Gordon Haskett: Is Activist Targeting HP?

Trading volume for shares of HP Inc HPQ is unusually high in recent days, and Gordon Haskett analyst Don Bilson speculated Wednesday that an activist investor could be targeting the stock.

Bilson, who heads event-driven research at the firm, said in a note that a huge spike in recent trading volume came despite a lack of an obvious catalyst.

Regulatory filings show that Nomura was the biggest buyer of the stock in the second quarter, and UBS was also a big buyer, the analyst said, adding that activists sometimes use those trading desks to get into swaps. 

High Volume

HP has traded more than its average of 10 million shares in eight of the last nine days, including two days over 20 million, Bilson said. 

Some shareholders of Xerox Holdings Corp XRX, including Carl Icahn, “might like to see HPQ buy XRX,” the analyst said. 

HP CEO Dion Weisler is stepping down in a month.

What exactly is going on isn’t fully clear, Bilson said, but added that it’s clear the stock is a consensus sell and is trading below nine times EPS.

“All told, we don't see any flames just yet, but we smell enough smoke to ring the alarm,” the analyst said.

“HPQ’s fiscal year ends in October and its nomination window opens in December which means if anyone is there, we should be hearing about it in the next month or two.”

Price Action

HP shares were trading 0.27% higher at $18.64 at the time of publication Wednesday. 

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