Berkshire Hathaway, controlled by Warren Buffett, disclosed that it has bought nearly 121 million shares of Hewlett-Packard Co., the latest in a series of large investments by the group. The investment gives Berkshire a roughly 11.4 percent stake in HP, worth about $4.2 billion based on HP’s closing price of $34.91 on Wednesday.
On Thursday, April 7th, Eastern Time, the stock price of HP, a veteran personal computer and printer manufacturer, gapped up by nearly 12%. During the intraday, the stock price once rose above $41 and approached $41.50, a record high intraday, and the intraday increase was close to 19. %, and finally closed up nearly 14.8%, the largest closing increase since March 26, 2020, to close at $40.06, also a new closing high.
A day before the best share price performance in two years, Buffett’s Berkshire Hathaway disclosed in a regulatory filing after the U.S. stock market closed that it had purchased nearly 121 million shares of HP. The stakes are worth about $4.2 billion at HP’s closing price of $34.91 on Wednesday.
Based on HP’s close of about 15% on Thursday, the market value of HP shares bought by Buffett’s Berkshire rose by about $650 million in one day, and its market value rose to $4.85 billion. In other words, Buffett made $650 million in just one day after disclosing his holdings.
It was Buffett’s third big deal in nearly a month. Since the end of February this year, Buffett has spent $5.6 billion to increase his stake in Occidental Petroleum for three consecutive weeks, holding a total of 136.4 million shares, accounting for 14.6% of Occidental’s outstanding shares. In a subsequent interview in March, Buffett revealed that he had decided to increase his stake in Occidental Petroleum after reading the full transcript of the company’s fourth-quarter earnings meeting on February 25, saying the company was “doing the right thing. “. Shortly after, Buffett announced on March 21 that it would buy insurance company Alleghany for $11.6 billion in cash, a move that expanded Berkshire’s portfolio of insurance companies including Geico and General Re. Before announcing the Alleghany acquisition, Buffett had not made a major acquisition for six years.
It is worth mentioning that in the past six years, as the valuation of U.S. stocks has soared, Berkshire has basically not made large acquisitions. Until February, Buffett was complaining about the lack of attractive investments, writing in his annual letter to shareholders that he and right-hand man Charlie Munger found “nothing exciting for us.” After the outbreak of the Russian-Ukrainian conflict, Buffett has already shot at three companies this year.
Buffett bought Apple and judging from some of the previous public interviews, there may be factors in viewing Apple as a consumer goods company. As for this year, there may be many reasons why HP has gradually become attractive in the eyes of “stock gods”. First, based on Buffett’s style of value investing, HP’s performance has always been solid. The latest financial report data shows that in 2021, the company will achieve revenue of US$63.4 billion, a growth rate of 12%, and a net profit of US$6.5 billion, a substantial increase of 128%. Another more important factor may be the impact of the epidemic. Since the epidemic, factors such as working from home have pushed up the returns of PC manufacturers. According to HP’s performance report, the company’s performance growth last year was also mainly due to factors such as the increase in home office and the rebound in consumption in the post-epidemic period. In addition, the impact of the epidemic has also profoundly changed many people’s living habits, and the application of electronic products such as the Internet and PCs will be more extensive.