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Buffett's Berkshire Scales Back on HP: A Strategic Move?

Published by MEXEM EUROPE

September 26, 2023 11:29 AM

Berkshire Hathaway {{ m-tag option="price" ticker="BRK-A" currency="USD" }}, led by the legendary investor Warren Buffett, has been systematically reducing its financial exposure to HP Inc., a leading PC and printer industry player. Regulatory filings indicate that Berkshire Hathaway divested an additional $130 million of HP
{{ m-tag option="price" ticker="HPQ" currency="USD" }} shares just last week. This move comes from an earlier sale this month, where the conglomerate offloaded nearly 10 million shares, valued at almost $300 million.

The Nitty-Gritty of the Sale:

The shares were strategically sold over three days, fluctuating prices between $26 and $28. This calculated move led to a 4.1% reduction in Berkshire Hathaway's stake in HP, now at a little under 111 million shares.

When Berkshire Hathaway initially disclosed its investment in HP in April 2022, the stock experienced a significant uptick, commonly referred to as the "Buffett Effect." However, the stock has since taken a nosedive, plummeting 35% to close at $26.77 last Friday.

Erosion of Investment Value:

The declining stock price, coupled with Berkshire's recent divestments, has eroded the value of its HP stake from a high of $5.5 billion to its current valuation of approximately $3 billion.

Strategic Portfolio Realignment:

While the reasons for Berkshire's divestment from HP remain undisclosed, the move is consistent with the firm's broader strategy of optimizing its investment portfolio and enhancing liquidity. Over the past three fiscal quarters, Berkshire Hathaway has net sold $33 billion in various stocks and has grown its cash reserves by an impressive 13%, reaching a near-record $147 billion.

HP's Revised Financial Forecast:

On a related note, HP has recently revised its full-year profit forecast downwards by up to 15 cents per share. This adjustment followed a lackluster Q3 earnings report and reflects ongoing market challenges in China and cautious corporate IT spending.

The information on is for general informational purposes only. It should not be regarded as investment advice. Investing in stocks involves risk. A stock's past performance is not a reliable indicator of its future performance. Always consult a financial advisor or trusted sources before making any investment decisions.


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