Warren Buffett has made another big plunge into a tech stock – spending around $US4.2 billion buying a stake in HP – a laptop maker and part of the old Hewlett Packard.
Buffett’s Berkshire Hathaway bought some of the stock earlier this week in multiple transactions and now holds an investment of about 121 million shares in the computer company, according to a regulatory filing on Thursday.
That makes Berkshire the largest shareholder in HP, as Amex, Coca Cola, Bank of America, Occidental and of course, Apple.
It’s his third major play in two months – Berkshire has spent upwards of $US7.2 billion building a 14% stake in mini energy major, Occidental, and last month offered $US11.6 billion for insurer and investor, Alleghany Corp.
The $US22 billion spent so far on the three deals is still less than the $US27.1 billion in Berkshire spent in 2021 buying back its own shares.
The addition of HP shares to Berkshire’s portfolio swill add to the massive, $US157 billion stake in Apple which is Berkshire’s largest stockmarket holding.
Another tech investment is a stake in the cloud computing company, Snowflake.
It signals that contrary to his talk in his most recent shareholder letter about there being a dearth of opportunities to deploy some of the $US146 billion in cash on his books, Buffett is now betting on corporate America and the US economy, even as Russia’s invasion of Ukraine raises the possibility of slower global growth and high inflation.
Buffett’s red, white and blue eyed view of the strength and buoyant future of the US economy and society is something that pops up every year in his shareholder letters.
The three investments marked a noticeable shift by a company that had largely sat out a spate of big dealmaking over the past six years as stock valuations soared.
Buffett had complained about the lack of appealing investments as recently as February, writing to shareholders in his annual letter that he and his right-hand man Charlie Munger were finding “little that excites us”.
That has obviously changed. The Alleghany purchase will see him add upwards of $US30 billion in cash and near cash securities to the float and a handful of investments and shareholdings in mostly small or unlisted companies.
The HP purchase is a bet on the future of mobile technology and the purchase of Occidental shares supports the $US10 billion in finance injected into the energy company by Berkshire to help finance Occidental’s $US37 billion takeover of rival Andarko almost three years ago.
HP said in a statement: “Berkshire Hathaway is one of the world’s most respected investors and we welcome them as an investor.”
What is interesting about these three deals is that they have come so close together after more than five years of sitting on the sidelines and making a $US2.7 billion, one off investment in buying 36% of Pilot Travel Services (Flying J) which is the largest operator of these truck stop/service station come-cafe, come-shopping outlets in the US.
