Warren Buffett's Berkshire Hathaway buys 11.4% stake in HP

Warren Buffett's Berkshire Hathaway has taken up a double-digit stake in PC and print biz HP Inc's stock worth about $4.2 billion, a move that sent the company's share price up by 10 percent. The purchase, confirmed in a SEC filing by the investment vehicle on 6 April, saw roughly 121 million HP shares shift over to the new …

[Yet Another Anonymous coward]

That's all?

14% stake for $4bn, there are 'we have nothing but an unpronounceable name and a twitter account' fintec startups worth that.

HP should just rename itself sproingworrzel claim that it does crypto in the metaverse with AI and cash out before anyone notices.

[Peter2]

Re: That's all?

Is the valuation of that fintec company based on the self importance of a snakeoil salesman, or are they actually worth that?

If Warren Buffett buys 11.4% of HP then i'd be inclined to think that he thinks that it's worth more than that in the long term.

You know, given that he's made over a hundred billion dollars by buying up shares of unsexy companies that he thinks are undervalued and then watching the value increase over time.

[Yet Another Anonymous coward]

Re: That's all?

He made money by buying Apple but for the last 20years has lost money holding railroads and Coke compared to just buying SPY

I'm sure HP is worth that tiny amount of $, if just for their stock of printer ink, just sad that it's true

[julian.smith]

Spot on

"He made money by buying Apple but for the last 20years has lost money holding railroads and Coke compared to just buying SPY"

I didn't believe it but the numbers support your proposition

(all data from Morningstar)

Berkshire Hathaway Inc Class B BRK.B v SPDR® S&P 500 ETF Trust SPY

% Total Return

Years 15 10 5 3 1 YTD

BRK.B 10.99 9.96 14.48 15.74 17.70 11.71

SPY 10.01 14.54 15.81 17.79 11.84 -5.22

For the " investment horizons" 5+ years, SPY is superior, especially considering the inbuilt diversification and BRK's need for continuing to make great decisions.

I stand corrected

BTW S&P 500 is my only shareholding, it has served me well for 10+ years

[Arthur the cat]

He's made more money than I have so probably knows what he's doing(*), but it seems a bit like buying a race horse just after it broke a leg.

(*) I have this vision of Buffett swimming Scrooge McDuck style in a lake of printer ink.

[MiguelC]

Re: buying a race horse just after it broke a leg

Sorry for the image, but a shrewd investor would buy the horse for next to nothing and sell her for human consumption for a profit (either legally or less so)

[Anonymous Coward]

Why

Yahoo Finance had a good analysis of why the investment makes sense.

https://finance.yahoo.com/news/why-billionaire-warren-buffett-took-a-stake-in-hp-101104566.html

TLDR

"HP shares only trade on a forward price-to-earnings multiple of 8.5 times, according to Yahoo Finance Plus data. That's well below the forward PE multiple on the S&P 500 of about 18.2 times. It's also bizarrely below the 12 times rival Xerox shares fetch, in the face of less stronger performance than HP throughout the pandemic."

BTW, I have a substantial investment (for me) in both Berkshire Hathaway and an S&P ETF (which Buffett recommends for individual investors). They've both returned over 130% with Berkshire holding a 6% advantage. Don't bet against the Oracle of Omaha.

[DS999]

Re: Why

I've had a fairly good chunk invested in Berkshire for long enough I'm at a nearly 700% gain, but that pales to the gain in the roughly equal amount of Apple I bought shortly after the 2008 crash. Because of those gains the two account for the clear majority of my retirement despite not adding to those positions since - so I get a yearly call from an advisor at Fidelity suggesting I diversify. Good thing I didn't listen!

I did sell half my Apple stake late last year because I figure it has to have a correction at some point, and I really should diversify somewhat. Still holding that as cash in the account, I haven't come up with anything that looks like a good value in the current market. Same problem Buffett has been having, I guess. Maybe I should have bought Apple back when it was at its low a few weeks ago.

[julian.smith]

Re: Why

The problem with market timing is that you have to get 2 decisions correct.

In your case the SELL and the BUY.

Good luck, most highly paid active funds managers can't beat the S&P 500 over 5+ years

EXAMPLE SPY 10 year return % Category Rank is 12 ie. it beat 88% of the Large Cap Blend funds (and it's an INDEX fund FFS)

BTW it's your portfolio return that's most important rather than an individual stock's return

[jake]

So finally, we have proof ...

... of something that most of us knew years ago: HP is no longer a technical company.

Bill & Dave are spinning. What a fucking waste.

[T. F. M. Reader]

Looking forward to ...

... checking the ROI of Buffet's 11.4% of HP vs. Musk's 9.2% of Twitter some time down the road.

[mrGecko]

HP management will be glowing

... until Buffet say's he fat-fingered the buy button and thought he was purchasing the sauce company. Certainly HP sauce is much more his sort of business. F*ck knows if HP is a good buy or not.

[jake]

Re: HP management will be glowing

I doubt Buffet even knows HP Sauce exists. It's not all that common in middle America (it doesn't get much more middle than Omaha Nebraska).

On the other hand, Berkshire Hathaway owns about 26.7% of Kraft-Heinz, current owner of HP Foods (including HP, Lea & Perrins and Daddies sauces) ...

In the gripping hand, Beer. Always handy to wash down something drenched in sauce.

_{Make mine Palo Alto Firefighter's Habanero Sauce}

[nijam]

> HP isn't yet existentially challenged by the cloud.

Doesn't need to be. It's been existentially challenged by its own management for quite a while now.