HP Inc. (HPQ) shares soared higher Thursday after Securities and Exchange Commission filings revealed that billionaire investor Warren Buffett has built a $4.2 billion stake in the printer and PC maker.
SEC filings published late Wednesday showed that the Berkshire Hathaway (BRK.A) (BRK.B) investment firm now owns an 11.4% stake in the Palo Alto, Calif., group, a move that adds to Buffett's recent buying spree following new stakes in oil major Occidental Petroleum (OXY) and the $11.6 billion takeover of Alleghany Corp late last month.
Berkshire Hathaway posted record fourth quarter earnings earlier this year, and bought back $27 billion in stock over the whole of 2021 as Buffett lamented that few companies or deals were able to pique his interest.
Since the, however, the billionaire cautioned that stock buybacks would slow considerably this year, to just $1.2 billion, suggesting The Sage of Omaha may be tempted to put his $146.7 billion cash pile to work in finding more companies.
HP shares were marked 16.6% higher in early afternoon trading Thursday trading to change hands at $40.68 each, a move that would bump the stock into positive territory for the year.
HP, which beat-back a $35 billion hostile takeover bid from Xerox (XRX) in the spring of 2020, added audio and video devices maker Poly to its stable last month in a deal valued at $3.3 billion, including debt, as it looks to expand product offerings to take advantage of the global shift towards hybrid work.
Management has guided to second quarter GAAP earnings of around $1 per share, with full-year earnings in the region of $3.87 to $4.07 per share. The group expects to generate free cash flow of around $4.5 billion
"We continue to see very strong demand, driven in large part by the secular tailwinds associated with hybrid. The way people work and live has fundamentally changed and we see this trend continuing across our segments long part of the pandemic," CEO Enrique Lores told investors in late February. "This creates incredible opportunities for innovation and growth. Companies are reconfiguring office space to be more collaborative and this is requiring a refresh in their IT strategies, services, and security offerings."
"Consumers are investing to improve their home office setups as hybrid work becomes the norm," he added.
