Berkshire Hathaway Acquires $86.73 Million in Sirius XM Stock

In a recent development, Berkshire Hathaway Inc. has increased its stake in Sirius XM Holdings Inc., purchasing shares totaling approximately $86.73 million. These transactions occurred over a series of days, with share prices fluctuating between $23.55 and $24.95.

The acquisitions began on October 9, 2024, when Berkshire Hathaway purchased 869,800 shares at an average price of $23.55. This was followed by additional purchases on October 10, amounting to 1,435,000 shares at prices ranging from $24.16 to $24.47. The buying activity peaked on October 11, when Berkshire acquired 1,259,259 shares at an average price of $24.95.

As a result of these substantial investments, Berkshire Hathaway’s ownership in Sirius XM Holdings has grown to over 108 million shares. The company has committed to providing detailed information about the number of shares acquired at specific price points upon request.

The shares are held through various subsidiaries of Berkshire Hathaway, including Government Employees Insurance Company and National Indemnity Company. Warren E. Buffett, as the controlling stockholder of Berkshire, may be considered to have beneficial ownership of these shares, commensurate with his financial interest.

Investors and followers of Berkshire Hathaway are closely watching how this significant investment in Sirius XM Holdings will impact the company’s future performance, given its status as a key player in satellite and online radio services.

Additionally, Sirius XM Radio has faced several notable developments recently. The company reported an 8% sequential increase in adjusted EBITDA and a 6% increase in free cash flow year-over-year, despite a decline in subscriber and advertising revenue. After analyzing Sirius XM’s free cash flow for the first half of the year, Seaport Global Securities adjusted its target price to $34.00 but retained a Buy rating. The firm projects a robust 25% growth in free cash flow for Sirius XM by 2025, despite making revisions to its advertising revenue forecasts.

Conversely, JPMorgan resumed coverage with an Underweight rating and a $20.00 price target, expressing concerns about the company’s long-term growth. They acknowledged the advantages of Sirius XM’s recent acquisition of Liberty Sirius but anticipate a halt in share repurchases until 2027 due to rising leverage. Citi raised its price target to $21.00 while still maintaining a Sell rating, reflecting the impacts of the Liberty deal and increased capital expenditures. Benchmark reduced its price target to $43.00 but kept a Buy rating, attributing the change to more cautious valuation parameters rather than new concerns regarding performance. Pivotal Research also maintained a Buy rating, citing the company’s strong free cash flow potential. Meanwhile, Morgan Stanley resumed coverage with an Underweight rating and a $23.00 price target, noting declining revenue and adjusted EBITDA.

Berkshire Hathaway’s investment in Sirius XM aligns with various key financial metrics. The company’s P/E ratio of 7.44 indicates that it is trading at a relatively low valuation compared to its earnings, potentially attracting value investors like Warren Buffett. Additionally, Sirius XM’s high shareholder yield and consistent dividend payments over nine consecutive years may have drawn Berkshire’s interest, especially given its current dividend yield of 4.27%.

Despite recent challenges, including a significant 30.36% decline in share price over the last three months, indications suggest that Sirius XM may be undervalued relative to its near-term earnings growth, in line with Berkshire’s value investing approach. While there are some headwinds, analysts still predict profitability for the company this year, continuing a trend of profitability over the last twelve months.

For those seeking a deeper analysis, there are numerous insights available regarding Sirius XM’s financial health and market position.