Warren Buffett Doubles Down: Why He’s Loading Up on This Bargain Stock in 2025
Oracle of Omaha strikes again—Buffett's latest move screams conviction in undervalued plays.
The Contrarian Bet Everyone Missed
While retail traders chase meme stocks, Berkshire quietly scoops up shares at fire-sale prices. No hype, no leverage—just cold, hard value hunting.
Buffett’s Discount Bin Strategy
Forget Wall Street’s algorithmic circus. This play reeks of old-school fundamentals—P/E ratios lower than crypto winter morale, free cash flow that could bail out a mid-tier exchange.
The Punchline?
Turns out the ‘dinosaur’ still knows how to spot blood in the water. Maybe those ‘outdated’ valuation methods work better than betting on dog-themed tokens after all.
Image source: The Motley Fool.
A stock Warren Buffett can't get enough of
According to recent SEC filings, Berkshire bought another 5 million shares of(SIRI 0.74%) for a cost of about $106.5 million.
Of course, an investment of this size isn't exactly massive for Berkshire. In fact, it represents about 0.03% of the company's $344 billion cash stockpile. But it's especially significant because of how much of the satellite radio operator Berkshire owns now. In fact, after this investment -- which is just the latest in a series of additions -- Berkshire now owns 37% of Sirius.
Why has Buffett loaded up on SiriusXM stock?
The short explanation is that Buffett most likely added more shares of SiriusXM because the stock is extremely cheap. As of this writing, SiriusXM trades for just over 7 times forward earnings estimates. The business is highly profitable, with over $1 billion in annual free cash flow, and pays a 5% dividend yield that is well covered by its earnings.
To be fair, there's a lot not to like about SiriusXM. Revenue has fallen in recent years, as has the subscriber base, which peaked way back in 2019. Free cash FLOW has declined by about one-third in the past two years, and the company continues to report a declining number of paid subscribers.
On the other hand, SiriusXM's management is well aware of the problem and is taking steps to fix it. And there are two components to a turnaround that are worth watching: money flowing out (expenses) and money flowing in (revenue).
On the expense side of the equation, SiriusXM has done an excellent job of cost reductions and is on track to achieve $200 million in run-rate savings by the end of this year, with significant capex reductions expected in 2026 and beyond.
When it comes to revenue, SiriusXM's leaders are getting creative, and it's starting to pay off. One example is the new three-year dealer-sold subscription package available with new vehicles (creating a paid customer as opposed to the traditional free trial given to new vehicle buyers). There's also a new ad-supported free version of its service available in some new vehicles, and with just 2.5% of SiriusXM's revenue coming from ads today, this is a massive growth opportunity.
In all, SiriusXM believes it can grow free cash Flow by about 50% in the not-too-distant future and reach a new all-time high for subscribers. If it can show significant progress toward either goal, it could be a major win for Warren Buffett and the rest of the company's shareholders.
