Warren Buffett's Berkshire Hathaway continues to increase its investment in the satellite broadcasting company. $Sirius XM (SIRI.US)$ , increasing its shareholding to 32%.

According to the SEC filings in the USA, $Berkshire Hathaway-B (BRK.B.US)$ they bought approximately 3.6 million shares of SiriusXM stocks in separate trades from Wednesday to Friday, worth around 87 million US dollars. Adding to their existing holdings, Berkshire holds 0.1087 billion shares of the company.

Why is the Oracle of Omaha betting on this company?

It is reported that sirius xm was formed by the merger of Sirius Satellite Radio and XM Satellite Radio in 2008.

Just a few months after the merger, the company fell into financial difficulties, but with the help of a $0.53 billion loan provided by Liberty Media, it was able to avoid bankruptcy.

By 2023, Liberty Media has become the majority shareholder of SiriusXM, holding 83% of the shares, and tracks these shares through Liberty SiriusXM Group. Last year, Liberty proposed to spin off LSXM and merge it with SiriusXM.

Buffett's increased shareholding occurred after the completion of Liberty Media's restructuring. Liberty Media, a company of billionaire John Malone, merged with SiriusXM-related stocks in early September and spun off the Atlanta Braves baseball team as a standalone publicly traded company. Berkshire also holds shares of the baseball team. This restructuring is part of Malone's adjustment of his media empire.

Berkshire first acquired Liberty Media's tracking stock in 2016, and began substantial purchases of SiriusXM's tracking stock in early 2024 after the announcement of the transaction, possibly as a form of merger arbitrage.

Despite being 94 years old this year, Buffett has never publicly mentioned this bet. It is currently unclear whether he is personally manipulating behind the scenes, or if it is done by his investment assistants Ted Weschler or Todd Combs, both billionaires.

This is a big bet for a troubled satellite broadcasting company.

After Berkshire invested $87 million, SiriusXM's stock price surged over 9% during trading. However, the stock is still down over 50% this year, and the future path is not smooth.

Not very favored by Wall Street.

Sirius XM is the largest satellite broadcasting company in the USA, with approximately 33.9 million subscribers as of December 31, 2023. Unlike most of the revenue from terrestrial radio stations that comes from live ads, the majority of this company's revenue comes from subscriptions.

While Sirius XM is currently facing user attrition and unfavorable demographic changes, leading to its low popularity on Wall Street.

According to FactSet's data, out of 14 analysts, only 5 gave the stock a 'buy' rating. jpmorgan analyst Sebastiano Petti rated it as 'shareholding,' expressing concerns about the company's long-term growth potential.

In August, the company reported a loss of 0.1 million self-paying subscribers in its satellite broadcasting division in the second quarter, compared to a decrease of 0.13 million subscribers a year ago.

In the second quarter of 2023, the company added 0.171 million new employees. Revenue decreased by 3% year-on-year to $2.18 billion.

Sirius XM is expected to announce its performance on October 31st.

Editor/Rocky