Buffett Bet $8700 Million More On SiriusXM, But Why?

According to documents submitted to regulators last Friday, Berkshire Hathaway recently increased its stake in Sirius XM Holdings, purchasing 3.6 million shares for approximately $87 million over the weekend.

Buffett's company now holds 108.7 million Sirius XM shares, owning 32% of the company. According to Form 4 filed with the U.S. Securities and Exchange Commission last Friday, Berkshire purchased between Wednesday and Friday last week at an average price of nearly $24.50 per share.

This year, Berkshire has significantly increased its holdings, primarily through the purchase of Liberty Sirius XM, a stock that tracks Sirius XM, and merged with the satellite radio operator in early September.

Last Friday, Sirius XM's stock rose 2.6% to $24.93 but has fallen about 55% year-to-date. Investors are concerned about the platform's slight loss in self-pay subscribers, flat revenue, aging user base, and the company's $10 billion debt.

Sirius XM's service is primarily used in cars, but the company is seeking to expand the platform. By the end of June, Sirius XM had 31.5 million self-pay subscribers.

It is believed that Berkshire's stake in Sirius XM is managed by Ted Weschler, one of the two investment managers who manage Berkshire's more than $300 billion stock portfolio alongside CEO Warren Buffett.

Sirius XM is currently trading cheaply, at about eight times the expected earnings per share of approximately $3.10 in 2025, and has a dividend yield of over 4%.

JPMorgan analyst Sebastiano Petti resumed coverage of the company last week with an underweight rating and a target price of $20. Petti wrote in a client report, A lower EBITDA growth profile, elevated capex, and a pause in buybacks will continue to weigh on SIRI sentiment.

The company's EBITDA is expected to be flat compared to 2023. Petti stated that due to the company's focus on reducing debt, stock buybacks may not resume until 2027.

Sirius XM Chairman Greg Maffei said that Buffett is very fond of the platform and listens to the Siriusly Sinatra channel, which plays classic American songs.