Warren Buffett insider trading alert 

Warren Buffett’s Berkshire Hathaway has made a significant move, scooping up more shares of SiriusXM (NASDAQ: SIRI). 

As of October 18, 2024, Berkshire has acquired an additional $42.1 million worth of Sirius XM shares, bringing the total amount of shares bought in the last 10 days to roughly $129 million. 

This latest round of purchasing brings Berkshire’s total stake to an impressive 32.5% of Sirius XM’s outstanding shares.

With Sirius XM’s stock closing at $27.39, down -0.22 (-0.80%) on October 21, and the stock trading near the lower end of its 52-week range ($22.18 to $57.80), Buffett’s move is drawing attention. 

Despite the stock being down over 50% year-to-date, it appears that Berkshire sees potential in the satellite radio company’s business model and future growth opportunities.

Why is Buffett betting on SiriusXM?

While Sirius XM faces stiff competition from streaming giants like Spotify and YouTube, it remains the only satellite radio service with pre-installed setups in new vehicles, thanks to its partnerships with automakers like General Motors (NYSE: GM) and Ford (NYSE: F). This gives SiriusXM a unique competitive edge, particularly in the automotive market.

Sirius XM has also benefited from its recent split from Liberty Sirius XM Group (NASDAQ: LSXMA), which allows it to focus solely on its own growth without Liberty’s influence. The company now operates independently, and this move is expected to enhance trading dynamics and improve the company’s float.

In addition to satellite radio, Sirius XM boasts a diverse portfolio, including the popular music streaming service Pandora and an expanding podcast network. These assets provide steady cash flow, and the company’s subscription model assures a reliable revenue stream.

Moreover, Sirius XM has big plans to roll out its next-generation 360L service, which will offer listeners access to over 10,000 stations, further boosting its offerings and potentially attracting new subscribers.

SIRI stock bet here’s why

Berkshire Hathaway’s purchase comes as Sirius XM’s valuation looks attractive, especially considering its 12% free cash flow yield. Though some analysts remain cautious about its growth prospects, Buffett’s investment signals confidence in Sirius XM’s ability to capitalize on its strengths despite challenges.

However, Buffett’s strategy has always been about long-term value, and it appears that he views Sirius XM as a “diamond in the rough” that can deliver steady returns over time especially with the subscription model.

With Sirius XM free from Liberty’s control, its solid foothold in the automotive market, and its promising portfolio of media assets, investors will be keen to see if Buffett’s gamble pays off.