Berkshire Bets Over $2.8 Billion on Sirius XM at a Discount Through Tracking Stock

Warren Buffett and Berkshire Hathaway have invested over $2.8 billion in Liberty SiriusXM (LSXMA), a tracking stock that represents Sirius XM (SIRI).

Liberty SiriusXM trades at a discount to Sirius XM stock, allowing Berkshire to acquire an ownership stake in Sirius XM at a lower valuation.

Sirius XM generates most revenue from subscriptions, making it resilient to economic downturns. There is still room for subscriber growth.

Streaming is Sirius XM's biggest threat, but its lower royalty fees provide an advantage over on-demand streaming competitors.

At 11x forward earnings, Sirius XM stock trades at an attractive valuation to Berkshire Hathaway, especially when purchased at a discount via the tracking stock.