BofA concerned about potential future HP Inc. share sales by Berkshire

After HP’s (HPQ) largest shareholder, Berkshire Hathaway (BRK.A), noted in a filing that it had sold 5.5M shares of HP for about $158M in recent days, BofA noted that the firm’s position in HP is currently worth $3.3B. Noting that Berkshire first disclosed a material position of 11% stake in shares of HPQ in April 2022, the firm views Berkshire’s initial investment as driven by HP’s strong capital return program and attractive free cash flow generation. However, weakness in fundamentals have resulted in a weaker free cash flow and capital return profile and HP may be “more cyclical and a less reliable FCF generator than Berkshire might have viewed in the past,” contends the firm. While admitting to being “directly unaware of Berkshire’s plans,” the firm is concerned about potential future sales and maintains an Underperform rating and $25 price target on HP Inc.