Sirius XM: Why Berkshire Just Added Another 2.3 Million Shares
Sirius XM Holdings Inc. (NASDAQ: SIRI) operates the country’s only FCC-licensed satellite radio service, SiriusXM. The subscription service offers over 200 channels of music, news, talk, podcasts, sports and entertainment. Sirius grew its total subscribers to 33 million by the end of 2024. Interestingly, the consumer discretionary sector giant has sparked the interest of iconic investor Warren Buffet as Berkshire Hathaway Inc. (NYSE: BRK.A) and (NYSE: BRK.B) purchased another 2.3 million for around $54 million between Jan 30 to Feb 3, 2025. This brings the total number of shares owned by Berkshire to 105.16 million or 31% of the company, marking them as the largest shareholder in the company. Berkshire’s pension plan also owns just under 16 million shares, bringing its total stake above 35%.
Sirius Is Completely Independent After Shedding Liberty Media
While Sirius has its own trading symbol, it was previously a subsidiary of Liberty Media. Through a series of transactions, Liberty Media disentangled its ownership through a split-off merger process and a 1-for-10 reverse stock split. This ultimately gave Sirius XM its freedom and independence as its own entity, with a much simpler capital structure since September 2024. It also enables the company to undertake strategic options and even be acquired, as it faces tough competition from streaming music and podcast services like Spotify Technology SA (NYSE: SPOT).
Here's Why Berkshire Owns So Much Sirius
When investors hear that Berkshire Hathaway is buying a certain stock, they automatically assume Warren Buffet is making the decision. However, that’s not always the case. Buffett has many portfolio managers that can and do make independent investment decisions. Ted Weschler is a former hedge fund manager who now works as a portfolio manager for Berkshire Hathaway.
Weschler is no slouch when it comes to picking the right stocks. He turned $70,000 into $131 million in just over two decades. He’s been working for Berkshire for nearly 15 years and has been the one leading its investment in Sirius XM. With over a 35% stake in the company, it looks like a long-term investment or even a potential acquisition down the road.
Trying to Right the Ship Into 2025
Sirius gained its independence in 2024 but shares still closed down nearly 60% for the year. While still profitable and paying a dividend, the company will need to restart its growth engine in 2025. The company reported Q4 2024 EPS of 83 cents, beating consensus estimates by 17 cents. Revenues fell 4.3% YoY to $2.19 billion versus $2.17 billion, driven by lighter subscription and advertising revenue. The average revenue per subscriber (ARPU) dropped 52 cents to $15.11. The gross profit margin was 60%.
Sirius Reaffirms 2025 Guidance Targeting Another $200 Million in Cost Savings
Sirius reaffirmed guidance for the full year 2025 for revenues of $8.50 billion versus $8.54 billion, adjusted EBITDA around $2.6 billion, and free cash flow (FCF) of $1.15 billion. The company is targeting another $200 million in run-rate savings by year’s end 2025 to build on the $350 million achieved in 2024. The company also launched its service in Tesla Inc. (NASDAQ: TSLA) and Rivian Inc. (NASDAQ: RIVN) electric vehicles (EVs) in December 2024, leveraging its 360L technology. Sirius XM's 360L is its latest platform that enables both satellite and streaming delivery, allowing subscribers to access a larger library of content on demand and get personalized recommendations.
Sirius CEO Jennifer Witz was clear in their improvements strategy, “In 2025, we'll be making adjustments that will both allow for a more seamless customer experience and improve the overall health of our business in the long term. These include improvements in online customer engagement such as click to cancel and a reduction in marketing to higher cost, higher churn audiences, as well as shortened introductory offers, immediately following automotive trials and new lower-priced package options.”
SIRI Stock Is In a Cup Pattern
A cup and handle pattern is comprised of two separate patterns: a cup and a handle. The cup is formed as a stock peaks a swing high, marking the lip line as shares fall to a swing low, form a rounding bottom, and rally back to retest the cup lip line. After the cup pattern is complete, the stock rejects again from the lip line to form a shallow pullback before returning to retest the cup lip line, forming the handle. The cup and handle breakout occurs if the stock can break out above the cup lip line on the handle bounce and in the third attempt.
SIRI started the cup lip line at $29.18 before sinking to the $20.55 swing low to form a rounding bottom to stage a rally back up through the daily anchored VWAP at $22.90 towards the cup lip line. The daily RSI peaked just under the 70-band. Fibonacci (Fib) pullback support levels are at $24.43, $22.62, $20.55, and $18.48.
SIRI stock’s average consensus price target is 23.56% higher at $22.00, and its highest analyst price target sits at $30.00. It has six analysts' Buy ratings and two Hold ratings. The stock has a 1.39% short interest.
Bullish investors can consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, then writing covered calls at upside Fib levels executes a wheel strategy for income in addition to the solid 4.25% dividend.
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