HP Inc’s stock soared after it was revealed this week that Warren Buffett’s Berkshire Hathaway bought a $4.2 billion stake in the company, an amount that encompasses about 121 million shares, reports Bloomberg. The purchase was made earlier this week and revealed in a regulatory filing late in the day on Wednesday, April 6th. In the wake of the news, HP shares skyrocketed to record highs, gaining as much as 19% to bring the price to $41.47.
It’s one more big purchase in a string of big purchases Berkshire Hathaway has made in recent weeks as they look to spend the enormous amount of cash they’ve stockpiled after being stymied by high valuations and a competitive marketplace for so long. Aided by the volatility that’s been dogging the S&P 500 Index, Berkshire has broadened its $350 billion equity portfolio. Last month, they bought a stake in Occidental Petroleum Corp, an announcement that came on the heels of the news that they’d acquired insurance company Alleghany Corp. But even that deal only accounts for 7.9% of Berkshire’s $146.7 billion in cash reserves at the end of last year, according to the article.
Many of Berkshire’s holdings have been performing extremely well, such as BNSF railroad, adding to the cash pile, which has been accumulating faster than Buffett can spend it. He’s also turned to buybacks as a way to spend the money, repurchasing $27.1 billion in Berkshire stock last year.
For its own part, HP stock gained 53% last year but dropped 7.3% so far in 2022. As an almost relic in tech stocks, a shift into value tech shares could be an advantage to the company as higher interest rates are sure to limit gains for higher-priced, flashier Big Tech stocks. HP has seen steadily increasing demand for PCs as hybrid work becomes more prevalent, and they’ve had continued success in their gaming and 3D printing arenas. And in a $3.3 billion deal last month that will build on the remote-work culture, HP agreed to buy Plantronics Inc, a company that sells audio and video accessories, such as headsets.
While Berkshire didn’t respond to Bloomberg’s request for comment, a spokesperson for HP said that “Berkshire Hathaway is one of the world’s most respected investors and we welcome them as an investor in HP.”