This year, the stock price has been cut in half, but Buffett has increased his holdings significantly. Who is this satellite radio company Sirius?

Berkshire Hathaway's massive bottom-fishing in Sirius XM stock, what signal is being sent?

The latest regulatory filings show that on October 16-18, Berkshire Hathaway, under Buffett's leadership, increased its stake in Sirius XM by approximately $86.73 million, bringing its total holdings to 108.72 million shares.

This news boosted Sirius XM's stock price. In after-hours trading on the 13th, the company's stock price surged nearly 13%, closing at $24.93 per share on Friday.

In fact, Berkshire Hathaway has added to its Sirius XM holdings multiple times this year, with investments of over $760 million in March and around $100 million in April.

However, due to challenges in subscriber growth and stagnant revenue, Sirius XM's stock price has fallen over 54% this year.

Currently, Berkshire Hathaway is the largest shareholder of Sirius XM, with a 32% stake.

Who is Sirius XM?

According to media compilations, Sirius XM is a North American radio entertainment company that provides live broadcasting, programming, and services through satellite radio, offering music, sports, drama, talk shows, news, and other content, mainly maintaining stable profits in the car scene. It was formed by the merger of Sirius Satellite Radio and XM Satellite Radio in 2008.

In 2023, billionaire John Malone's Liberty Media became a major shareholder of Sirius XM, holding an 83% stake, some of which is held through tracking stocks of the company Liberty SiriusXM Group (LSXM).

In September last year, John Malone chose to split the LSXM business and merge it with Sirius XM, establishing a new publicly traded company that continues to operate under the name and brand of Sirius XM. The new company will reissue a single series of common stock with the ticker symbol "SIRI".

After the split, LSXM shares were converted to Sirius XM shares at a ratio of 1:0.8375, making Berkshire Hathaway, originally one of Liberty Media's shareholders, the largest shareholder of Sirius XM.

Why is Berkshire Hathaway increasing its stake significantly?

According to market sources cited by the media, Berkshire Hathaway's stake in Sirius XM is managed by Ted Weschler. Weschler joined Berkshire Hathaway in 2012 and is one of Buffett's two designated successors, helping Buffett manage assetsSome analysis points out that Berkshire Hathaway's multiple increases in Sirius XM may reflect the company's strategic desire to increase its media and technology asset investment portfolio.

Currently, Sirius XM's valuation is attractive, with a P/E ratio of 8.21 times, which may imply that investors like Buffett believe it has potential value.

Previously, Sirius XM Chairman Greg Maffei also mentioned that Buffett really likes this platform and listens to the Siriusly Sinatra channel while driving his Cadillac, which plays classic American songs.

Last week, JP Morgan analyst Sebastiano Petti gave Sirius XM an "underweight" rating with a target price of $20. In a client report, Petti stated:

"Lower EBITDA growth prospects, higher capital expenditures, and suspended stock buybacks will continue to impact Sirius XM's sentiment."