Beware HP shareholders, Warren Buffett may not just be doing some trimming

Published Tue, Sep 26 202310:07 AM EDTUpdated Tue, Sep 26 20231:57 PM EDT

Warren Buffett's Berkshire Hathaway has trimmed its HP Inc. stake in two separate sales recently, leading some to believe that the Oracle of Omaha's intention is to dump the tech bet entirely. The conglomerate sold 4.8 million HP shares for $129.2 million last week, it disclosed in a filing late Friday . It marks the second consecutive week that Berkshire has reduced its stake in the personal computer and printer maker. In total, Berkshire has cut its position in the company once known as Hewlett-Packard by 10.3 million shares, an 8.5% reduction, lowering its stake to 11.2% from 12.1%. Still, Berkshire's remaining 110.7 million HP shares have a market value of almost $3 billion , making it HP's largest shareholder . The sales disclosed Friday "are an inconvenient fact for anyone who argued after Berkshire filed its first HPQ Form 4 on September 13 that Buffett was just doing a little trimming," wrote Don Bilson, head of event-driven research at Gordon Haskett, in a note Tuesday. The analyst pointed out that the first batch was sold at an average price of $28.80, while the average price on the second tranche was $27.00. The lower selling price "lowers the floor on the price that Buffett is willing to take to exit this losing bet," Haskett said. Buffett first bought the tech hardware stock in April 2022. The bet, however, hasn't been profitable as the stock finished last year down more than 28%. Shares are down 2% this year, significantly underperforming the market and its tech peers. HPQ YTD mountain HP In August, HP reported revenue in its fiscal third quarter that missed analysts' expectations. Analysts said HP's quarter was "disappointing." They believe PC revenue will likely improve going forward but the company's printing business may be more of a problem. After Buffett's first sale was disclosed Sept. 13, some argued that Berkshire was "just doing a little trimming," of its HP stake, Bilson wrote. "Anyone making that same point after seeing Friday's disclosure is, at this point, just hoping against hope because this now looks to us like an 'everything must go' sale," the analyst added. "What that means is 110m shares will need to find a new home." If Buffett sticks with his selling schedule of five million shares per week, he should be out of this position by the end of February, the analyst said "So long as the stock doesn't collapse in the weeks and months ahead, we'd be willing to bet his exit will be quicker than that," Gordon Haskett wrote. HP is lower by about 17% over the past month.