Shares of HP Inc. surged in after-hours trading on Wednesday after Warren Buffett’s Berkshire Hathaway Inc. revealed it had taken a large stake in the Silicon personal computer and printer maker Valley.
revealed in a late filing Wednesday that he owned 120.95 million shares of HP HPQ,
after buying stocks in recent days. This position is worth approximately $4.2 billion and represents an approximately 11% stake in the company.
The stock rose nearly 10% in after-hours trading.
“HP has engaged in one of the largest share buyback programs (relative to market capitalization) in our coverage, so we think Berkshire’s involvement makes sense,” analyst Amit Daryanani wrote. of Evercore ISI, in a note to customers.
Although he said he did not believe Berkshire’s investment in HP would result in significant changes to HP’s business, he viewed the high-level participation as “validation of the strategy/program of return on capital from HPQ,” noting that Berkshire began buying shares after HP announced its plans. to buy work-tech company Poly for $3.3 billion late last month.
Berkshire’s stake in HP indicates that Buffett sees value in HP’s business, although several analysts have been cautious lately in the personal computer market following a pandemic-driven boom.
“Specifically, we believe PC and consumer hardware spending will come under pressure as supply improves and demand normalizes after two years of above-trend growth,” wrote Erik Woodring of Morgan Stanley to explain its March 31 downgrades of HP and Dell Inc. DELL,
HP shares have lost 9.7% in the past three months as the S&P 500 SPX,
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