DBG: - Buffett "cuts meat" again in a month

Within a month, Buffett "cut meat" again...

On Thursday local time, "stock god" Buffett's Berkshire Hathaway company submitted to the Securities Exchange Commission (SEC) documents show that the company recently sold about 3.07 million shares of HP stock, about 80.40 million dollars.

It is worth noting that this is the second time in a month that Berkshire has reduced its holdings in HP. At the same time, after this reduction, Berkshire's holding in HP has fallen below 10%.

This means that in the future, if Berkshire continues to reduce its stake in HP, it will no longer need to file with the SEC.

DBG ForexIt is rare to observe! "meat cutting" twice within a month

Buffett, who has never been too keen on technology stocks, surprised the market by taking a big position in HP in early 2022. At that time, Buffett's Berkshire owned 120 million shares of HP stock.

However, after Buffett completed his position, HP's share price plunged by more than 40%. After a year and a half of patient holding, in September this year, Buffett's Berkshire filed with the Securities Exchange Commission (SEC), showing that Berkshire sold about 5.50 million HP shares at an average price of $29 per share, cashing out about $160 million.

After the sale, Berkshire Hathaway owns about 11.7 percent of HP, according to SEC filings.

After Buffett first sold off his HP holdings, HP's share price fell sharply again, falling below the $26 mark on Friday, down about 14% from around $30 in early September.

According to previous reports, Buffett's cost of holding a position is around $30. This means that Buffett has reduced his holdings in HP twice in a month, which is lower than its cost of holding a position.

In the future, whether Buffett will fully withdraw from HP will have to wait until Berkshire's earnings report next year to see what it will look like.

The demand for PCs is sluggish

HP cuts full-year profit forecast

From a timeline perspective, Buffett's divestment follows HP's announcement of its fiscal third quarter 2023 earnings.

After hours on August 29, US Eastern Time, HP announced its financial results for the third fiscal quarter of 2023. The financial report shows that in the third fiscal quarter ended July 31, HP's total revenue calculated according to US General Accounting Standards (GAAP) reached $13.20 billion, a year-on-year decrease of 9.9%, lower than the market expectation of $13.40 billion; non-US General Accounting Standards (Non-GAAP) net profit was 800 million yuan, a year-on-year decrease of 32%; adjusted earnings per share were 0.86 dollars, a year-on-year decrease of 17%.

HP expects free cash flow for the fiscal year ending October 2023 to be $3 billion, compared with its previous estimate of about $3.25 billion. HP also lowered its non-GAAP earnings per share forecast to $3.23-3 from $3.30-3.

HP President and CEO Enrique Lores said, "Although we expect sequential growth to continue in the fourth quarter, the improvement in the external environment has been slower than expected, so we have adjusted our expectations.”

After the earnings report was released, on August 30, Eastern Time, HP shares opened sharply lower, falling as much as 10.59%, but then rebounded, closing at $29.29, down 6.63%.

In a post-earnings call, Mr. Lores said HP "will continue to navigate an unstable environment", with corporate customers generally cautious on spending due to higher capital costs and weakness in the consumer segment.

HP's revenue declined by 8% in the Americas, 5% in EMEA, and 9% in Asia Pacific and Japan (APJ), which Lores attributed primarily to weaker demand in China.

Shipments of PCs (desktops, notebooks and workstations) in mainland China continued to decline in the second quarter of 2023, falling 19% year-on-year to 9.60 million units, according to the latest DBG FX survey. Lenovo still holds the top spot in the Chinese mainland PC market, but shipments fell sharply by 24% year-on-year. HP and Huawei ranked second and third, up 6% year-on-year.