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Does Warren Buffett Know Something Wall Street Doesn't? Why the Billionaire Investor Owns This High-Yielding Dividend Stock.

Source The Motley Fool

Warren Buffett doesn't make many mistakes when it comes to investing, as evidenced by his supreme long-term track record in public markets. He and the team at Berkshire Hathaway (NYSE: BRK.B) seem to have made a mistake by investing in SiriusXM (NASDAQ: SIRI) -- at least, so far. The automotive satellite radio provider is down over 60% in the last five years, while the broad market indices have soared.

Today, the stock trades at a price-to-earnings (P/E) ratio of 8 and a dividend yield of 5%. Does Berkshire Hathaway see something in SiriusXM that the rest of the market is missing? Let's dive in further and investigate this fallen internet stock and see if it is a buy for your portfolio today.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Declining revenue, competitive threats

SiriusXM made its money selling satellite radio subscriptions in conjunction with automotive purchases. Today, this business is facing multiple headwinds with the rise of Spotify, Apple Music, and YouTube taking share from satellite radio for talk and music. Its subscribers stood at 32.86 million last quarter, which is below its user count at the end of 2018.

Lower subscriber figures have led to declining revenue, with sales now off 4.4% from all-time highs last quarter. This is coming at a time when the streaming music services such as Spotify are growing like gangbusters, which are putting a world of hurt on SiriusXM's business. With the rise of Google and Apple Car Play, users can stream the same applications in vehicles that they use on their phones, which has disrupted SiriusXM's competitive edge.

It has tried to fight back with a stand-alone SiriusXM streaming application, acquiring rights to podcasts, and even acquiring Pandora Radio back in the day. It has not lived up to expectations, with this other segment seeing a 2% decline in revenue year over year last quarter. Management is guiding for $1.15 billion in free cash flow this year, but that is still well below all-time highs set a few years ago. If revenue keeps sliding, free cash flow will eventually disappear.

Young person sitting on a bus and listening to music on their phone.

Image source: Getty Images.

Perhaps it wasn't a Buffett investment?

Just because a stock is owned by Berkshire Hathaway does not mean it was a Warren Buffett investment. The company has two investors -- Todd Combs and Ted Weschler -- who manage billions of dollars of investments. One of these investors may be the purchaser of SiriusXM stock instead of Buffett, who at this point only dabbles in investments that can move the needle for the trillion-dollar market-cap stock.

At a market cap of just $7 billion, SiriusXM is not going to be a meaningful contributor to Berkshire Hathaway's stock portfolio even if it goes up by 10 times. The company owns $2.8 billion worth of SiriusXM stock. If that stock is worth $28 billion someday, that is barely 2% of Berkshire's market value. A 10 times move upwards is highly unlikely too.

SIRI Dividend Yield Chart

SIRI Dividend Yield data by YCharts.

The truth behind SiriusXM stock

With a dividend yield of 5%, you might think SiriusXM stock is a buy just because Berkshire Hathaway owns it. In this case, following Berkshire Hathaway blindly has led an investor to lose money.

The problem with SiriusXM is not just its declining subscribers and declining revenue. It is the huge debt load carried on its balance sheet. The company has over $10 billion in long-term debt vs. its $1.1 billion in projected 2025 free cash flow. Free cash flow will decline if revenue keeps sliding. The debt is mostly due before 2030, meaning that SiriusXM is going to have to scramble to pay back these loans or refinance at higher interest rates. Either way, this is not good for shareholders.

SiriusXM is a stock with declining revenue and heavy indebtedness in a declining industry. Even with a high dividend yield of 5%, it is best to stay away from this stock. It's unclear what Berkshire Hathaway sees in this business.

Should you invest $1,000 in Sirius XM right now?

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Brett Schafer has positions in Spotify Technology. The Motley Fool has positions in and recommends Berkshire Hathaway and Spotify Technology. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.

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Bitcoin Slides 5% as Sellers Lean In — Can BTC Reclaim $88,000?Bitcoin has dropped back below $88,000 after rolling over from $90,500, with price still trading under the 100-hour Simple Moving Average. The sell-off found a floor at $85,151, and BTC is now consolidating near that base, but rebounds are facing pressure from a bearish trend line around $89,000. Bulls need to retake $88,000–$89,000 to ease downside risk; failure to do so keeps $85,500–$85,000 and then $83,500 in play, with $80,000 as the deeper “line in the sand.” Bitcoin (BTC) is back in damage-control mode after a sharp pullback wiped out recent gains. The price failed to reclaim the $90,000–$90,500 band, rolled over, and slid through $88,500 before briefly dipping under $87,000. Buyers did show up around $85,000, but the rebound so far looks more like stabilization than a clear trend reversal. Bitcoin dips hard, finds a bid near $85,000（h3） BTC’s latest move lower began when it couldn’t build follow-through above $90,000 and $90,500. Once that upside stalled, sellers took control and pushed price down through $88,500. The slide accelerated enough to spike below $87,000, but the market didn’t free-fall. Bulls defended the $85,000 zone, printing a low at $85,151. Since then, Bitcoin has been consolidating below the 23.6% Fibonacci retracement of the drop from the $93,560 swing high to the $85,151 low — a clue that the bounce is still shallow and that sellers haven’t fully backed off yet. Structurally, BTC is still on the back foot: It’s trading below $88,000, and It remains below the 100-hour Simple Moving Average, keeping short-term trend pressure pointed downward. Resistance is layered, and $89,000 is the problem area（h3） If bulls try to turn this into a recovery, they’ll have to climb through multiple ceilings in quick succession. First, BTC faces resistance around $87,150, followed by a more meaningful barrier near $87,500. From there, the market’s attention snaps back to $88,000 — the level BTC just lost and now needs to reclaim. A close back above $88,000 would improve the tone, but it doesn’t solve the bigger issue: there’s a bearish trend line on the hourly BTC/USD chart (Kraken feed) with resistance near $89,000, which also lines up with the next technical hurdle. If BTC can push through $89,000 and hold, the rebound could extend toward $90,000, with follow-through targets at $91,000 and $91,500. But until price clears that $88,000–$89,000 zone, rallies are at risk of being sold rather than chased. If BTC fails to reclaim resistance, the downside path is clear（h3） The near-term bear case is simple: if Bitcoin can’t climb back above the $87,000 area and keep traction, sellers may attempt another leg lower. Support levels line up like this: Immediate support: $85,500 First major support: $85,000 Next support: $83,500 Then $82,500 in the near term Below that, the major “don’t break this” level is still $80,000. If BTC slips under $80,000, the risk of acceleration to the downside increases significantly — not because it’s magic, but because it’s the kind of psychological and structural level that tends to trigger forced de-risking. Indicators: momentum still leans bearish（h3） The intraday indicators aren’t offering much comfort yet: Hourly MACD is losing pace in the bearish zone. Hourly RSI remains below 50, suggesting sellers still have the upper hand on short timeframes. So while the $85,000 defense held for now, the market hasn’t flipped bullish — it’s just stopped bleeding.

Author Mitrade

2 hours ago

Bitcoin has dropped back below $88,000 after rolling over from $90,500, with price still trading under the 100-hour Simple Moving Average. The sell-off found a floor at $85,151, and BTC is now consolidating near that base, but rebounds are facing pressure from a bearish trend line around $89,000. Bulls need to retake $88,000–$89,000 to ease downside risk; failure to do so keeps $85,500–$85,000 and then $83,500 in play, with $80,000 as the deeper “line in the sand.” Bitcoin (BTC) is back in damage-control mode after a sharp pullback wiped out recent gains. The price failed to reclaim the $90,000–$90,500 band, rolled over, and slid through $88,500 before briefly dipping under $87,000. Buyers did show up around $85,000, but the rebound so far looks more like stabilization than a clear trend reversal. Bitcoin dips hard, finds a bid near $85,000（h3） BTC’s latest move lower began when it couldn’t build follow-through above $90,000 and $90,500. Once that upside stalled, sellers took control and pushed price down through $88,500. The slide accelerated enough to spike below $87,000, but the market didn’t free-fall. Bulls defended the $85,000 zone, printing a low at $85,151. Since then, Bitcoin has been consolidating below the 23.6% Fibonacci retracement of the drop from the $93,560 swing high to the $85,151 low — a clue that the bounce is still shallow and that sellers haven’t fully backed off yet. Structurally, BTC is still on the back foot: It’s trading below $88,000, and It remains below the 100-hour Simple Moving Average, keeping short-term trend pressure pointed downward. Resistance is layered, and $89,000 is the problem area（h3） If bulls try to turn this into a recovery, they’ll have to climb through multiple ceilings in quick succession. First, BTC faces resistance around $87,150, followed by a more meaningful barrier near $87,500. From there, the market’s attention snaps back to $88,000 — the level BTC just lost and now needs to reclaim. A close back above $88,000 would improve the tone, but it doesn’t solve the bigger issue: there’s a bearish trend line on the hourly BTC/USD chart (Kraken feed) with resistance near $89,000, which also lines up with the next technical hurdle. If BTC can push through $89,000 and hold, the rebound could extend toward $90,000, with follow-through targets at $91,000 and $91,500. But until price clears that $88,000–$89,000 zone, rallies are at risk of being sold rather than chased. If BTC fails to reclaim resistance, the downside path is clear（h3） The near-term bear case is simple: if Bitcoin can’t climb back above the $87,000 area and keep traction, sellers may attempt another leg lower. Support levels line up like this: Immediate support: $85,500 First major support: $85,000 Next support: $83,500 Then $82,500 in the near term Below that, the major “don’t break this” level is still $80,000. If BTC slips under $80,000, the risk of acceleration to the downside increases significantly — not because it’s magic, but because it’s the kind of psychological and structural level that tends to trigger forced de-risking. Indicators: momentum still leans bearish（h3） The intraday indicators aren’t offering much comfort yet: Hourly MACD is losing pace in the bearish zone. Hourly RSI remains below 50, suggesting sellers still have the upper hand on short timeframes. So while the $85,000 defense held for now, the market hasn’t flipped bullish — it’s just stopped bleeding.

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Beginners

Does Warren Buffett Know Something Wall Street Doesn't? Why the Billionaire Investor Owns This High-Yielding Dividend Stock.

Declining revenue, competitive threats

Perhaps it wasn't a Buffett investment?

The truth behind SiriusXM stock

Should you invest $1,000 in Sirius XM right now?

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