4. HP Inc (NYSE:HPQ)
Greenlight Capital’s Equity Stake: $118.12 Million
Number of Hedge Fund Holders: 41
HP Inc. (NYSE:HPQ) is a technology company that provides personal computing and other digital access devices, imaging and printing products, and related technologies, solutions, and services worldwide. Einhorn’s investment in HP comes on growing optimism that the company will benefit from growing PC demand amid the artificial intelligence frenzy
“The industry appears to be in the early stages of an up cycle, perhaps to be enhanced by recently launched AI-enabled PCs that are expected to ramp up over the next several quarters,” Greenlight Capital explained.
In the realm of artificial intelligence, the firm claims to have the biggest selection of AI PCs available. Expectations are high that robust demand for AI-powered PCs will boost sales demand, allowing the company to generate more shareholder value.
With PC demand recovering, HP Inc. (NYSE:HPQ) ‘s stock might continue to rise. At the very least, an increase in demand should support its profitability as it strives to reinvest profits into shareholders and improve its financial health.
The company is already benefiting from strong PC demand, having delivered its first increase in revenue growth in nine quarters in the third quarter, with earnings climbing by 2% compared to the previous year. Revenue and earnings growth has sparked optimism about long-term prospects. This expectation is firm given HP Inc. (NYSE:HPQ) ‘s leading position in the AI PC segment, with its advanced AI PCs gaining popularity among professionals in knowledge and data science fields.
During the third quarter, HP Inc. (NYSE:HPQ) expanded its AI capabilities even more by being the first technology company to incorporate generative AI into its workstation solutions. HP remains focused more on enhancing its newer PC models’ mobility and AI capabilities. In July, the company launched its top-tier model, equipped with the latest AMD processor, which has been recognized as the industry’s most advanced AI PC
While trading at a price-to-earnings multiple of 10, HP’s dividend payout has increased to 3.07%, and it’s also distributing a significant amount of money back to its investors by buying back shares. During the third quarter, the company repurchased nearly $0.9 billion of shares, with $600 million going towards share buybacks and $268 million allocated for dividends. Its ability to return value through dividends and buybacks underscores why it is one of David Einhorn’s top stocks to buy.
A total of 41 hedge funds were long HP Inc. (NYSE:HPQ) in the second quarter, with a total stake value of $655 million.
Greenlight Capital stated the following regarding HP Inc. (NYSE:HPQ) in its Q2 2024 investor letter:
“In addition to gold, we had four material winners in our long portfolio this quarter. HP Inc. (NYSE:HPQ) jumped from $30.22 to $35.02. After seven quarters of declines, PC sales turned marginally positive during the quarter. The industry appears to be in the early stages of an upcycle, perhaps to be enhanced by recently launched AI-enabled PCs that are expected to ramp up over the next several quarters.”
