Warren Buffett just revealed a huge stake in HP — after ruling out ever owning the computing stock in 1998

• Warren Buffett's Berkshire Hathaway disclosed a massive stake in HP this week.
• In 1998, the billionaire investor ruled out ever owning HP and other technology stocks.

Warren Buffett's Berkshire Hathaway disclosed a $4.2 billion stake in HP Inc. on Wednesday, despite the investor once ruling out a wager on the maker of personal computers and printers.

The famed stock-picker was asked during Berkshire's shareholder meeting in 1998 whether he would ever consider investing in technology companies such as IBM, Microsoft, HP, and Intel.

"Well, the answer is no, and it's probably pretty unfortunate," Buffett said, bemoaning the fact that he'd never bet on tech gurus like Microsoft cofounder Bill Gates and then-Intel CEO Andrew Grove, despite his admiration for them.

The Berkshire CEO explained that he knew little about technology companies, couldn't confidently predict which ones would be winners in a decade's time, and vastly preferred to invest in industries where he had an edge over his rivals.

"I don't want to play in a game where I think the other guys have got an advantage over me," he said. "I could spend all my time thinking about technology for the next year, and I wouldn't be the 100th or the 1,000th or the 10,000th smartest guy in the country looking at those businesses."

"It's much better for us to swing at the easy pitches," he added.

Why did Buffett change his mind?

Buffett was especially wary of tech stocks when he swore off HP in 1998. He was speaking during the dot-com bubble, when many growth companies commanded eye-watering valuations based on the mere promise of future profits.

The investor has warmed up to tech over the past decade or so. He built a roughly $12 billion stake in IBM in 2011, then piled about $36 billion into Apple between 2016 and 2018. While the IBM bet didn't work out, Berkshire's Apple holdings have ballooned in value to north of $150 billion, and make up well over 40% of the company's entire stock portfolio.

It's also possible that one of Buffett's two investment managers, Todd Combs and Ted Weschler, oversaw the HP purchases. However, the sheer size of Berkshire's position suggests their boss was the mastermind, David Kass, a finance professor at the University of Maryland, tweeted on Thursday.

Buffett might feel comfortable owning HP because he's familiar with the business, which has been operating for more than eight decades. The company spun off its enterprise division in 2015, and retained its personal-computer and printer operations within HP Inc.

The Berkshire boss probably sees HP as a mature, modestly valued cash cow instead of a risky upstart chasing growth — similar to how he's framed Apple not as a tech company, but as a consumer brand with indispensable products.

"That's exactly what I've said on Apple, and it's the same thesis on HP," Lawrence Cunningham, the author of several books about Buffett and Berkshire, told Insider.

It's also the case that Buffett is looking to deploy a big chunk of Berkshire's nearly $150 billion cash pile. He recently plowed $7 billion into Occidental Petroleum stock in the space of 11 trading days, and agreed to acquire insurer Alleghany for nearly $12 billion.

Buffett may have determined HP is a solid business trading at an attractive price, and opted to own a big piece of it.