Warren Buffett Has Bought $78 Billion Worth of His Favorite Stock in 7 Years -- but He Currently Prefers Shares of This Legal Monopoly Instead
News Summary
Warren Buffett's Berkshire Hathaway halted share repurchases for 13 consecutive months from June 2024 to June 2025, after spending approximately $78 billion buying back its own stock over the preceding seven years. This pause is primarily due to Berkshire's valuation, which has traded at a 60% to 80% premium to book value, exceeding Buffett's intrinsic value assessment despite the company holding a near-record $344.1 billion in cash. Simultaneously, while Buffett has been a net-seller of other stocks, offloading $177.4 billion over 11 quarters, he has consistently increased Berkshire's stake in satellite-radio operator Sirius XM Holdings, now holding a 37.1% interest. Sirius XM is favored for its legal monopoly on satellite radio licenses, which grants it pricing power. Its revenue is predominantly subscription-based (76.8% of net sales in H1 2025), making it more resilient during economic downturns compared to advertising-driven radio. The company also benefits from a predictable cost structure and an attractive forward P/E ratio of 7.6, contrasting sharply with the S&P 500's elevated Shiller P/E.
Background
Warren Buffett, the legendary CEO of Berkshire Hathaway, is renowned for his value investing philosophy, focusing on identifying companies with sustainable competitive advantages ('moats') at reasonable valuations. Under his leadership, Berkshire Hathaway's Class A shares have surged nearly 5,940,000% over 60 years, significantly outperforming the S&P 500. Berkshire Hathaway's share repurchase policy changed in July 2018; previously, buybacks were only permitted if the stock traded at or below 120% of book value. The amended rules allow Buffett to authorize buybacks when the company holds at least $30 billion in cash and he believes shares are intrinsically cheap. Sirius XM Holdings is the sole satellite radio provider in the U.S., possessing a unique business model that derives the majority of its revenue from subscriptions rather than advertising.
In-Depth AI Insights
What are the true underlying motives behind Buffett's cessation of Berkshire stock buybacks? - While ostensibly a matter of valuation discipline, a deeper consideration might involve strategic cash preservation. In the context of heightened geopolitical and economic uncertainties in 2025, maintaining a substantial cash hoard (now $344.1 billion) provides Berkshire immense flexibility to navigate potential market turmoil or capitalize on future 'elephant-sized' acquisition opportunities. - Furthermore, halting buybacks could signal to the market that Berkshire currently perceives external investment opportunities as more attractive than internal stock repurchases, prompting investors to re-evaluate their portfolio strategies. What is the deeper allure of Sirius XM as a 'legal monopoly' for Buffett? - Beyond the article's points on stable subscription models and pricing power, Buffett likely values Sirius XM as one of the few traditional media assets capable of maintaining a strong 'moat' in an era of digital media fragmentation. Its unique licensing and content ecosystem shield it from direct internet competition, offering a relatively secure cash flow generator within a rapidly evolving media landscape. - Moreover, the significant 37.1% stake suggests this is not merely a financial investment but potentially a strategic control position aimed at influencing its governance or future business direction, or as part of a broader media investment platform. Its low valuation in the current expensive market provides an additional margin of safety. What implications do Buffett's recent investment actions hold for the average value investor? - Buffett's continued net selling and the pause in Berkshire's own share repurchases strongly suggest his view that the broader market is generally overvalued. This serves as a potent reminder for value investors in 2025 to maintain extreme discipline regarding valuations, even for seemingly 'must-buy' companies, and to avoid chasing elevated prices. - The concentrated investment in Sirius XM underscores the importance of seeking assets with genuine, sustainable competitive advantages and predictable cash flows during uncertain times, even in relatively mature industries. This is not about chasing hot trends but rather a steadfast commitment to high-quality, defensive assets.