Buffett holding hundreds of billions of cash Buffett is in action. At the beginning of April, he increased his position in and HP in batches, holding more than 10% of the shares. Based on the closing price on Wednesday, it corresponds to US$4.2 billion, or about 26.7 billion yuan, which is the third large investment this year; stocks After the market heard the news, it soared about 10%.
According to the latest SEC disclosure, from April 4 to 6, Buffett’s Berkshire bought HP’s common stock four times, with the purchase price ranging from US$34.88 to US$36.43. The purchase amount ranged from 250,000 shares to 4.4 million shares. About 11 million shares were purchased in 4 days, and the purchase amount was approximately US$320 million. Together with its initial holding of 109 million HP common shares, Berkshire holds 120 million HP shares, which corresponds to US$4.2 billion, or approximately 26.7 billion yuan, based on the closing price on Wednesday, and based on the after-hours price of US$38.36. The market value of holdings is approximately US$4.6 billion. Currently, Buffett holds about 11.4% of HP's shares and becomes one of its major shareholders.
After Apple , Buffett rarely got involved in technology stocks . What characteristics of HP attracted Buffett?
Judging from the performance in the past five years, HP has performed quite steadily. In fiscal 2021, its revenue was US$63.4 billion, a growth rate of 12%, and its net profit was US$6.5 billion, a 128% increase.
Another advantage of buying HP is that it is a company that pays great attention to shareholder returns. Based on the recent price of $38 and the past 12 months, HP's dividend yield is 2.6%, its repurchase yield is 19.3%, and its comprehensive shareholder return is as high as 21.9%. HP's share repurchases and dividends are examined together, and it ranks first among the S&P 500 constituent stocks .
HP's high buybacks are a key factor driving its shareholder returns. In the 2021 fiscal year as of October last year, HP repurchased a total of US$6.2 billion in shares, an increase of 100% from US$3.1 billion in the previous year.
Valuation may be another buying factor
Despite the recent surge in HP shares, relative to its earnings per share of US$6.2, Buffett’s current buying price is only equivalent to 5.6 times PE, which is almost 12 times PE in May 2021. Folded in half.
Since the epidemic, factors such as working from home have pushed up the returns of PC manufacturers. From the low in 2020 to the all-time high at the end of March this year, HP shares have more than doubled. Since May 2021, the stock has been trading sideways. From a fundamental perspective,
’s performance last year mainly benefited from factors such as the increase in home offices and the rebound in consumption in the post-epidemic period. However, affected by the economic outlook, the PC industry has begun to see a wave of order cuts, and large PC manufacturers including HP have begun to lower their shipment targets. HP shares have retraced 12% from their late-March highs.
Buffett has accumulated hundreds of billions of dollars in cash on his account in recent years, and has recently begun to make frequent purchases.
In March this year, Berkshire began to buy Occidental Petroleum Company, holding nearly 15% of the company's shares, entering its top ten holdings . At the end of March, Berkshire bought an insurance company for US$11.6 billion in cash. Alleghany. Before announcing the Alleghany acquisition, Buffett had not made a major acquisition in six years, leaving Berkshire with $146.7 billion in cash and equivalents. Buffett said he has at least $30 billion in cash on hand.
Technology stocks have always been rare stocks bought by Buffett. Previously, Buffett's investments in technology stocks such as IBM, , Oracle, and all failed, but this has changed in recent years. Buying , Apple, and was his biggest move. The large-scale purchase became his largest position and contributed most of the investment. income. In 2020, it was rare to buy the cloud computing company Snowflake during the IPO stage. This year's addition to HP was the first time it bought a technology stock in the past two years. However, compared to emerging unicorns like Snowflake, Buffett's choice of HP is more like his previous value investment style, whether from the perspective of shareholder returns or PE.
This article comes from China Fund News
