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Buffett takes $4.2 billion stake in HP, pushing shares up 10% premarket

On Wednesday, April 6th, Berkshire Hathaway Inc (NYSE: BRK.A) disclosed that it took a stake in HP Inc. (NYSE: HPQ), buying almost 121 million shares of HP. 

The purchase represents another large investment by Warren Buffett, who seems to have gotten his deal-making mojo back. 

In particular, this latest investment gives Berkshire roughly an 11.4% stake in HP, worth around $4.2 billion based on the closing stock price of $34.91. As of January 31st HP has 1.06 billion shares outstanding. 

Berkshire did not disclose whether this new purchase was made by the Oracle of Omaha himself since he usually handles larger investments, or perhaps this was done by one of its portfolio managers, Todd Combs and Ted Weschler. 

Chart analysis and stock performance 

Before the acquisition, the stock formed a double top, which indicated that the level would be retested. However, once the acquisition has been announced, the stock surged 10% in after-hours trading and sits currently slightly below the double top level at $39.20 (premarket).

HPQ 20-50-200 SMA lines chart. Source. data. See more stocks here.

Wall Street analysts gave the stock a hold rating predicting an average next 12 months’ price of $36.36. Currently, the stock sits at $38.38 in after-hours trading close. The highest price analysts see for the stock is $43.  

Source: TipRanks

Whether the stock rips past the double top and tests, the highest price analysts see for the stock in the next 12 months will be known once the markets open on April 7th. 

Stock fundamentals and acquisitions

Buffett loves dividend stocks and HP is a solid dividend-paying company. Compared to last year, HP grew its dividend by 29% to $1, marking a five times year-over-year annual increase which was, on average, around 10.02%.

Additionally, the company recently purchased a remote computing software provider, Teradici, thus betting heavily on hybrid work practices, where office workers will switch between remote and office working. 

Tracking what the Oracle of Omaha does is often a sound strategy for investors trying to pick stocks in the same vein as Buffett.

HP has solid fundamentals, a growing dividend, and a powerful presence in the business environment with their computer solutions. Whether the stock performs better with this new stake from Berkshire, only time will tell.  

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

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