HP shares zoom 15% after Buffett reveals a $4.2 billion stake.
In Wednesday night’s regulatory filing, Berkshire disclosed that it had nearly 121,000,000 HP shares. This includes 11.1 million bought this week.
After rising to $41.46, shares of HP rose $5.15 or 14.8%, to close at $40.06
Stock prices of companies often rise when Berkshire discloses stakes. This is regarded as an approval stamp from Buffett.
Berkshire doesn’t regularly invest in technology companies despite having a $161.2 million stake in Apple Inc at the end of 2021. Buffett views the iPhone maker as more of a consumer business than he can comprehend.
HP stated in a statement that Berkshire Hathaway was one of the most respected investors worldwide, and they are welcome to invest in our company.”
HP was separated from Hewlett-Packard in 2015. This is due to increased demand from people who spend more time at home learning and working.
Last month, the Palo Alto-based company purchased Poly, an audio and video accessory maker which was once known as Plantronics, for $1.7 billion.
Buffett has had difficulty investing Berkshire’s cash at $146.7 billion by year-end due to high valuations and competition from other investors.
The Omaha-based conglomerate, headquartered in Nebraska, said it had committed $22 billion over the past month to make significant investments.
These include a 14.6% stake at Occidental Petroleum Corp. and an $11.6 billion purchase by insurer Alleghany Corp. This is Berkshire’s biggest acquisition since 2016.
Berkshire also has various businesses, including Geico auto insurance and BNSF railroad.
It didn’t immediately respond to our requests for comment.
Mark Cash, a Morningstar analyst, said HP could appeal to Berkshire as HP aggressively returns capital to shareholders through stock buybacks or higher dividends.
Cash stated that HP operates in markets where it is difficult to grow at high growth rates sustainably. Therefore, focusing on margins or returns is the best way for shareholders to be rewarded. “HP can be considered a value investment within tech.”
In 2021, Berkshire bought $27 billion worth of its stock.