Berkshire Hathaway held approximately 63 million shares of Sirius XM stock at the beginning of 2023, and increased its holdings to 105 million shares this year.

Berkshire Hathaway (BRK.A.N) added to its holdings of Sirius XM (SIRI.O) stock this year, but the decision has not paid off. Liberty Sirius XM's stock, which tracks satellite broadcasting operator Sirius XM Holdings, has fallen by approximately 30%.

The decline in the tracking stock is due to Sirius XM's stock price falling by more than 50%, making it the worst-performing stock in this year's Nasdaq 100 index.

At the beginning of 2023, Berkshire Hathaway held approximately 63 million shares of Liberty Sirius XM stock, increasing its holdings to 105 million shares, or about 32% of the tracking stock issued by John Malone's Liberty Media. Berkshire Hathaway holds Liberty Sirius XM's Class A voting shares (LSXMA) and non-voting shares (LSXMK).

Liberty Sirius XM's Class A shares closed at $20.48 on Thursday, down 3.5% and hitting a 52-week low during the day. Berkshire Hathaway had bought in near the 52-week high of $31. Sirius XM's stock price fell 3.6% to $2.54 on Thursday, hitting a 52-week low of $2.45 during the day.

Berkshire Hathaway's most recent addition was in late April. As a shareholder with over 10% of the company, Berkshire Hathaway must disclose changes in its holdings within two business days.

Berkshire Hathaway's total holdings in Liberty Sirius XM are worth about $2.2 billion, a small proportion of its stock portfolio of approximately $385 billion, with Apple (AAPL.O) accounting for over 40% at about $169 billion.

Berkshire Hathaway is apparently bullish on the value of its 84% stake in Sirius XM, which will remain with it beyond 2024, and expects to see a discount of about 35%.

In December of last year, Liberty Media and Sirius XM reached a long-awaited merger agreement, with the tracking stock holders being allocated Sirius XM stock held by Liberty, receiving approximately 8.4 shares of Sirius XM stock per share. The deal provided a mechanism for bridging significant discounts that had existed for years.

As the transaction nears completion, the discount has shrunk to about 5%. However, Sirius XM's stock price fell sharply, dragging the tracking stock down.

Sirius XM's stock price fall is due to concerns over satellite broadcasting user attrition, cable company Charter Communications (CHTR.US) stock price fall and the contraction of the company's valuation. Sirius XM's valuation was higher than cable companies at the end of 2023.

Sirius XM is currently valued at approximately seven times expected pre-tax depreciation and amortization profit in 2024, with a dividend yield of 4%.

The company's market cap is approximately $9 billion, and net debt is expected to be approximately $10 billion after the Liberty merger, based on an expected post-transaction share count of 3.4 billion shares.

Some Berkshire Hathaway observers suggest the Sirius XM position may have been established by Berkshire Hathaway investment manager Ted Weschler, who works with CEO Warren Buffett. Weschler and Todd Combs jointly manage approximately 10% of Berkshire Hathaway's stock portfolio. Weschler is said to be closely connected to Liberty Media CEO Greg Maffei.

Berkshire Hathaway declined to comment on this.

The Liberty Sirius XM deal has also attracted some large hedge funds, including Baupost Group, Millennium Management and Point72. Baupost is led by Seth Klarman, Point72 is run by Steve Cohen, and Millennium is led by Israel Englander. These funds held tracking stock as of the latest reporting date of March 31.