Rich US stock valuations certainly help explain why the ‘Oracle of Omaha’ is trimming down most of his positions in 2025. Yet that hasn’t been the case with Sirius XM Holdings (NASDAQ:SIRI). In fact, he’s been busy steadily, increasing his stake since late 2024, growing the position to around $2.6bn.

With the share price down almost 30% in the last 12 months, could this be a hidden value opportunity?

Why Buffett’s buying

As a quick reminder, Sirius XM is a radio and audio streaming service provider operating across the US and Canada. Using satellite signals, it supports over 250 audio channels streaming music, sports and talk shows, among others. It’s a classic boring business that most investors have seemingly been ignoring. And while we don’t know the exact investment thesis, the company does have several favourable traits that Buffett likes.

First off, after the recent tumble, the valuation now looks quite attractive with a price-to-earnings ratio of just 7.3. That’s despite the fact that the company has a long track record of generating strong free cash flow and consistent dividends that have been rising since 2016.

What’s more, despite competitive pressures from platforms like Spotify, Sirius has proven to be quite durable, especially in rural areas where a reliable mobile signal is uncommon. And this resilience has only been compounded by the firm’s exclusive content and content partnerships.

This all points to a competitive moat that most investors seem to be underestimating. With that in mind, it’s not so surprising to see Buffett load up on shares while everyone else is seemingly selling.

No guarantees

Seeing Buffett invest in a business is certainly a strong signal of confidence. However, it’s important to remember that he isn’t perfect and has made plenty of mistakes over the years. Therefore, blindly following in his footsteps likely isn’t a prudent strategy.

Instead, investors need to understand the risk of this investment. And while Sirius has a lot of promising traits, the firm still has its weak spots.

Growth in the group’s subscriber base has slowed recently. This may be as a result of a wider cyclical slowdown or consumers simply losing interest in the shows available on its satellite-powered platform. And there‘s growing concern that customer attrition could accelerate as some of its long-standing exclusive programming comes to an end, as older talent starts to retire.

At the same time, the balance sheet holds close to $10.2bn in debt & equivalents versus only $92m in cash & equivalents. To be fair, with operating cash flows of $1.7bn in 2024, the company’s comfortably covering both its interest and dividend expenses. But that could change if more listeners start switching to competing platforms.

The bottom line

All things considered, Sirius XM appears to be a promising value opportunity. But that value’s entirely dependent on management’s ability to attract and retain an audience. And right now, it’s unclear whether it can succeed on this front. That’s why I’m not following Buffett on this one.

The post Here’s the stock that Warren Buffett’s buying hand over fist in 2025! appeared first on The Twelfth Magpie.

However, some of them have analysts confused.

In the third quarter of 2024, the investment giant significantly reduced its holdings in Apple, selling over 600m shares. Despite this, the stock remains Berkshire’s largest holding, with the remaining stake worth approximately $70bn.

It also cut its stake in Bank of America to below 10%, adding to the firm’s growing stockpile of cash.

With the US stock market experiencing increasing volatility, Buffett seems to have adopted a cautious investment approach. That’s not surprising, considering the so-called ‘Buffett Indicator’ is near all-time highs. 

The indicator compares the total market capitalisation to GDP in the US. It’s currently above 200%, suggesting the market’s significantly overvalued. This is likely the key reason behind what appears to be a shift in strategy for the ‘Oracle of Omaha’.

An odd purchase

It’s not all about selling at Berkshire. Some of the recent capital from sales went towards building a notable position in satellite broadcasting company Sirius XM (NASDAQ: SIRI).

Between late January and early February, Berkshire purchased an additional 2.3m shares in the company, bringing its ownership to over 35.4%. This investment suggests strong confidence in the satellite communications sector, despite declining interest from consumers. 

Aside from its core service, Sirius XM also operates Pandora music streaming. This makes it a key competitor to Spotify and Apple Music. At one point it was a leader in the sector, commanding over 70% of the online music market in 2013.

But the service has reportedly been losing two-to-three million listeners a year. The stock fell 58% in 2024 and isn’t highly favoured on Wall Street, with few analysts giving it a Buy rating.

So what is behind the sudden interest from Berkshire Hathaway?

Long-term potential?

As a value-focused investment firm, it may see potential in the company’s low valuation. Recently, it’s begun adding exclusive content and expanding its streaming services in an attempt to recover market share. It’s possible these developments prompted Berkshire to consider the company’s long-term potential.

However, as it has yet to comment on the purchase, we can only speculate on the reason.

For now, Spotify, Apple and Amazon collectively account for over 90% of US music streaming subscribers. Any competitor has a tough road ahead if it hopes to make a dent in that dominance.

After posting a $1.67bn loss in its latest full-year results, Sirius XM needs all the help it can get. Earnings have recovered somewhat after a disastrous Q3 last year but they’re expected to remain flat at 66c per share in Q1 2025.

Overall, I don’t see the attraction. Yes, the shares seem undervalued right now but I don’t see a strong argument for a recovery. As such, it isn’t high on my list of stocks to consider right now. 

However, I’m not one to question the genius of Buffett and his team at Berkshire. There’s a strong possibility I’ll be proven wrong.

The post What is Warren Buffett planning for in 2025? appeared first on The Twelfth Magpie.

The stock’s fallen by 51% since the start of the year, but Berkshire increased its stake by 200% in the first six months of 2024 — and it’s kept going since. So should I consider buying it?

What does SiriusXM do?

SiriusXM has two main operating divisions. The core business provides satellite and online radio services and its Pandora division is a music streaming service.

The company also has two main income sources. Paid subscriptions account for around 77% of revenues and advertising sales make up roughly 20%.

The business has an unusual route to market. The vast majority of new and used vehicles in the US come with a free trial of its services, after which users can choose whether or not to sign up.

Unfortunately, a lot of them aren’t – monthly active users have fallen from 61m in 2020 to 45m today. This might put some investors off, but I think the stock’s worth a closer look.

Cash flows

Berkshire’s been a consistent buyer of SiriusXM shares this year but that hasn’t stopped the stock falling. And at today’s prices, it looks very cheap.

The company currently has a market-cap of $9bn and generated $1.2bn in free cash in 2023. It expects to do something similar in 2024, which is 13% of the firm’s current market value.

A lot of this has been going back to investors. At today’s prices, the dividend yield has reached 4% and SiriusXM has also been buying back shares at a rate of 4% a year since 2014.

That’s an eye-catching return. More importantly though, the company’s been using its cash to address its declining subscriber base – most notably through podcasts.

Growth investments

There’s no way around the fact that SiriusXM is up against tough competition. The obvious examples are Spotify and Apple. 

Nonetheless, the company’s been investing heavily in its talent roster. The recent highlight is the exclusive agreement it has signed with Alex Cooper, the world’s leading female podcaster.

An attractive content line-up is something that listeners could be willing to pay for. If SiriusXM can build it, the subscribers might well come – or at any rate, not leave. 

The company’s route to market means it also stands to benefit from another ongoing trend. Higher car sales as a result of the shift to electric vehicles should boost subscriber numbers.

Should I buy the stock?

I don’t know whether it’s Buffett that has been buying SiriusXM shares, or one of Berkshire Hathaway’s other managers. But I think it looks interesting. 

There are some clear challenges facing the business at the moment. But in my view, there’s a good chance the market might be overestimating these in the current share price. 

If the business can arrest the decline in its subscriber base, the stock could be a real bargain. And at today’s prices, I’m tempted to think the risk might be worth the potential reward.

I think buying SiriusXM shares at today’s prices could well work out nicely for investors and are worth considering. It’s firmly on my list of stocks to think about buying.

The post Warren Buffett’s Berkshire Hathaway has been loading up on this stock. Should I? appeared first on The Twelfth Magpie.