As promised, I sold my HP position completely.
This was one of the most harrowing and hence learning experiences of my short investing career. It showed me how the qualitative aspects dominate the quantitative. How mis-management can wreak havoc to a company and how important the role of the BoD is.
I plan to write this in more detail but for now I am happy to get out at these prices. The stock may appreciate in the short term but frankly I am increasingly convinced that this company is not a great long term investment.