuckerberg and Jeff Bezos)
