Warren Buffett made about $650 million on HP after stake was revealed

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Charlie Munger (left) and Warren Buffett.
VCG | Visual China Group | Getty Images

HP’s stock just had its best day in more than two years, and Warren Buffett’s Berkshire Hathaway is almost $650 million richer because of it.

In filing with the SEC late Wednesday, Berkshire revealed ownership of 121 million shares in HP, making it the biggest stakeholder in the PC and printer maker, surpassing Vanguard.

HP shares surged 15% on Thursday, following the disclosure, boosting the value of Berkshire’s stake to $4.85 billion from $4.2 billion. It was the biggest rally for HP since the early days of the pandemic in March 2020.

The swift market reaction to Berkshire’s disclosed stake shows how much investors still pay attention to what Buffett says and does. HP is now Berkshire’s second-biggest tech holding next to Apple. Berkshire owns shares in the iPhone maker worth over $150 billion.

Buffett famously eschewed high-flying tech stocks before his holding company started buying large amounts of Apple in 2016. Apple competes with HP in the PC market.

HP underperformance prior to Berkshire disclosure
CNBC

While Apple remains a steady grower, HP is more of a value stock. Before Thursday, it was trading at about 8 times forward earnings, compared to a multiple of about 21 for the S&P 500 and 27 for Apple. And as of Wednesday’s close, HP shares were up 7.5% over the past year, trailing Apple’s 36% gain and the 10% advance for the S&P 500.

Buffett’s investment comes at an uncertain time for the PC market. Sales of laptops and desktops have skyrocketed during the pandemic, boosting manufacturers including HP. But some market analysts now believe that that PC shipment growth will slow drastically in the coming year, and that demand for PCs has passed its peak.

WATCH: HP shares surge after Berkshire Hathaway takes 11.4% stake

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