Greenlight Capital Exits HP Position, Citing Better Opportunities in AI and Shifting Market Dynamics
Prominent hedge fund Greenlight Capital, led by David Einhorn, has closed out its position in HP Inc. (NYSE: HPQ), according to the firm's fourth-quarter 2025 investor letter released this week. The move underscores a strategic pivot as the fund seeks higher-growth opportunities in the artificial intelligence sector while navigating a challenging period for the legacy hardware maker.
Greenlight's investment philosophy traditionally centers on a bottom-up approach, building portfolios of undervalued long positions and overvalued short sales, complemented by macroeconomic hedging. The partnership reported a net return of 9.0% for 2025, trailing the S&P 500's 17.9% gain, though it outperformed in Q4 with an 8.5% return versus the index's 2.7%. Since its 1996 inception, Greenlight has returned $6.1 billion net to investors.
HP, a cornerstone name in personal computing and printing, has faced significant headwinds. Its shares have traded between $18.93 and $35.28 over the past year, recently closing at $19.39 with a market cap of approximately $18.1 billion. The stock has declined 12.3% over the past month and nearly 30% over the last quarter, reflecting broader pressures in the PC market and concerns over its long-term growth trajectory.
In the letter, Greenlight addressed the exit directly: "While HP possesses a strong brand and cash flow, our analysis concluded that capital is better deployed elsewhere. We believe select AI equities present a more compelling asymmetry—greater upside potential with managed downside risk—in the current cycle." The fund noted that hedge fund ownership of HP dipped to 42 portfolios at the end of Q3 2025, down from 51 the prior quarter, and it did not rank among the top 30 most popular hedge fund holdings.
The decision highlights a growing divergence within tech investing, where funds are increasingly allocating away from mature hardware plays toward software and infrastructure beneficiaries of the AI boom. HP, while investing in hybrid work solutions and 3D printing, is perceived by some investors as less central to the immediate AI capital expenditure wave.
Market Voices
Michael R. Chen, Portfolio Manager at Horizon Trust: "This is a pragmatic rotation. Greenlight is recognizing that AI isn't just a theme—it's the capital allocation driver for the next decade. HP's fundamentals are stable, but 'stable' isn't what outperforms in this market."
Sarah J. Phelps, Senior Tech Analyst at Clearwater Research: "It's a shortsighted move. HP is fundamentally cheap, trades at a deep discount to the market, and is returning substantial capital to shareholders. Exiting at a 52-week low seems more like performance chasing than value investing."
David Lin, Independent Market Commentator: "This is classic Einhorn—sticking to his process. He's not paid to hug a stock for sentiment. If the risk/reward isn't there, you move on. The brutal underperformance of HP lately speaks for itself."
Rebecca Torres, Editor at 'The Street Critique': "It's surrender. Selling a iconic American tech name at its lows to buy into an AI bubble? This is the kind of herd mentality that destroys fund value. Greenlight just locked in a loss and is chasing hype."
For further analysis, Insider Monkey's coverage includes a list of the most undervalued tech stocks for 2026 and additional hedge fund letters from Q4 2025.
Disclosure: None. This article is originally published at Insider Monkey.