Warren Buffett’s Berkshire Hathaway Inc. has found another way to put even more of its money to work, purchasing a stake in HP Inc. valued at more than US$4.2 billion. 

The disclosure that the billionaire investor’s company holds about 121 million shares in the computer maker sent HP’s stock surging to a record. The shares gained as much as 19 per cent on Thursday to US$41.47 in New York. Berkshire bought some of the stock earlier this week in multiple transactions, according to a regulatory filing late Wednesday.

“Berkshire Hathaway is one of the world’s most respected investors and we welcome them as an investor in HP,” an HP spokesperson said.

Berkshire’s HP bet is just the latest way the billionaire investor’s firm has found a way to deploy some of its near-record cash pile, after years of being stifled by high valuations and a competitive dealmaking landscape. In recent months, Berkshire has expanded its US$350 billion equity portfolio, helped in part by volatility that dragged the S&P 500 Index down almost 6 per cent this year through Wednesday’s close.

In March, Buffett’s company disclosed that it had been buying up shares in Occidental Petroleum Corp., building a stake that now ranks among Berkshire’s 10 largest common-stock bets. 

What Bloomberg Intelligence says:

“Berkshire Hathaway’s US$4.2 billion investment in HP Inc. reinforces the computer maker’s long-term capital-returns value proposition. HP Inc. has become a capital-returns story, given its low-single-digit growth profile.”

-- Woo Jin Ho, BI senior industry analyst

Berkshire has also found more luck on the acquisition front, announcing in March a US$11.6 billion deal to purchase insurer Alleghany Corp. in the conglomerate’s largest deal since its 2016 acquisition of Precision Castparts Corp. Still, the purchase price represents just 7.9 per cent of Berkshire’s cash pile of US$146.7 billion at the end of 2021. 

Helped by strong performances from businesses such as the BNSF railroad and Berkshire’s sprawling energy empire, Buffett’s conglomerate has been pulling in more cash that he can quickly deploy into higher-returning assets, a skill that had drawn the investor acclaim for years. A shortage of appealing investment opportunities has led the billionaire to increasingly turn to share buybacks, with repurchases totaling a record US$27.1 billion last year.

Now, some stock valuations have become even more attractive. HP stock rallied last year, gaining 53 per cent in 2021, but had fallen 7.3 per cent this year through Wednesday’s close. Berkshire, which had historically shied away from some technology investments, has leaned further into that sector in recent years and built up a stake in Apple Inc. that was valued at more than US$161 billion at the end of 2021.

As one of the older, more traditional tech stocks, HP, which makes printers and computers, could benefit from a shift into so-called value tech shares, with the prospect for rising interest rates blunting gains for more highly valued Big Tech stocks. 

HP has benefited from sustained increased demand for PCs, a market that HP now expects to be worth as much as US$560 billion by 2024, amid a shift to hybrid work. It’s also seeing continued success in segments such as gaming and 3D printing. Last month, HP agreed to buy Plantronics Inc., also known as Poly, which sells phone headsets and audio and video accessories, in a US$3.3 billion deal to help it capitalize on the remote-work culture.

Berkshire didn’t immediately respond to a request for comment sent outside regular business hours about whether the purchase was made by Buffett himself or one of his two investing deputies.