HPQ - Was it Good Bet by Warren Buffett?

3 Mei 2022

Following the news about the purchase of 11% HP shares by Warren Buffett in April the price was up by 17%.
Who can question the King but let's have a quick look if it was such a good idea and if the retail investors should follow him or look the opposite way in the short term.

Fundamental indicators:

• Revenue and Profits - not consistent for the past 10 years
  
• Profit margin - averaging at circa 7% so it is not impressive either
  
• P/E - very attractive at 6.6% compared to the market average
  
• Liabilities - signs of debt problems with growing liabilities which exceed assets
  

Technically:

• Following the global correction that lasted 20 years and took shape of Contracting Triangle we can observe 5 wave impulse since March 2020
  
• This impulse is at the final stage with completed waves 1 to 4
  
• The 5th wave is forming now in the shape of Ending Diagonal which can be explained by the choppy movement
  
• Once the final wave updates the current maximum of circa $42 there might be a sharp drop in the first corrective wave to the region of $20 to $25 representing 0.382 and 0.5 Fibonacci retracement levels respectively
  

Given the rising risks of global recession and mediocre performance of the company, was it a good idea for Warren Buffett to get into this deal or is there some insider information that we are missing?

What do you think about this?

Please share your thoughts in the comments and like this idea if you would like to see more stocks analysed using Elliott Waves.

Thanks