Last week, Warren Buffett's company, Berkshire Hathaway (BRK.A.US), made a significant investment in SiriusXM (SIRI.US), a satellite radio broadcasting company. According to regulatory filings submitted last Friday, Berkshire purchased $86.73 million worth of SiriusXM stock over a three-day period, raising its total holdings in the company to 108.72 million shares. Specifically, on Wednesday, the company bought 869,800 shares of SiriusXM stock; on Thursday, it made two separate purchases of 917,800 shares and 517,200 shares, respectively; and on Friday, it acquired an additional 1.2593 million shares.

resource：uSMART SG

Berkshire Hathaway first disclosed its stake in SiriusXM in November 2023. Last September, following a transaction with Liberty Media, SiriusXM became a standalone publicly traded company with a simplified capital structure. The broadcasting company is expected to report its first earnings since that time on October 31.

SiriusXM is a well-known U.S.-based broadcasting service, specializing in providing subscription-based radio services through satellite and internet platforms. The company offers a wide range of audio content, including music, radio shows, sports, news, and talk programs. Its services span across North America, allowing users to receive various radio services in their cars, homes, or on mobile devices.

SiriusXM is particularly recognized for its prevalence in in-car entertainment systems and is a leading provider of satellite radio services in the U.S. market. It attracts subscribers with its exclusive content and personalized radio options.

Despite this, SiriusXM is not a stock heavily favored by secondary market investors. In fact, many retail investors on popular U.S. investment forums are not familiar with the stock. In terms of stock performance, SiriusXM has experienced a significant decline in 2024, with its share price down by as much as 46.8% year-to-date and a 23% drop in the past month alone.

SiriusXM was formed in 2008 after the merger of Sirius Satellite Radio and XM Satellite Radio Holdings. The company provides a wide range of content, including music, sports, entertainment, comedy, talk shows, news, traffic updates, and weather information through its proprietary satellite system in North America. SiriusXM also acquired the once-dominant music streaming platform Pandora. According to its website, SiriusXM's revenue for the 2023 fiscal year was $8.95 billion, with EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $2.79 billion and net income of $1.26 billion. The platform boasts 150 million listeners and around 34 million subscribers.

In contrast, Berkshire Hathaway has been actively reducing its stake in Bank of America (BAC.US), the second-largest bank in the U.S. Since mid-July, Berkshire has been selling off shares of Bank of America, recently lowering its ownership to below 10%.

Some analysts believe that SiriusXM's stock price decline in 2024 might have prompted Buffett to see it as undervalued at its current price, providing an attractive long-term investment opportunity. Additionally, Buffett has historically shown interest in the media and entertainment industries, particularly companies like SiriusXM, which have stable, subscription-based revenue models.

Earlier this month, SiriusXM reported second-quarter earnings that met market expectations, but its revenue slightly decreased due to subscriber losses in two of its core segments.

Wall Street analysts maintain a neutral stance on SiriusXM, in line with SA Quant's "hold" rating. However, Wall Street's average price target for the stock is $3.78, indicating a potential upside of up to 30% over the next 12 months.

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