Berkshire Hathaway Adjusts Portfolio with Increased Sirius XM Stake Amid Valuation Shift

Berkshire Hathaway Pauses Buybacks Amid Valuation Concerns

Berkshire Hathaway, under the leadership of Warren Buffett, has ceased repurchasing its own Class A and Class B shares for 13 consecutive months, spanning from June 2024 through June 2025. This decision marks a significant shift for a company that had previously spent approximately $78 billion over 24 quarters (July 2018 – June 2024) to reduce its outstanding share count by over 12%. The primary rationale for this pause, according to value investing principles, is the current valuation of Berkshire Hathaway stock, which has consistently traded at a 60% to 80% premium to its book value during this period, compared to a 30% to 50% premium in prior years. Despite a near-record cash pile, including U.S. Treasuries, amounting to $344.1 billion, Buffett has indicated no inclination to acquire Berkshire shares at these elevated valuations.

Simultaneously, Berkshire Hathaway has maintained a position as a net-seller of stocks for 11 consecutive quarters, divesting a cumulative $177.4 billion in equities. This broader selling trend, alongside the halt in internal buybacks, has been interpreted by some market observers as a cautious stance on overall market valuations.

Paul Dietrich, Chief Investment Strategist at Wedbush, suggests that Buffett's strategy of liquidating stock assets indicates he foresees an approaching market storm, aiming to repurchase shares after a potential market crash.

Strategic Accumulation in Sirius XM Holdings

Amidst its broader market divestitures, Berkshire Hathaway has notably intensified its investment in Sirius XM Holdings (SIRI). Recent disclosures via 13Fs and Form 4s reveal significant purchases, including over 5 million shares between July 31 and August 4, and an additional 2.3 million shares in late January and early February. These transactions have elevated Berkshire Hathaway's total holdings in the satellite-radio operator to approximately 124.8 million shares, constituting a substantial 37.1% stake in the company.

This increased investment signals Buffett's continued conviction in Sirius XM, even as the stock has faced headwinds, experiencing a decline of approximately 60% since 2022. Berkshire Hathaway's estimated average purchase price for its current holdings stands at $26.93, indicating a current unrealized loss given a July 31, 2025 price of $23.00, yet demonstrating a long-term investment horizon.

Investment Rationale: A "Legal Monopoly" with Predictable Cash Flow

Buffett's attraction to Sirius XM aligns with his preference for companies possessing durable competitive advantages, often termed "economic moats." Sirius XM is considered a "legal monopoly" as the sole holder of satellite-radio licenses in the U.S., affording it significant subscription pricing power. The company's revenue mix heavily favors subscriptions, which accounted for 76.8% of its net revenue through the first half of 2025, in contrast to the 19.6% derived from advertising. This subscription-driven model provides a more predictable and stable operating cash flow, particularly resilient during economic downturns when advertising revenues typically contract.

Furthermore, Sirius XM exhibits a predictable cost structure, with equipment and transmission expenses remaining relatively static irrespective of subscriber numbers. The company also offers a robust dividend yield of 4.7% ($1.08 per share annually), which is well-covered by analyst earnings estimates. From a valuation perspective, Sirius XM stands out with a historically low forward price-to-earnings (P/E) ratio of 7.6, particularly noteworthy when compared to the broader S&P 500's Shiller P/E ratio, which has reached historically high multiples.

Sirius XM's Operational Landscape and Future Outlook

Despite the strategic investment by Berkshire Hathaway, Sirius XM has navigated a challenging operational environment. The company reported a 1.9% decrease in revenue for Q2 2025 ($2.11 billion) compared to Q2 2024, slightly missing analyst expectations. Earnings per share (EPS) for Q2 2025 declined 41.9% to $0.61. The first quarter of 2025 also saw a 4% revenue drop, a 15% profit tumble, and a year-over-year subscriber decrease of 303,000.

However, Sirius XM has outlined a strategic plan for 2025 focused on optimizing core subscription services, enhancing advertising capabilities, and improving operational efficiency. The company reaffirmed its full-year 2025 guidance, projecting approximately $8.5 billion in total revenue, $2.6 billion in adjusted EBITDA, and $1.15 billion in free cash flow (FCF). Aggressive cost-cutting measures are in progress, targeting an additional $200 million in annualized savings by year-end 2025, building on $350 million achieved in 2023 and 2024. The company also plans to reduce its debt by approximately $700 million in 2025, aiming for a leverage ratio of 3.6x.

A key business consideration for Sirius XM remains the impending contract renewal of high-profile talent Howard Stern in late 2025, a decision with an estimated value of $500 million. The company is actively pursuing new programs and strategic partnerships, such as integration into Tesla's operating system, to attract and retain subscribers.

Market Reaction and Forward Implications

Warren Buffett's continued accumulation of Sirius XM shares, despite recent underperformance, underscores a strong belief in the company's long-term value proposition and its fundamental business model. This involvement often acts as a stabilizing factor, potentially attracting further institutional interest. Analyst Matthew Harrigan of Benchmark issued a price target of $32 per share in February 2025, suggesting a potential 44% upside from current levels. Retail sentiment on platforms like Stocktwits also saw a notable increase in bullishness following Berkshire's disclosure of its increased stake.

Looking ahead, the market will closely monitor Sirius XM's progress on its strategic initiatives, particularly its ability to stem subscriber churn and execute on cost efficiencies. The outcome of the Howard Stern contract negotiations will also be a focal point. For the broader market, Berkshire Hathaway's cautious stance on its own stock valuation and its sustained net selling activity could imply a broader apprehension regarding market excesses, signaling a continued search for undervalued assets with robust fundamentals in the current environment.