Billionaire Investors Bet Big on a Beaten-Down Nasdaq Stock
As the market continues to soar, with the S&P 500 index up nearly 27% this year, one stock has bucked the trend. Digital audio leader Sirius XM Holdings (NASDAQ: SIRI) has plummeted over 52% in 2023, leaving many investors wondering if it’s time to throw in the towel. However, some of the world’s most successful investors are taking a contrarian view.
Warren Buffett Leads the Charge
Warren Buffett’s Berkshire Hathaway has been aggressively buying shares of Sirius XM throughout the year, amassing a staggering $2.9 billion stake. This significant investment accounts for 1% of Berkshire’s massive $300 billion portfolio. Buffett’s confidence in the company is a clear sign that he believes Sirius XM has tremendous upside potential.
Other Billionaires Join the Fray
Ken Griffin’s Citadel Advisors has also taken a shine to Sirius XM, initiating a new position in the third quarter valued at over $59 million. Griffin had previously held calls and put positions in the second quarter. The involvement of these billionaire investors suggests that they see value in the company’s recent transformation.
A New Chapter for Sirius XM
Sirius XM has undergone significant changes, including a reverse 1-for-10 stock split and its separation from Liberty Media. These moves aim to simplify the corporate structure and attract more institutional investors. Additionally, the company has embarked on a new strategy to acquire exclusive advertising and distribution rights to popular podcasting brands, hoping to lure more paying subscribers and advertisers to its platform.
A Classic Value Play
Sirius XM possesses many qualities that make it an attractive value investment. As the largest digital audio company in North America, it enjoys a monopoly-like status, having secured the only commercial satellite license from the Federal Communications Commission. Furthermore, its paid subscription model offers the potential for sticky, recurring revenue streams. While the company still faces challenges, Berkshire’s significant stake and Buffett’s track record in turnaround stories inspire optimism.
Before You Invest…
While Sirius XM may seem like an attractive opportunity, it’s essential to do your due diligence. Consider alternative investment options, such as the top 10 stocks recommended by The Motley Fool’s Stock Advisor analyst team. These picks have the potential to generate substantial returns in the coming years.
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