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Activist investor ValueAct believes Nintendo can rival Netflix, Disney+

San Francisco company has built up $1.1 billion stake in the platform holder over the last year

A Nintendo investor believes the company can rival the biggest digital services if it continues to build on the success of the Switch and its world famous IP.

Reuters obtained a letter from ValueAct Capital Partners, which disclosed the firm has purchased around 2.6 million shares in the company since April 2019.

This gives ValueAct a 2% stake in Nintendo, worth over $1.1 billion.

In the letter, the investor said it has has been meeting with Nintendo's management and believes in the vision of president Shuntaro Furukawa.

A Nintendo spokesperson confirmed to Reuters that the company is "aware that ValueAct is holding a stake" and has "been engaged in dialogue with them," but does not disclose the details of its conversations with investors.

ValueAct says there is room for the platform holder to grow, both in the games space and as a broader entertainment company.

"We believe Nintendo will be one of the largest digital media services in the world, in a category with the likes of Netflix, Disney+, Tencent Interactive Entertainment and Apple Music," the company wrote.

It's worth noting Nintendo is already taking steps to broaden its offering, with projects like the Super Nintendo Land section of the Universal Studios theme park in Osaka, and the upcoming animated feature film from Despicable Me creator Illumination Entertainment.

The letter goes on to say Nintendo has not thrived as much as other games publishers such as EA and Activision, although its fortunes have improved over the course of the last ten years.

ValueAct believes the digital transition Nintendo is currently undergoing, presumably a reference to the improved store and online services offered through the Switch, will benefit the platform holder greatly.

ValueAct has been described as an activist investor, one that uses its stake and influences to drive change at the company.

According to a Business Insider report, the company demanded seats on Microsoft's board back in July 2013, amid skepticism around then-CEO Steve Ballmer's plan to focus on services and Microsoft's own devices. Ballmer left the company a month later.

ValueAct has not asked for board representation, but has said it can offer advice to Nintendo having served on boards at Microsoft and Adobe.

Seeking Alpha reports Nintendo's shares rose by 4.9% following Reuters' report on ValueAct's stake.

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