Warren Buffett’s Berkshire Hathaway Inc. has built a stake of more than 11% in computer-and-printer maker HP Inc., HPQ 14.75% marking another foray into computing by the once technology-averse billionaire investor.
At Wednesday’s closing share price, the holding, of nearly 121 million shares, was worth about $4.2 billion. The share purchases were disclosed in two securities filings Wednesday.
After long expressing wariness about investing in tech, the 91-year-old Mr. Buffett has taken big positions in two other storied tech brands in recent years, starting with an ill-fated bet on International Business Machines Corp. before making a far more successful investment in Apple Inc. AAPL 0.18%Stock and index performance, past two yearsSource: FactSetHPS&P 500 IndexMay 2020’21’22-250255075100125150%
Berkshire began betting on IBM IBM -0.65% in 2011 but within a few years had reversed course and had sold out most of its stake by early 2018. Mr. Buffett’s colleagues first took a $1 billion toehold in Apple in 2016, and since then Berkshire has increased its stake, to nearly 5.6% as of the end of 2021. The Apple position was worth some $161 billion at the end of last year and is among Berkshire’s biggest holdings.
HP shares were the biggest gainers in the S&P 500 Thursday, rising 15% to end at $40.06. That was a record closing high, according to FactSet. Berkshire rose 0.5%.
The purchase makes Berkshire the single largest shareholder in HP. Before this, HP’s biggest investors were Vanguard Group and BlackRock Inc., with stakes of nearly 11% and slightly more than 10%, respectively, according to S&P Global Market Intelligence data.
The Omaha, Neb., conglomerate has made a string of investments this year in more traditional sectors of the economy. It agreed to buy the insurer Alleghany Corp. for about $11.6 billion last month, and recently boosted its position in Occidental Petroleum Corp. to nearly 15%.
The deals add to Berkshire’s array of railroad, energy and consumer businesses, among other holdings. It reported $90 billion in net earnings for 2021, a record.
“Whatever our form of ownership, our goal is to have meaningful investments in businesses with both durable economic advantages and a first-class CEO,” Mr. Buffett said in a letter to shareholders in February. “We own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves.”
HP lifted its annual profit outlook in late February. The Palo Alto, Calif., company reported strong sales of computers to businesses in the first three months of its financial year but warned that Russia’s invasion of Ukraine would dent its second quarter.
Last month, the company agreed to buy Poly, a maker of workplace communications products, for $1.7 billion in a bet on the rise of hybrid work.
While HP is synonymous with Silicon Valley, the company looks more like a classic Buffett investment than many tech startups. Although HP’s share price hit a record close last month, the stock remains modestly valued when set against its expected earnings. As of Wednesday, it traded at a price of about eight times expected earnings for the next 12 months, Refinitiv data shows.
HP also has a long history, dating back to 1939 when predecessor Hewlett-Packard Co. was founded in a Palo Alto garage. That company split in two in 2015, with its business-focused division becoming the separately traded Hewlett Packard Enterprise Co.
Source: WSJ.COM
