April 8, 2022
HP shares soared after Berkshire Hathaway invested $4.2 billion, or an 11.4% stake in the company.
Berkshire Hathaway, owned by billionaire Warren Buffett, said in its filing on Wednesday that it owned nearly 121 million HP shares, including 11.1 that were bought this week.
Berkshire is known not to invest in tech companies, which surprises experts.
Morningstar analyst Mark Cash explained the likely reason for the investment, saying HP could please Berkshire because HP is aggressively returning capital through share buybacks and higher dividends.
“HP operates in markets that are challenging to (durably) grow at heightened rates, so focusing on margins and returns is the best way to reward shareholders. Within tech, HP can be considered a value play,” Cash said.
Buffet struggled to invest Berkshire’s cash estimate of $146.7 billion, owing to high valuation and competition from private equity and other investors.
But times are changing as the company announced $22 billion in investments in key sectors, including a 14.6% stake in Occidental Petroleum and an $11.6 billion acquisition of insurer Alleghany.
The sources for this piece include an article in Reuters.
