Greenlight Capital, an investment management firm, released its first quarter 2024 investor letter. A copy of the letter can be downloaded here. In the first quarter, the Greenlight Capital funds returned 4.9% net of fees and expenses, compared to 10.6% for the S&P 500 index. The year’s first quarter saw a bullish market, with investors focusing on AI, cryptocurrency, and meme stocks. Despite the market’s strong performance, the long and short portfolios didn’t fare as well. The long portfolio only saw a modest increase of 2.2%, net of fees and expenses, while the single-name short portfolio broke even. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Greenlight Capital featured stocks like HP Inc. (NYSE:HPQ) in the first quarter 2024 investor letter. Headquartered in Palo Alto, California, HP Inc. (NYSE:HPQ) is a personal computing and other digital access devices, imaging and printing products, and related technologies, solutions, and services provider. On May 7, 2024, HP Inc. (NYSE:HPQ) stock closed at $28.41 per share. One-month return of HP Inc. (NYSE:HPQ) was -1.87%, and its shares lost 4.86% of their value over the last 52 weeks. HP Inc. (NYSE:HPQ) has a market capitalization of $27.799 billion.
Greenlight Capital stated the following regarding HP Inc. (NYSE:HPQ) in its first quarter 2024 investor letter:
“The title of our Sohn presentation was “Solve AI,” which was a play on Solvay’s corporate name. Nonetheless, we established another new long position that actually stands to benefit from AI, which we believe is not reflected in the current stock price. HP Inc. (NYSE:HPQ) sells computers, printers and adjacent products and supplies. We established an initial position at an average price of $30.76 per share, which is about 9x current year earnings estimates. Recent results reflect a two-and-a-half-year cyclical downturn in demand for computers, which followed a mini-boom driven by COVID and related demand for equipment to work-from-home. We believe that we are, at a minimum, on the cusp of a normal PC refresh cycle, which should drive earnings above estimates. HPQ has committed to return 100% of free cash flow to shareholders through buybacks and dividends. The shares have a 3.6% dividend yield and we estimate HPQ has the capacity to buy back 25-30% of the outstanding shares over the next three years.
The more exciting opportunity is through a possible AI-driven PC adoption cycle, fueling higher unit prices and a more robust PC market recovery. Currently, investor attention around AI is focused on cloud service providers and related equipment. This summer, Intel plans to release a neural processing unit (NPU), which will allow AI functionality on local devices. Microsoft has teased AI features that are coming in the next Windows update later this year, which may require a computer with an NPU to fully function. One such application is believed to be ‘AI Explorer,’ which is described as an “advanced Copilot” with a built-in history/timeline feature that turns everything you do on your computer into a searchable repository using natural language. It is said to work across any application and allows users to search for previously opened conversations, documents, web pages and images. While we have spoken with experts that are divided between being enthusiastic and skeptical of an AI PC cycle, we don’t believe any of the optimism is currently reflected in the share price. HPQ ended the quarter at $30.22 per share.”
A laptop, showing off the companys sleek notebook computers and workstations.
HP Inc. (NYSE:HPQ) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 50 hedge fund portfolios held HP Inc. (NYSE:HPQ) at the end of the fourth quarter which was 44 in the previous quarter. HP Inc.’s (NYSE:HPQ) top stakeholder Berkshire Hathaway holds shares worth $687.638 million as of Q4 2023.
We previously discussed HP Inc. (NYSE:HPQ) in another article, where we shared the list of top technology companies in Silicon Valley. HP Inc. (NYSE:HPQ) holds 10th position in the list of dirt cheap stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.