Hewlett-Packard Enterprise, Held By 233 ETFs, Sees Earnings Hit

June 02, 2022

Hewlett Packard Enterprise Company (HPE), which was spun off of Hewlett-Packard in 2015, dropped as much as 8% on Thursday morning, one day after second-quarter fiscal earnings showed flat or reduced results in several areas. 

Currently, 233 ETFs hold HPE stock. The RiverFront Dynamic US Dividend Advantage ETF (RFDA) has the most overall exposure at 2.7%, though the iShares Focused Value Factor ETF (FOVL) is close behind at 2.68%. Following the top two ETFS are the Fidelity Cloud Computing ETF (FCLD), at 2.51%; the First Trust US Equity Dividend Select ETF (RNDV) at 2.16%; and the IQ U.S. Mid Cap R&D Leaders ETF (MRND) at 2.04%. 

 

 

In aggregate, U.S.-listed ETFs hold 165.8 million shares of HPE. The SPDR S&P 500 ETF Trust (SPY) sits in pole position, with 13.81 million shares. The iShares Core S&P 500 ETF (IVV) is in second place, with 10.71 million shares, followed by three Vanguard funds: the Vanguard Mid-Cap ETF (VO)  with 10.32 million shares; the Vanguard S&P 500 ETF (VOO) with 9.95 million shares; and the Vanguard Total Stock Market ETF (VTI) with 8.41 million shares. 

 

 

In terms of categories, 48 of the ETFs holding HPE represent cap-weighted, vanilla strategies, with 41 multifactor ETFs also holding the stock. There are 29 actively managed ETFs that hold HPE shares, as well as 27 value ETFs and 25 ESG ETFs.  

HPE’s Earnings Miss 

Wednesday's report showed HPE's net earnings came in at $250 million and $0.19 per share, compared with $259 million and $0.19 per share a year ago. Adjusted earnings came in at $0.44 per share, down 4%. The earnings and revenue were lower than consensus expectations. 

The company cited hundreds of millions of dollars’ worth of business operations in Russia being halted due to the Ukraine conflict, along with supply chain issues and rising inflation as the primary reasons for stagnancy. In fact, they said they're "optimistic" about flat earnings amid all these struggles. 

HPE, often considered the "other Hewlett Packard" stock, is the smaller sibling to HP Inc. (HPQ), which is held by 263 ETFs. HPE's business focuses on computing hardware, whereas HPQ primarily focuses on PCs and printers. 

In comparison to fast-growing startups and exciting IPOs, both Hewlett Packard tickers fly under the radar occasionally in the tech world. Many consider HP, which was founded in 1939, to be an older generation of technology compared with more recently founded companies. 

However, this perception may explain why HPE's sibling company has fared much better in recent months. 

Warren Buffett purchased an 11.4% stake in HPQ in April, causing the stock to gain 15% in a single day. At a valuation of $4.2 billion, Berkshire Hathaway is now the largest stakeholder in HPQ, holding around 121 million shares. 

Given Buffett's long track record of growing wealth by buying perceivably "boring" stocks when they're on sale, one wonders if Thursday's drop will be viewed not as a sign to sell, but as an opportunity to buy HPE shares at a lower price. 

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