Warren Buffett's Berkshire Increases Investment in Struggling SiriusXM
Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway(BRK.A, Financial) has raised its stake in SiriusXM(SIRI, Financial) to 32% after a strategic transaction by John Malone's Liberty Media. According to the latest Securities and Exchange Commission filing, the Omaha-based conglomerate invested $87 million in the satellite radio company after buying roughly 3.6 million of its shares.
This followed Liberty Media's tracking stocks with SiriusXM in early September and a restructuring of Malone's media assets while also spinning out the Atlanta Braves a company in which Berkshire owns stakes.
However, SiriusXM has been experiencing some problems, such as a decreased subscriber base and a reduced target audience among young people. This has dampened the spirit of analysts on Wall Street, which, at the moment, only five of fourteen are advising that investors purchase the stock. The latest criticism came from JPMorgan's Sebastiano Petti, who downgraded SiriusXM to underweight, saying that it is struggling to deliver growth and is not as popular among the young as one might think.
Furthermore, the Liberty Media agreement led to the collapse of SiriusXM's share count by 12%, which can stop the firm's stock buyback programs until 2027, putting pressure on its stock prices. Nevertheless, Berkshire's rise in stake triggered the gain of 8% in SiriusXM shares up until now, and for the YTD, there has been a decline of over 50%.
This investment has not elicited a word from Buffett, which fuels speculation if he or his right-hand men, Ted Weschler or Todd Combs, made this strategic move for the company. This action also seems to support the recent trend of Buffett's investment policy, especially inavoiding risky media business.
This article first appeared on GuruFocus.