The legendary guru, who leads the Omaha, Nebraska-based insurance conglomerate, along with his two portfolio managers, Ted Weschler and Todd Combs, follows a long-term value investing approach that focuses on companies that have understandable business models, favorable long-term prospects and competent management teams that are available at attractive prices.
According to GuruFocus Real-Time Picks, a Premium feature based on 13D, 13G and Form 4 filings with the Securities and Exchange Commission, the investor sold about 5.50 million shares of the Palo Alto, California-based tech company between Sept. 11 and Sept. 13. The stock traded for an average price of $28.81 over the three-day period.
Based on the filing, Buffett now holds approximately 115.45 million shares. As of the end of the second quarter, 13F filings show the position previously occupied 1.07% of the equity portfolio and was his ninth-largest holding. GuruFocus data says he has lost around 23.20% on the investment since establishing it in the first quarter of 2022.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Founded in 2015 following its spinoff from Hewlett Packard, HP develops and manufactures personal computers, printers and related supplies. It also offers 3D printing solutions.
The company operates through two main segments. The largest business, Personal Systems, contributed 70% of revenue in 2022.
On Aug. 29, HP reported its fiscal third-quarter 2023 results.
For the three months ended July 31, the company posted revenue of $13.2 billion, which was down 9.9% from the prior-year quarter. Net income of $766 million also declined from a year ago.
Non-GAAP diluted earnings of 86 cents per share fell from $1.03 last year, but were within the company’s guidance of 81 cents to 91 cents.
In a statement, HP President and CEO Enrique Lores commented on “a strong quarter of sequential growth,” which he noted was achieved through “combining strong innovation with disciplined execution to gain profitable PC market share and achieve our non-GAAP EPS target.”
"While we expect another quarter of sequential growth in Q4, the external environment has not improved as quickly as anticipated and we are moderating our expectations as a result,” he said. “We remain confident in our ability to drive long-term growth and value creation as we focus on the things we can control and make continued progress against our Future Ready plan.”
Looking ahead to the fourth quarter, HP anticipates non-GAAP diluted earnings per share to be in the range of 85 cents to 97 cents. Further, its earnings projections for the full year fall between $3.23 and $3.35 per share.
The GF Value Line suggests the stock is modestly undervalued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 87 out of 100, the GF Score indicates the company has good outperformance potential. While HP raked in high ratings for profitability, growth and momentum, the financial strength and value ranks are more moderate.
The predictability rank of one out of five stars, however, is on watch as a result of declining revenue per share over the past 12 months and an Altman Z-Score of 1.96, which means it is under some financial pressure. GuruFocus research found companies with this rank return an average of 1.1% annually over a 10-year period.
Despite the reduction, Buffett remains HP’s largest guru shareholder. Other major guru investors as of the end of the second quarter included Dodge & Cox, PRIMECAP Management (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Steven Cohen (Trades, Portfolio).
During the three months ended June 30, Paul Tudor Jones (Trades, Portfolio) and Caxton Associates (Trades, Portfolio) established new positions in the stock, while Jeff Auxier (Trades, Portfolio), Ray Dalio (Trades, Portfolio)’s Bridgewater Associates and Jefferies Group (Trades, Portfolio) added to their holdings.
In recent quarters, gurus have been more bearish on the stock.
Portfolio composition and performance
The majority of Berkshire’s $348.19 billion equity portfolio, which was composed of 49 stocks as of the end of the second quarter, was invested in the technology and financial services sectors.
Other companies in the tech sector it held as of June 30, according to 13F filings, were Apple Inc. (AAPL, Financial), VeriSign Inc. (VRSN, Financial), Snowflake Inc. (SNOW, Financial) and StoneCo Ltd. (STNE, Financial).
GuruFocus data shows Buffett’s firm returned 4% in 2022, outperforming the S&P 500’s return of -18.11%.