Warren Buffett's Berkshire Hathaway reveals a $5 billion stake in HP — after plowing $400 million into the tech stock in 3 days
- Warren Buffett's Berkshire Hathaway disclosed an 11.4% stake in HP on Wednesday.
- HP shares climbed as much as 18% on Thursday, valuing Berkshire's stake at $5 billion.
Warren Buffett's Berkshire Hathaway revealed an 11.4% stake in HP on Wednesday, as the famed investor's company continued its buying spree with a surprise bet on the storied technology company. The disclosure sent HP stock up as much as 18% on Thursday, lifting the value of Berkshire's holdings to $5 billion.
Buffett's conglomerate owned 110 million HP shares on April 1, regulatory filings show. 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 ranks as the personal-computer and printer maker's largest shareholder.
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.