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Warren Buffett Invested $54M Into Sirius XM This February. Why I'm Adding to It in My Portfolio.
SIRISirius XM(SIRI) The Motley Fool·2025-03-08 09:11

Core Viewpoint - Berkshire Hathaway is significantly increasing its stake in Sirius XM Holdings, indicating confidence in the media company's long-term potential despite recent performance challenges [1][2][5]. Company Overview - Berkshire Hathaway now owns over 35.4% of Sirius XM's total shares outstanding, having recently purchased an additional 54millionworthofshares[2][1].−SiriusXMhasbeenapartofBerkshireHathaway′sportfoliosinceearlylastyear,butBuffetthasbeeninvolvedinthesatelliteradiosectorsince2016throughtrackingshares[3][4].FinancialPerformance−SiriusXMhasexperiencedadeclineinvalue,losingmorethanhalfofitsworthsincethebeginningoflastyear,andhasbeenoneofthepoorerperformersinBerkshireHathaway′sportfolio[2][5].−Thecompanyreportedarevenuedeclineoflessthan154 million worth of shares [2][1]. - Sirius XM has been a part of Berkshire Hathaway's portfolio since early last year, but Buffett has been involved in the satellite radio sector since 2016 through tracking shares [3][4]. Financial Performance - Sirius XM has experienced a decline in value, losing more than half of its worth since the beginning of last year, and has been one of the poorer performers in Berkshire Hathaway's portfolio [2][5]. - The company reported a revenue decline of less than 1% in 2023, following a 3% drop the previous year, with guidance suggesting a further decline of 2% to 2.5% in 2025 [8]. - Sirius XM is trading at less than eight times forward earnings, a low multiple for a consumer stock, and offers a 4.5% dividend yield [8][9]. Subscriber Dynamics - Subscriber growth is slowing due to decreasing car sales and a shift among younger drivers towards connected cars that favor streaming services [7]. - The satellite radio platform, which accounts for 75% of revenue, relies heavily on subscription revenue, making the decline in subscriber growth a significant concern [7]. Debt and Cash Flow - Sirius XM has over 10 billion in long-term debt, with its enterprise value being more than double its market cap, yet it has maintained consistent profitability since the merger of Sirius and XM in 2009 [9]. - The company generates over $1 billion in annual free cash flow, which is used for debt repayment, dividends, and share buybacks, resulting in a reduced share count over the years [11]. Future Outlook - The potential for recovery exists as driving activity increases with low gasoline prices and a return to office work, alongside efforts to enhance content offerings in anticipation of potential changes in key programming [10].