Warren Buffett Continues to Load Up On This Value Stock That's Already Up 20% This Year. Should You Follow?

Core Viewpoint - Warren Buffett's Berkshire Hathaway was a significant net seller of stocks in 2024, selling $133 billion worth of stocks while only buying$6 billion, with notable purchases in Sirius XM despite its challenges [1][2]. Group 1: Berkshire Hathaway's Investment Strategy - Berkshire Hathaway has increased its stake in Sirius XM, a low-priced, 4%-yielding value stock, throughout 2024 and into 2025, indicating confidence in a potential turnaround [2]. - The company has been involved with Sirius XM since 2016, initially purchasing Liberty Sirius XM tracking stock, which merged with Sirius XM in September 2024 [3][4]. - Despite a decline in Sirius XM's stock due to falling subscribers and revenue, Berkshire continued to buy shares, now owning approximately 35% of the company [5][6]. Group 2: Sirius XM's Financial Performance - Sirius XM's Q4 2024 report showed a 4.3% year-over-year revenue decline, but it marked the first quarter of positive net subscriber additions since Q2 2023, with 70,000 net additions [7][8]. - The company has been working to attract self-pay subscribers and reduce churn by offering new packages and enhancing premium content, leading to a 24% increase in podcast advertising revenue [9]. - Operating income and net earnings per share grew despite revenue declines, with diluted EPS increasing nearly 24% to $0.83 [10]. Group 3: Future Outlook and Strategic Plans - Sirius XM plans to cut an additional$200 million in costs in 2025, aiming for an increase in free cash flow to $1.15 billion, up from$1.02 billion in 2024 [11]. - The company has resumed share repurchases for the first time in five quarters, retiring 0.3 million shares at low prices [12]. - While there are concerns about potential churn increases due to new features being rolled out, these measures are intended to enhance customer satisfaction and improve the quality of the subscriber base [13][14]. Group 4: Stock Performance and Valuation - Sirius XM's stock has risen 20% at the start of 2025 following a solid earnings report, yet it remains 60% below its 2022 trading levels [15]. - The stock trades at nine times last year's cash flow number, suggesting potential for further upside if subscriber stabilization and profit margin improvements continue [15].