Buffett Invests Over $42M More in SiriusXM Stock

"The 'Oracle of Omaha' Warren Buffett's Berkshire Hathaway (BRK.A.US) continues to increase its stake in Sirius XM (SIRI.US), purchasing over 1.5 million additional shares, raising its ownership in the satellite radio company to over 32%.

According to a filing with the U.S. Securities and Exchange Commission (SEC) last Friday, Berkshire bought over $42 million worth of SiriusXM in three transactions from Wednesday to Friday of last week.

These three transactions increased its total holdings to over 110 million shares, accounting for approximately 32.5% of Sirius XM's publicly traded stock. It is understood that Berkshire also invested over $86 million to increase its stake in Sirius XM during the week of October 8th, becoming the company's largest shareholder last month. This move has provided some support for Sirius XM's stock price, which has fallen by 50% this year due to expected sales declines.

Berkshire has increased its bets after billionaire John Malone's Liberty Media completed a transaction in early September of this year to merge its tracking stock with the remaining shares of the audio entertainment company. This is part of Malone's restructuring of his vast media empire, which also includes spinning off the Atlanta Braves baseball team into an independent publicly traded company, in which Berkshire also holds shares.

Berkshire first acquired tracking stocks of Liberty Media in 2016 and began to heavily purchase tracking stocks of Sirius XM in early 2024 after the transaction was announced, which may be a merger arbitrage action.

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It is also worth noting that Sirius XM's current trading price is at a historical low, with a price-to-earnings ratio of around 8 times, and it has a dividend yield of over 4%. In the second quarter, Buffett also bottom-fished the beauty stock Ulta Beauty (ULTA.US), which has plummeted this year.

Buffett has never publicly mentioned this bet, and it is currently unclear whether he is the one behind the scenes or whether it is the work of the billionaire's investment assistants Ted Weschler or Todd Combs.

Falling out of favor on Wall Street

Sirius XM, which has been struggling with user loss and unfavorable demographic changes, is not popular on Wall Street. According to FactSet data, only 5 out of 14 analysts have given a 'buy' rating.

JPMorgan analyst Sebastiano Petti gave a 'reduce' rating, citing concerns about the broadcasting giant's long-term growth and its ability to successfully target a broader audience."At the same time, the analyst stated that the Liberty Media Group deal reduced the number of shares by 12%, which could lead to Sirius XM suspending stock buybacks until 2027, potentially putting pressure on the stock price.