HP soars 14.8%, sets record after Buffett reveals $4.2 billion stake

By Jonathan Stempel

(Reuters) -HP Inc's stock soared to a record high on Thursday after billionaire Warren Buffett's Berkshire Hathaway Inc said it had taken an 11.4% stake valued at about $4.2 billion in the maker of personal computers and printers.

Berkshire revealed in a Wednesday night regulatory filing that it owned nearly 121 million HP shares, including 11.1 million purchased this week.

Shares of HP closed up $5.15, or 14.8%, at $40.06, after earlier rising to $41.46.

Companies' stock prices often rise when Berkshire discloses new stakes, regarded as a stamp of approval from Buffett.

Berkshire does not regularly invest in technology companies, despite ending 2021 with a $161.2 billion stake in Apple Inc. Buffett considers the iPhone maker more of a consumer company that he can understand.

"Berkshire Hathaway is one of the world's most respected investors and we welcome them as an investor," HP said in a statement.

Separated in 2015 from the former Hewlett-Packard, HP is benefiting from increased demand as people spend more time working and being schooled at home.

The Palo Alto, California-based company agreed last month to buy audio and video accessories maker Poly, once known as Plantronics, for $1.7 billion.

Buffett has struggled to invest Berkshire's cash, which totaled $146.7 billion at year end, citing high valuations and competition from private equity and other investors.

But in the last month, the Omaha, Nebraska-based conglomerate said it has committed approximately $22 billion to major new investments.

These include a 14.6% stake in Occidental Petroleum Corp and an $11.6 billion purchase of insurer Alleghany Corp, Berkshire's largest acquisition since 2016.

Berkshire also owns dozens of businesses including Geico auto insurance and the BNSF railroad.

It did not immediately respond to requests for comment.

Morningstar analyst Mark Cash said HP might appeal to Berkshire because HP is aggressively returning capital to shareholders through stock buybacks and higher dividends.

"HP operates in markets that are challenging to (durably) grow at heightened rates, so focusing on margins and returns are the best way to reward shareholders," Cash said. "Within tech, HP can be considered a value play."

Berkshire repurchased $27 billion of its own stock in 2021.

(Reporting by Jonathan Stempel in New York; Editing by Nick Zieminski, Bernard Orr)