- Warren Buffett’s Berkshire Hathaway disclosed a $4.2 billion stake in HP on Wednesday.
- Berkshire has built an 11.4% ownership stake in the personal-computer and printer company.
- Buffett recently piled $7 billion into Occidental Petroleum, and agreed to acquire Alleghany.
Warren Buffett’s Berkshire Hathaway revealed a $4.2 billion stake in HP on Wednesday, as the famed investor’s company continued its buying spree with a surprise bet on the storied technology company.
Buffett’s conglomerate disclosed it owned 110 million HP shares on April 1. It spent about $400 million to boost that position by 10% to 121 million shares during the first three days of this week. It now owns 11.4% of HP, making it the personal-computer and printer maker’s largest shareholder.
HP shares jumped as much as 14% in premarket trading on Thursday. They were priced at just under $35 as of Wednesday’s close, representing an 8% decline this year, but a 150% gain since the pandemic caused the stock market to tank in the spring of 2020.
Hewlett-Packard spun off its enterprise business in 2015, retaining the personal-computer and printer business under the HP name. Bill Hewlett and David Packard founded the company in a California garage in 1939, when Buffett was 8 years old.
Buffett has avoided technology companies for most of his career, preferring to buy simpler, more predictable businesses. However, he counts Apple — founded by Steve Jobs and Hewlett-Packard engineer Steve Wozniak in another California garage in 1976 — as easily the largest holding in Berkshire’s stock portfolio.
HP generated $63.5 billion in net revenue and $6.5 billion in net income in its last financial year, yet its market capitalization was only $37 billion as of Wednesday’s close. Its modest valuation relative to its sales and profits undoubtedly appealed to Buffett and his team.
Buffett has disclosed several big-ticket purchases in recent weeks. Specifically, he plowed $7 billion into Occidental Petroleum stock over the course of 11 trading days, and struck a deal to buy insurer Alleghany for nearly $12 billion.
The investor had been struggling for years to find bargains with stocks near record highs, and private equity firms and special-purpose acquisition companies (SPACs) bidding up the price of acquisitions. Berkshire’s current buying boom could mean the deal drought is finally over.
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