Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, bought 10 stocks in 2024. While he has been a net seller of stocks for eight consecutive quarters, he is still strategically adding to Berkshire’s portfolio. Several of the stocks Buffett acquired last year were already existing positions for Berkshire.
He began aggressively buying shares of a property and casualty insurer in 2023 without revealing which stock it was until early 2024. Buffett also added to Berkshire’s significant stake in Occidental Petroleum in the first and second quarters of 2024. Another significant addition was VeriSign, a domain name registry service and internet infrastructure provider.
Berkshire Hathaway disclosed at the end of 2024 that it had increased its holdings in VeriSign. Liberty Media continued to be a favorite last year, with Buffett buying shares of both Liberty Media SiriusXM Holdings and Sirius XM Holdings themselves. There were also new additions to the portfolio.
In Q2 of 2024, Buffett initiated positions in the aerospace and electronics company Heico and cosmetics retail chain operator Ulta Beauty. In Q3, Domino’s Pizza and swimming pool supply company Pool Corporation were added. Wall Street analysts believe Pool Corporation and Ulta Beauty will deliver strong gains over the next 12 months.
However, one of Buffett’s 2024 purchases stands out as potentially having the most significant upside in 2025. Sirius XM, which performed poorly last year with its shares plunging 58%, might be the best pick for 2025. Despite its previous struggles, the stock is now attractively valued with a forward-earnings multiple of just 6.4. This low valuation likely influenced Buffett’s decision to increase his holdings in 2024.
Income investors might also favor Sirius XM for its yield of 5.15%, higher than any of the other nine stocks Buffett bought last year. While opinions on Wall Street vary, with only three out of 14 analysts rating the stock as a “buy” or “strong buy,” the average 12-month price target suggests an almost 22% upside potential. While other Buffett stocks like Occidental may be better long-term picks, the chances for Sirius XM to rebound in 2025 look promising.
It’s likely Buffett agrees with this assessment. Berkshire Hathaway owns about 45 stocks in its $300 billion portfolio, many of which were hand-selected by Buffett himself.
sirius XM’s potential upside in 2025
While there’s a solid case to be made in favor of almost every stock Berkshire owns, some are more attractive than others right now. Ally Financial, an online-only bank spun off from General Motors, stands out among the bank stocks remaining in Berkshire’s portfolio. Berkshire owns 9.5% of Ally, which focuses on auto lending but has evolved into a full-featured bank.
Ally is highly profitable, thanks to the average yield of 10.5% on its newly originated auto loans. Despite an unexpected jump in loan delinquencies in the third quarter, Ally trades at a 10% discount to book value, making its risk-reward profile quite appealing right now. Berkshire has also recently increased its stake in Sirius XM Holdings, now owning 35% of the satellite-radio leader.
Sirius XM, while not growing its subscriber base, remains highly profitable and trades for less than 8x earnings. If interest rates fall in the coming years, it could boost new-vehicle sales, a major growth pipeline. Plus, Sirius XM’s new ad-supported product could broaden its audience significantly.
On the other hand, while Apple is a fantastic company, it may currently be overvalued compared to other opportunities within Berkshire’s portfolio. Buffett has sold more than half of Berkshire’s Apple stake over the past year, citing capital-gains tax reasons and high stock valuations. In the past five years, Southwest Airlines and Charter Communications have been Buffett’s worst picks, providing total returns of -30% and -34%, respectively.
The COVID-19 pandemic significantly impacted Southwest’s performance, causing a downturn that no one could have foreseen. Charter Communications has been affected by the rise of streaming services, which have greatly impacted cable and traditional media stocks. The best-performing stocks in Berkshire Hathaway’s portfolio from Q4 2019 are tech giant Apple and credit card company American Express.
Apple’s five-year total return of 237% over that period significantly outpaces the S&P 500 by around 140%. American Express has also been a stellar performer in Berkshire’s portfolio, with a five-year total return of 160%. In summary, while some of Buffett’s picks haven’t panned out, his investments in Apple and American Express have yielded impressive returns, reinforcing his reputation as a legendary investor.
Berkshire Hathaway’s portfolio contains over four dozen stocks, and there’s a strong bull case to be made for almost all of them. However, some stocks look more attractive than others right now, and Ally Financial and Sirius XM Holdings are good examples.
