Unlocking Hidden Value: A Berkshire Holding Poised for a Comeback
A Sleeping Giant in the Audio Entertainment Space
Berkshire Hathaway, led by Warren Buffett, has consistently outperformed the S&P 500 since 2022. One of its lesser-known holdings, Sirius XM, has the potential to make a significant comeback in 2025 and beyond.
A Company in Transition
Sirius XM, the leading satellite radio service provider, has faced challenges in recent years. Its third-quarter numbers were disappointing, with a swing to a per-share loss and a decline in revenue. However, this weakness is not permanent. The company is undergoing significant transformations, including the end of its complex relationship with Liberty Media.
Beefing Up Content and Technology
Sirius XM is focusing on enhancing its audio content offerings, adding fresh talent to its roster of on-air stars. The company is also utilizing Unified ID 2.0, a technology that enables more precise and effective advertising delivery. Additionally, Sirius XM is offering more pricing options, including ad-supported offerings, to attract and retain subscribers.
A Path to Profit Growth
As the business shifts online and away from satellite-delivered programming, Sirius XM expects to reduce capital expenditures on satellites. This, combined with its efforts to revitalize its reach in the automobile industry and launch new ad-supported subscriptions, is expected to drive subscriber growth and increase annual free cash flow.
Buffett’s Patience Will Pay Off
Warren Buffett’s continued support for Sirius XM speaks volumes. With a solid dividend yield of 4.1%, the stock presents an attractive opportunity for investors. While it may take time for the company’s overhaul efforts to bear fruit, the potential upside is significant.
A Value Play Worth Considering
Sirius XM’s stock has been halved since the end of 2023, presenting a discounted entry point for investors. If you’re looking to add a value play to your portfolio, Sirius XM is worth considering. With its strong fundamentals and growth potential, it could be a smart addition to your investment mix.
Leave a Reply