Daily Authority: 🖨️ Buffett buys some printers

🍌 Good morning! Oh the fruit show was pretty great! Obviously, lots of companies wanting to show off their machines and concepts for packaging, cleaning, processing, vision systems for quality control, and so on. But also: fruit! Amazing to see brands you never really think of, like Chiquita bananas, with a booth the size of a small farm and an army of corporate suits hoping to sell more. Also in innovations: a no-tears, no smell onion. Hm!

Buffett buys 10% of HP (or like four ink cartridges)

Something different for you today: PC and printer maker HP has been given the Warren Buffett seal of approval (aka, lots of money) (FT, $):

Warren Buffett’s Berkshire Hathaway disclosed late on Wednesday that it had purchased a stake in computer and printer maker HP Inc. worth $4.2bn, the latest sign that the sprawling conglomerate and its billionaire investor are finding value in the US stock market.

It’s a big deal when Warren Buffett and his conglomerate company, Berkshire Hathaway step into a company, though Buffett doesn’t go for the Elon Musk-style intervention approach, as he’s launched with Twitter.

Don’t underestimate the Oracle of Omaha:

Buffett, now 91 years old, and his right-hand man, Charlie Munger (who is 98), have published decades of his investing thoughts and ideas, always talking a game of patient investing, ignoring market swings, and buying during down times.
To give you an idea, back in 1988 when he bought into Coca-Cola, he said: “In 1988 we made major purchases of Coca-Cola. We expect to hold these securities for a long time … In fact, when we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
When Buffett/Berkshire bought 5% of Apple, starting in 2016, Apple stock hadn’t done much in a few years. It had the iPhone, but the market didn’t see much growth opportunity.
As invariably happens, Buffett’s bet on Apple was right: Berkshire reaped $100 billion in six years from its investment (CNBC).

So, why HP?

HP, alongside Dell (and Apple), has had good years on the back of the boom in the PC market during the work and study-from-home pandemic months and years.
That said, the same morning Buffett announced his position, one report pointed out HP and Dell stock had been falling as consumer spending is expected to slow.
I had a look at HP Inc’s most recent quarterly performance: Hardware sales of PCs and laptops and monitors and so on earned HP $12.2B, while its printing division earned $4.8B, with printing vastly more profitable on a bigger margin.
(HP is worth $36B in total, a little short of Apple’s ~$2T valuation!)
(Also, Xerox tried to buy HP in 2019-2020 for $24 a share, but backed out due to the pandemic. HP’s shares are currently ~$40. Ouch).

Why it matters:

I mean, it doesn’t. Buffett isn’t going to ring HP and ask them to put an edit button on their printers, and the core HP business won’t change.
But at the same time, this is a big signal: Buffett doesn’t think PCs and accessories or printers are going away — he believes in HP leadership and the business, and the brand.
HP doesn’t really have a close following in our enthusiast market at the moment, and hasn’t had a smartphone or tablet since 2016, with the 6-inch Elite X3, which ran Windows 10.
But it’s been a top name forever, and its Spectre and Omen brands are strong.
My simple takeaway is: HP looks better than ever after this.

Roundup

📱 OnePlus shows off Nord N20, confirms US release soon, with OLED and in-display fingerprint sensor (Android Authority).

🏃‍♂️ “The Peloton Guide wouldn’t let me skip a single push-up” (Engadget).

🚢 “ELI5: Why are space vehicles called ships instead of planes?” (r/explainlikeimfive)

Throwback Thursday

Remember when OpenAI revealed the DALL-E machine learning system which could generate images?

You probably saw it but didn’t try it out given the waitlist, but OpenAI’s DALL-E 2 is now here, boasting higher resolution and lower latency than the original, and it can edit existing images as well.

It produces pretty wild images of just about whatever you can imagine, even long strings, like “Shiba Inu dog wearing a beret and black turtleneck”: