Investing

Buffett Bought 30% of A Company Whose Best Days Are over, It's The Strangest Investment I've Ever Seen Him Make (SPOT, SXM, BRK.B)

Austin Smith

Published: February 11, 2025 9:27 am

24/7 Wall St. Key Points:

• Warren Buffett has increased his stake in Sirius XM (NASDAQ: SIRI) to 35.4%, despite concerns about market saturation and declining relevance.
• The rise of Apple (NASDAQ: AAPL) CarPlay, Spotify (NYSE: SPOT), and other streaming services challenges Sirius XM’s long-term growth potential.
• Buffett’s massive cash reserves suggest he remains cautious about the broader market, making his Sirius XM bet even more puzzling.
• Also: Are you ahead, or behind on retirement? Click here to take a quick quiz and see for yourself.

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Transcript:

[00:00:04] Doug McIntyre: So Warren Buffett has made one of the strangest decisions I’ve ever seen him make. You want to walk us through that?

[00:00:13] Lee Jackson: Well, as we’ve discussed and told our viewers and written about at length at 24/7 Wall Street, he, he didn’t buy anything last year. He was a net seller of Bank of America. (NYSE: BAC)

[00:00:27] Lee Jackson: He was a net seller of Apple, and so his moves were very limited. He bought the pool company, he did buy Domino’s Pizza (NASDAQ: DPZ), which is a smart buy. And he bought and sold and bought again, Ulta (NASDAQ: ULTA), the, cosmetic store that women really like, which I thought was a good buy that he should stay with. But he’s continued to add to Sirius XM, the satellite, music and sports and talk venue.

[00:00:56] Lee Jackson: And he’s got 35. 4 percent of the company.

[00:01:01] Doug McIntyre: I don’t get it. I don’t get it either. Here’s why I don’t get it. That is a company that has to have saturated the market. All right. Because every time you get a new car. It’s installed and you get six months free. And then they try to flip you to being a paid customer.

[00:01:19] Doug McIntyre: So anybody who wants serious in their car has it in their car. So where do you get, how is that? I don’t understand how a business is virtually. 100 percent saturation. How does it grow?

[00:01:34] Lee Jackson: Yeah. And I think that five, seven years ago, maybe it was a plausible move. But now, like for instance, I bought a new car, less than a year ago and it wasn’t a super, it was a Honda CRV, but it wasn’t near their bottom line.

[00:01:50] Lee Jackson: And I asked the salesman, who was a friend of mine, he owned the dealership. And I said, so is Sirius XM in there? And he goes, no. And I went, really? And he goes, no. He said, use the Apple car. sure. And so that’s what everybody’s using. you have a streaming service. You have Spotify, if you want to listen, you have Spotify that you don’t have to pay for and listen to commercials, or you have Pandora, which you can do with or without commercials and you just plug it in.

[00:02:21] Lee Jackson: You don’t have to fiddle around with jumping around channels and stuff like that. and, Spotify has everything that XM has and more.

[00:02:30] Doug McIntyre: Well, hang on. They don’t have Howard Stern. No, I don’t think they have Joe Rogan either. Right, so if you want to listen to Joe Rogan, which I think has, Joe Rogan now has more, bigger audience by about 10 times than CNN does, so.

[00:02:45] Lee Jackson: There’s probably a lot more than that, yeah.

[00:02:48] Doug McIntyre: Yeah, you’re right, I’m sorry. if you want to listen to one of the two, big personalities, and Stern and Rogan, you’re right, I’m sorry, I should have thought of that.

[00:02:58] Lee Jackson: Howard Stern’s best days, I’m sure, are far behind him. 30 or 40 years. Yeah. Yeah. But I think that’s interesting that, that of all the things with all the money, we’ve talked about this over and over. He has $325 billion in t-bills and cash. And why would his only target. Only target be to keep piling on Sirius XM. He put on a little more of some of his other positions Most notably occidental because it dipped lower But why that I think he’s worried.

[00:03:34] Lee Jackson: I still think he’s worried about the overall market.

[00:03:38] Doug McIntyre: There is no other explanation when a brilliant investor has that much in cash, other than the fact that they think the market’s going to eventually In the near term future is going to basically dump.

[00:03:51] Lee Jackson: Yeah, and but still of all things to buy serious xm Which is, like you said, it used to be every new car you would buy, it would be in there and you’d get it free for six weeks or six, six months

[00:04:06] Lee Jackson: I remember when I bought a car out in Hawaii, I kept saying, why doesn’t this work? Because they don’t, their satellites don’t cover Hawaii. I just don’t understand this. And he owns over a third of the company.