Is Warren Buffett Giving Up on HP (HPQ) Stock?


  • Berkshire Hathaway (BRK-A) has sold 5.5 million shares of HP (HPQ) stock this week.
  • The investment firm still owns 11.7% of the company’s shares.
  • HPQ stock is up by about 3% so far this year, significantly underperforming the market.
HP sign with blue sky and autumn leaves as backdrop
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HP (NYSE:HPQ) stock opened in the red today after Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) disclosed a partial sale of its stake. From Monday to Wednesday, the investment firm sold off 5.5 million shares. These shares were sold at an average price of about $29 per share. In total, Berkshire’s sale was worth about $160 million.

Still, it doesn’t appear as if Buffett is completely giving up on HPQ stock. Following the transaction, Berkshire still owns 115.5 million shares, equivalent to an 11.7% ownership stake. The fund was required to disclose its recent sale due to its status as a 10% owner. Berkshire first disclosed a stake in HP in early 2022.

As of the second quarter, HPQ was Berkshire’s ninth-largest 13F holding with a 1.07% portfolio allocation. The fund has an average 13F holding period of 26.73 quarters, or about 6.7 years. For stocks in its top 10 13F positions, the fund has an average holding period of 29.60 quarters, or 7.4 years.

Berkshire Hathaway Sells 5.5 Million Shares of HPQ Stock

Now, the big question is if Berkshire will continue to wind down its position. After the sale, Evercore ISI analyst Amit Daryanani noted that the sale could be attributed to HP’s guidance:

“The share sale follows a more challenged quarter with HP lowering FY23 EPS and FCF expectations driven by macro softness and continued channel inventory overhang […] Investors will be interested to see if Berkshire Hathaway continues to reduce its ownership in the coming days and weeks.”

Daryanani estimates that Berkshire has an HPQ cost basis of $36, which means that it lost money on its recent sale and is down on its overall position. The analyst added that it would be interesting to see if Berkshire adjusts its position again before the company’s upcoming analyst day on Oct. 10.

HP reported its fiscal third-quarter earnings on Aug. 29. Revenue tallied in at $13.2 billion, which was down by 9.9% year-over-year (YOY). On the bright side, EPS was 76 cents, which was above HP’s prior guidance of between 61 cents and 71 cents.

As addressed by Daryanani, the company reported weak guidance. For fiscal Q4, HP has guided for GAAP EPS between 65 cents and 77 cents. Furthermore, it expects roughly $3 billion of free cash flow and a GAAP EPS between $2.95 and $3.07 for the full year.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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