In a recent move by Berkshire Hathaway Inc . (NYSE:BRKa), the conglomerate has increased its stake in Sirius XM Holdings Inc. (NASDAQ:SIRI), purchasing shares worth a total of $86.73 million. The transactions were carried out over several days, with prices ranging from $23.55 to $24.95 per share.
The series of acquisitions began on October 9, 2024, with Berkshire Hathaway buying 869,800 shares at an average price of $23.55. This purchase was followed by additional buys on October 10, totaling 1,435,000 shares, with prices averaging between $24.16 and $24.47 per share. The buying spree culminated on October 11, with the acquisition of 1,259,259 shares at an average price of $24.95.
This substantial investment has expanded Berkshire Hathaway's ownership in Sirius XM Holdings, now totaling over 108 million shares. The detailed transactions indicate a weighted average price for the shares, with the company undertaking to provide full information regarding the number of shares bought at each separate price upon request.
The shares are held by several subsidiaries of Berkshire Hathaway, including Government Employees Insurance Company and National Indemnity Company, among others. As the controlling stockholder of Berkshire, Warren E. Buffett may be deemed to beneficially own the shares owned by these subsidiaries, to the extent of his pecuniary interest.
Investors and followers of Berkshire Hathaway's investment strategies will be keenly observing the effects of this significant addition to its portfolio in Sirius XM Holdings, a leading broadcaster in satellite and online radio services.
In other recent news, Sirius XM Radio has been the subject of several critical developments. The company's second-quarter earnings report revealed an 8% sequential increase in adjusted EBITDA and a 6% increase in free cash flow from the previous year, despite a decrease in subscriber and advertising revenue. Seaport Global Securities, after reviewing Sirius XM's first half of 2024 free cash flow, reduced its target price to $34.00 but maintained a Buy rating. The firm projects a strong 25% free cash flow growth for Sirius XM by 2025, despite some adjustments in its advertising revenue projections.
JPMorgan, however, resumed coverage with an Underweight rating and a $20.00 price target, citing concerns about Sirius XM's long-term growth prospects. The bank recognizes the positive aspects of Sirius XM's recent acquisition of Liberty Sirius but expects a pause in share repurchases until 2027 due to increased leverage. Citi increased its price target to $21.00, focusing on the effects of the Liberty transaction and increased capital expenditures, while maintaining a Sell rating.
Benchmark lowered its price target for Sirius XM to $43.00, maintaining a Buy rating. The adjustment was attributed to more conservative valuation parameters rather than any new concerns about the company's performance. Pivotal Research maintained a Buy rating on Sirius XM, emphasizing the company's robust free cash flow capabilities and potential for growth. Morgan Stanley resumed coverage with an Underweight rating and a $23.00 price target, pointing out the company's declining revenue and adjusted EBITDA.
InvestingPro Insights
Berkshire Hathaway's recent investment in Sirius XM Holdings Inc. (NASDAQ:SIRI) aligns with several key financial indicators highlighted by InvestingPro. The company's P/E ratio of 7.44 suggests that SIRI is trading at a relatively low valuation compared to its earnings, which could be one of the factors attracting value investors like Warren Buffett.
According to InvestingPro data, Sirius XM boasts a high shareholder yield and has maintained dividend payments for 9 consecutive years. This consistent return to shareholders may have caught Berkshire's attention, especially considering SIRI's current dividend yield of 4.27%.
Despite recent challenges, including a significant price drop of 30.36% over the last three months, InvestingPro Tips indicate that SIRI is trading at a low P/E ratio relative to its near-term earnings growth. This suggests potential undervaluation, which aligns with Berkshire's value investing philosophy.
It's worth noting that while Sirius XM faces some headwinds, with 3 analysts revising their earnings downwards for the upcoming period, the company remains profitable. InvestingPro Tips highlight that analysts predict the company will be profitable this year, maintaining its streak of profitability over the last twelve months.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Sirius XM, providing deeper insights into the company's financial health and market position.
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