Warren Buffett, Israel Englander, and Steven Cohen are investing in Sirius XM Holdings’ reverse stock split. The satellite-radio operator announced the split in December 2023 to simplify its capital structure and eliminate arbitrage opportunities between share classes. The billionaire money managers are attracted to Sirius XM’s unique market position and low valuation.
The company holds the exclusive license as the only satellite-radio operator and generates most of its revenue from subscriptions, providing consistent cash flow even during economic downturns. Sirius XM’s cost structure benefits from fixed transmission and equipment expenses, allowing for higher operating margins as it scales.
Investors attracted to Sirius XM
The company’s board is committed to returning capital to shareholders through stock buybacks and a quarterly dividend of $0.27 per share. Currently trading at around 8.5 times its forward earnings, Sirius XM’s valuation is near an all-time low. This historically inexpensive valuation makes it an attractive investment opportunity for long-term investors.
Warren Buffett’s Berkshire Hathaway increased its stake in Sirius XM, while Millennium Management and Point72 Asset Management acquired 1,698,711 and 454,360 shares, respectively, after the stock split. Sirius XM’s robust financial health, strategic advantage in a competitive industry, and aggressive capital-return program have made it an attractive buy for some of Wall Street’s most successful investors.
