If an investment company has just become a 10% shareholder in a business, it’s often worth taking a closer look. These companies do their research, and if they’re making a substantial investment in a stock, it’s usually because they see the potential for significant upside.
In this report, we are going to highlight some interesting 10% shareholder buying activity at HP Inc (HPQ:US). HP is a technology company that manufacturers computers, printers, and other electronic devices. In 2021, the group was the second largest computer manufacturer globally, behind Lenovo. The company is listed on the New York Stock Exchange and currently has a market capitalization of $39.46 billion.
HP Has a New 10% shareholder
Our data shows that recently, Warren Buffett’s investment company, Berkshire Hathaway, has become a 10% shareholder in HP. In total, Berkshire has purchased around 121 million shares in the technology company, which equates to a 11.4% stake. This trade cost Berkshire Hathaway around $4.2 billion.
More Insider Activity at HP
Interestingly, this is not the only insider activity at HP recently. Indeed, our data shows that on March 31, board member Bruce Broussard bought 6,810 HP shares at a price of $36.67 per share, spending around $250,000 on stock. This trade increased the size of his holding by around 130%. The fact that the insider increased the size of his holding by such a large percentage suggests he’s very confident the stock is set to rise.
Does Buffett See Value in HP Stock?
As for why Buffett is buying HP stock right now, it’s most likely related to the fact that the stock looks very cheap right now. For the year ending October 31, 2022, Wall Street analysts expect HP to post earnings per share of $4.29. At the current share price, that puts the stock on a forward-looking price-to-earnings (P/E) ratio of about 8.1. That’s well below the average market P/E.
And the company appears to have momentum right now. For the first quarter of fiscal 2022, net revenue was up 8.8% to $17.0 billion. Meanwhile, non-GAAP diluted earnings per share came in at $1.10 – above the previously provided outlook of $0.99 to $1.05 and also above the consensus forecast of $1.02. On the back of the strong performance, the group returned $1.8 billion to shareholders via share repurchases and dividends during the quarter.
In light of the valuation here, we see the buying activity from Berkshire Hathaway as a bullish indicator. The fact that Buffett has become a 10% shareholder suggests that he sees considerable upside from current levels.