Always keep in mind that one million times zero equals zero.
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 1
Berkshire Hathaway raises stake in Sirius XM
Feb. 04, 2025 9:07 AM ETSirius XM Holdings Inc. (SIRI) Stock, BRK.B Stock, BRK.A StockBy: Preeti Singh, SA News Editor4 Comments
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Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) has further raised its bet on Sirius XM Holdings (NASDAQ:SIRI), boosting its stake to over 35%, latest regulatory filings show.
The conglomerate acquired around 2.3M shares of the radio broadcasting firm for about $54M in a series of transactions from Jan. 30-Feb. 03, 2025.
Berkshire now owns 35.4% of SiriusXM (NASDAQ:SIRI). As of Feb. 3, Berkshire Hathaway's subsidiaries own over 103.79M SiriusXM shares, and Berkshire's pension plans own 15.98M shares.
Berkshire (NYSE:BRK.A) (NYSE:BRK.B) has been steadily amplifying its stake in Sirius (SIRI), as majority owner Liberty Media decided to merge its tracking stock with Sirius in the second half of 2024. It began investing in Liberty Media in 2016.
SiriusXM (SIRI) shares rose 3.3% premarket on Tuesday. Shares lost 53% in value over the past year.
No. of Recommendations: 10
This is certainly one of those mysterious picks. It seems like a previously-loved cigar with a limited number of puffs left, but it's so far outside my area of expertise that I can but watch from a distance.
Jim
No. of Recommendations: 7
I was previously a Sirius subscriber, and I think a stockowner for a brief spell. While it's a fine and neat product, it seems a very niche one. With Apple, we get music streaming as part of the cloud/tv/music bundle, so it didn't make any more sense. It was novel 20 years ago, but simply isn't as customizable now. All the young people talk about Spotify and such. Sirius might be different now, but a couple years ago when we dropped it, you couldn't search out songs and download them for offline playing and create lists like you can with all the streaming services. With the proliferation of good cell phone coverage in just about anywhere except for the most rural places, there seems to be little need for this now. It strikes me as not having much of a moat. I was puzzled by this too. Sometimes Ted and/or Todd buy things for their own rationale, and I'm not going to second guess them, given their track record.
No. of Recommendations: 0
In re Berkshire's Sirius play, isn't it an arbitrage?
No. of Recommendations: 7
In re Berkshire's Sirius play, isn't it an arbitrage?
I don't see how it could be considered an arbitrage. Maybe you are thinking back to when Ted was buying the Liberty Sirius tracking stock and it traded at a discount to the underlying SIRI shares. Even then it was not an arbitrage since he was not short SIRI against long LSXMA / K at a discount. He was also long some SIRI at that time, not short.
Now Berkshire is essentially the new controlling shareholder of SIRI. No arbitrage here - this company needs to continue generating cash, paying down debt, and retiring stock for many years for this one to work well. It probably will but it won't be exciting. Kind of like DVA.
No. of Recommendations: 6
“this company needs to continue generating cash, paying down debt, and retiring stock for many years for this one to work well. It probably will but it won't be exciting. Kind of like DVA.”
Well put. It took time for DVA to get traction. They have been very disciplined since they sold the health care unit. Blocking and tackling, sticking to their knitting. Covid was a huge speed bump, but now they seem to be doing well.
I like re-engineering the Ted and Todd buys, what are they seeing? Why is this a good buy?
After studying the DVA example, SIRI becomes clearer. If you remember, Ted did very well with DDS (Dillards), similar as well, huge buyback. DDS is not some exemplary retailer either.
When you look at the VRSN financials, it is somewhat similar to V, mostly all free cash, very little capex, and buybacks.
Some will say, that one shouldn’t coat-tail. I agree, one shouldn’t buy just because someone else is buying it. If you are following disciplined, long term buyers, it can be a great learning experience.
No. of Recommendations: 5
SIRI has 34M subscribers. There are 283M registered cars in the USA (2.8M of those in Canada, I think). Very little tariff risk - woo hoo! :)
So ~11% of registered cars are members, worst case. Not horribly shabby.
There are 127M households, so 24% of households. If they stay there they will get some population growth (maybe)
SIRI is $8.7B MarketCap. Pandora <> Spotify, I know, but SPOT is a $126B market cap company. So one can dream...
I think rural drivers, sales-persons and older wealthy people will continue to use SIRIUS and it might always be an older subscriber base so I am not super concerned subscribers will age out. "Research published by the Federal Reserve shows the age of a new car or truck buyer has grown older over the past decade. It is now around 53 years old. They also note that among new vehicles buyers, the 55+ age group has a 15 percentage point increase since 2000." It is going to be an older demographic and SIRI is easy to use -- My 86/95 year old parents are not at all tech-savvy yet they love Facebook, iPhone and Sirius XM.
Subscribers peaked during COVID which makes sense. It might take some time to have subscribers climb back up but I think in the next 10 years there will be more than 34M subscribers as registered vehicles climb with the US population. New car purchases will have to increase eventually as the fleet ages out though average fleet life will continue to increase overall (probably).
They also have the 2nd highest rated podcast (Joe Rogan #1) in "Call Me Daddy" which is 70% women and 70% under 35 so maybe they can A/B test and bring in a younger demographic with disposable income.
Ad revenues increased more than they expected -- Stock is up 18% since earnings. CapEx should shrink, cost cutting is planned so they'll pay down debt and buy back shares and pay a dividend which are all decent uses of FCF which is roughly ~11.5%. You should get ~$4 in debt reduction and ~$2 in dividends over the next 2 years if they don't buy back shares instead of the debt reduction -- so what, ~20%? IF they grow FCF from $1B to $1.4B with cost savings and capex reduction things should go well -- and if they return to growth of subscribers or spend/subscriber you could get even better returns. Best thing that can happen is they deleverage I little bit, pay the divy and maybe sneak in a few share repurchases way down here. Or better yet, I will buy the shares with Berkshire and SIRI can focus on debt and dividends for now.
SIRI is up over 20% from it's low on Jan 13th. Though holding it and adding to it over the last year sucked! Bad. Double down like Berk! ;). This is not investing advice and I will be scaling back down as it climbs.
No. of Recommendations: 1
In re Berkshire's Sirius play, isn't it an arbitrage?
The arbitrage opportunity is over because the deal closed in late 2024. There are no more Liberty tracking stocks, only plain old regular SIRI stock that Berkshire is buying (I think they already own over 1/3 of the company or something like that).
