The share price of HP Inc jumped by more than 16% in early trading today after it was revealed that Warren Buffett’s Berkshire Hathaway had become its largest single shareholder.
In two HP regulatory filings dated April 6, it was shown that Berkshire Hathaway had acquired just over 120 million shares of HP common stock in a number of separate transactions between April 1-6. This investment – valued at more than $4 billion – makes Berkshire Hathaway the largest institutional investor in HP, with a stake of more than 11%. As of 31 December 2021, the two largest shareholders in the tech firm had been Vanguard and Dodge & Cox, with respective holdings of 9.85% and 9.62%.
News of the transaction helped HP’s NYSE share price leap from $34.91 at closing on April 6 to more than $40.64 soon after the market opened today – an increase of 16.8%. Investors were no doubt buoyed by the size of Berkshire’s investment, with Buffett – who is known for his ‘buy and hold’ strategy – clearly confident in the future of HP.
We now have a situation where two iconic US-based print companies – HP and Xerox – have legendary investors as their top shareholders. At Xerox, Carl Icahn-owned firms owned around 20% of Xerox’s common stock at the end of 2021. Icahn tried to engineer a Xerox takeover of HP in 2019, but abandoned his plans after resistance from HP and the onset of the COVID-19 pandemic.
Since then, the performance of the companies’ share prices have differed significantly: in the past two years, HP has risen by more than 155%, while Xerox has fallen by about 1.8%. And Buffett must believe there is room for more long-term improvement at HP.