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Is Sirius Xm Stock A Good Buy

One of the more surprising winning streaks on Wall Street -- Sirius XM Holdings (SIRI 0.26%) delivering 11 consecutive years of positive shareholder returns -- came to an end in 2020 when the stock took a 9% (dividend-adjusted) hit. It's now working on its second consecutive year of negative shareholder returns.

is sirius xm stock a good buy


The stock was trading slightly higher year to date at the end of 2021's first half, but the momentum shifted as COVID-19 cases started to spike again due to the Delta surge and new car sales slipped due to supply chain issues. JPMorgan analyst Sebastiano Petti downgraded Sirius XM late last week, shifting to a neutral stance on the stock. The combination of softening auto sales and rising capital expenditures on Sirius XM's end in launching new satellites have left him cautious about the company's near-term prospects.

Sirius XM has become a profitable media company, and it generates a ton of free cash flow -- much of which it uses to repurchase stock and boost its dividend. However, it will have to earn its way out of its two-year rut. We're beyond the point where content deals could push the stock higher. It has announced smart partnerships lately with popular podcasts and celebrities, but investors are more concerned about the problematic trends playing against its growth. The earnings report coming in two weeks will likely determine whether or not Sirius XM ends 2021 on a positive note.

We know what the greatest long-term investor of all time has been up to because the U.S. Securities and Exchange Commission requires investment managers with at least $100 million in assets to file a Form 13F quarterly report disclosing changes in share ownership. These documents add an important level of transparency to the stock market and give Buffett-ologists a bead on what the Berkshire chief is thinking.

When Buffett initiates a stake in some company, or adds to an existing one, investors read into that as a vote of confidence. But if he pares his holdings in a stock, it can spark investors to rethink their own investments.

Here's the scorecard for what Warren Buffett was buying and selling during the fourth quarter of 2021, based on Berkshire Hathaway's 13F filed on Feb. 14, 2022, for the period ended Dec. 31, 2021. You can check out the entire list of Buffett stocks here, or continue reading if you're most interested in Buffett's most recent transactions.

Warren Buffett reduced Berkshire Hathaway's exposure to one of his more recent favorite stock picks by an immaterial amount in Q4. The holding company shed 350,000 shares, or less than 0.01% of its stake, in supermarket operator Kroger (KR (opens in new tab), $45.69).

With more than 61 million shares, Berkshire Hathaway is Kroger's third-largest stockholder, holding 8.4% of its shares outstanding. Only BlackRock (10.7%) and Vanguard (9.9%) have larger stakes in the supermarket chain.

Berkshire Hathaway first bought Visa in the third quarter of 2011, and while he didn't specify whether it was Todd Combs or Ted Weschler, Buffett admitted that it was one of his lieutenants. He also has said that he wishes it was his own stock pick, and that Berkshire had bought even more.

The moves come as part of a general retreat by Berkshire Hathaway's on bets in the pharmaceutical industry. In the case of BMY, its late 2019 acquisition of biotech giant Celgene was thought to be a big part of Buffett's attraction to the stock. The deal brought in a pair of blockbuster multiple myeloma treatments: Pomalyst and Revlimid, the latter of which also treats mantle cell lymphoma and myelodysplastic syndrome.

During the fourth quarter of 2017, Berkshire initiated a stake in the Israel-based drug manufacturer, which was out of the market's favor at the time. A bloated balance sheet, mass layoffs and the looming expiration of drug patents had short sellers circling the stock. Needless to say, TEVA's valuation was depressed. Buffett apparently saw a bargain to be had.

Cheap? Yes. Value? Apparently not. The turnaround never materialized, leaving Teva's stock down roughly 75% over the past five years. This one looks like a bet Warren Buffett wishes he could take back.

It's hard to tell whether this was an Oracle of Omaha buy, or a project of one of his lieutenants, Ted Weschler or Todd Combs. Buffett has been mostly mum on RH. Still, the stake fits broadly with the Oracle's worldview. Buffett stocks tend to be bets on America's growth, which certainly includes housing-related industries.

Buffett now holds a total of more than 38 million shares in the energy supermajor, worth $4.5 billion. The stock, a component of the Dow Jones Industrial Average, has delivered a total return of 58% over the past 52 weeks, thanks to soaring crude oil prices.

Buffett has been involved with the Sirius XM tracking stock since the second quarter of 2016, and has been one of the stock's largest shareholders for some time. He added to that stake in a big way during Q4 2021, packing on more than 5.4 million shares, or 35%.

The developer of global hits such as World of Warcraft and the Call of Duty franchise saw its stock plunge amid allegations of sexual harassment, litigation, torrents of bad press and calls for CEO Bobby Kotick to step down. The company also faced tough year-over-year comparisons against 2020's pandemic-fueled growth.

The chairman and CEO of Berkshire Hathaway, for the record, has never been a fan of IPOs. He's said so, on the record, and has notably turned up his nose at some of the most heavily hyped stock market debuts.

Ask Matt readers have long been infatuated with Sirius XM Radio in addition to the predecessor companies, Sirius Satellite and XM prior to their merger. I have been cautioning readers for years to avoid this stock. As long ago as Jan. 28, 2008, Ask Matt readers read this about Sirius Satellite:

Investors who have endured living through this stock must have incredible patience. The stock has delivered bruising volatility with very low returns, losses in fact. But bailing out on the stock just as it's about to recover would be doubly painful.

For investors who would like to dig deeper, they could examine the present value of the cash the company is expected to generate over its lifetime. This analysis, known as discounted cash flow, shows the stock is \"dangerous,\" according to New Constructs, a data analysis firm.