Shares of HP Inc. surged in after-hours trading Wednesday after Warren Buffett’s Berkshire Hathaway Inc. disclosed that it had taken a large stake in the Silicon Valley maker of personal computers and printers.
disclosed in a late Wednesday filing that it owned 120.95 million shares of HP
after buying shares in recent days. That position is worth about $4.2 billion and represents a roughly 11% stake in the company.
The stock rose nearly 10% in after-hours trading.
“HP is committed to one of the largest share-repurchase programs (relative to market cap) within our coverage, so we think Berkshire’s involvement makes sense,” Evercore ISI analyst Amit Daryanani wrote in a note to clients.
While he said he didn’t believe that Berkshire’s investment in HP would drive significant changes to HP’s business, he deemed the high-profile stake a “validation of HPQ’s strategy/capital return program,” noting that Berkshire began purchasing shares after HP announced plans to purchase the workplace-technologies company Poly for $3.3 billion late last month.
Berkshire’s HP stake indicates that Buffett sees value in HP’s business, though several analysts have sounded cautious lately on the market for personal computers following a pandemic-driven boom.
“Specifically, we believe PC and consumer hardware spending will be pressured as supply improves and demand normalizes after two years of above-trend growth,” Morgan Stanley’s Erik Woodring wrote in explaining his March 31 downgrades of HP and Dell Inc.
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Shares of HP have lost 9.7% over the past three months as the S&P 500
has dropped 4.6%.