The stock of HP Inc rocketed to a new high on Thursday after Warren Buffett’s Berkshire Hathaway Inc announced it had purchased an 11.4 percent stake in the producer of personal computers and printers for $4.2 billion.
On Wednesday night, Berkshire stated it owned over 121 million HP shares, including 11.1 million bought this week.
HP shares were trading at $40.19 in early Thursday trading, up to $5.28, or 15.1 percent, after hitting a high of $40.50 earlier in the day.
HP, which was spun out from Hewlett-Packard in 2015, is a typical technology stock that has benefited from growing demand as individuals spend more time at home working and schooling.
Last month, the Palo Alto, California-based firm agreed to pay $1.7 billion for Poly, formerly known as Plantronics, which makes audio and video devices.
Buffett has struggled to deploy more of the $146.7 billion cash pile his Omaha, Nebraska-based conglomerate has amassed in recent years, citing high market valuations and competition from private equity and other investors as reasons.
Berkshire Hathaway, on the other hand, just announced that it has committed $22 billion to substantial new initiatives.
These include a 14.6 percent interest in Occidental Petroleum Corp and Berkshire’s largest acquisition since 2016, the $11.6 billion purchase of insurer Alleghany Corp.
Buffett’s organization also controls dozens of businesses, including Geico auto insurance and the BNSF railroad, and had a $161.2 billion holding in Apple Inc. at the end of 2021.
In a statement, HP added, “Berkshire Hathaway is one of the world’s most regarded companies, and we welcome them as an investor.”
Berkshire did not reply to demands for comment right away.
HP may appeal to Berkshire since it is aggressively returning capital to shareholders through stock buybacks and greater dividends, according to Morningstar analyst Mark Cash.
“HP operates in markets where it’s difficult to (durably) grow at high rates, therefore the best way to reward shareholders is to focus on margins and returns,” Cash added. “HP can be considered a value play in the tech world.”
In 2021, Berkshire Hathaway repurchased $27 billion of its own stock.
