Sirius XM: Buffett's New Darling

seekingalpha07:59

Sirius XM Holdings Inc.'s split from Liberty Media and simplified capital structure make it a compelling investment and brand rebuilding opportunities.The company aims to increase subscribers from 40 ...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSirius XM: Buffett's New Darling\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-22 07:59 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739454-sirius-xm-buffett-new-darling><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Sirius XM Holdings Inc.'s split from Liberty Media and simplified capital structure make it a compelling investment and brand rebuilding opportunities.The company aims to increase subscribers from 40 ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739454-sirius-xm-buffett-new-darling\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4559","symbol_name":"巴菲特持仓","start_time":0,"source_url":"https://seekingalpha.com/article/4739454-sirius-xm-buffett-new-darling","article_id":"2485475085","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1411728067/image_1411728067.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485475085","pubTimestamp":1732233574,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Sirius XM Holdings Inc.'s split from Liberty Media and simplified capital structure make it a compelling investment and brand rebuilding opportunities.The company aims to increase subscribers from 40 ","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4559":"巴菲特持仓","BK4100":"有线和卫星","SIRI":"Sirius XM Holdings Inc."},"translate_title":"Sirius XM：巴菲特的新宠儿","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SIRI":0.9},"content_text":"Sirius XM Holdings Inc.'s split from Liberty Media and simplified capital structure make it a compelling investment and brand rebuilding opportunities.The company aims to increase subscribers from 40 million to 50 million, boosting free cash flow to $1.8 billion annually.Berkshire Hathaway's big investment in the stock has been mostly overlooked due to the $10 billion in net debt and declining revenues.Sirius XM's 4.3% dividend yield and potential for significant share repurchases and debt reduction enhance its attractiveness as a value investment.   JHVEPhoto  Sirius XM Holdings, Inc. (NASDAQ:SIRI) is now a far more compelling investment story as a fully independent public company with a simplified capital structure. The media company recently split from Liberty Media and still faces a competitive digital audio market. My investment thesis is Bullish on Sirius XM after the split due to the cheap valuation and the opportunity to rebuild the brand, normal for companies splitting from larger corporations.   Source: Finviz New Phase Effective September 10, Sirius XM began as a new independent company with the split from Liberty Media official. The company completed a 1-for-10 reverse split, with the stock trading at just $2.67. North America’s leading audio entertainment company has needed to focus on rebuilding the business after users pivoted towards other audio options over the last decade. Satellite radio is no longer necessarily the go-to option for passengers listening in cars, and Sirius XM has built out digital audio options from Pandora to podcasts. Sirius XM currently has ~40 million subscribers, with a plan to reach 50 million subs over the long term. The company is also pursuing digital audio advertising opportunities while restructuring the subscription options for Sirius XM radio.   Source: SiriusXM Q3'24 presentation  After giving effect for over $200 million in transaction costs, Sirius XM begins the new phase as an independent company with $1.2 billion in free cash flow. The company estimates reaching ~$1.8 billion in annual free cash flow when the subscribers reach 50 million. A big part of the free cash flow boost will come from the company reducing satellite capital expenditures through 2028. The company will spend ~$300 million on such capex this year. The amount will slip to nearly zero by 2028, while non-satellite capex could decline ~$100 million by 2026, providing upwards of $1.6 billion in free cash flow before considering any subscriber growth. The new entity now has 339 million shares outstanding after giving effect to the reverse split. In addition, the deal with Liberty Media involved a 12% share reduction via Sirius XM, assuming some net liabilities of the new company in the transaction. The current consensus analyst estimates have Sirius XM producing roughly flat revenues in 2025 at $8.7 billion. The company is forecast to produce ~$3.20 in adjusted EPS, with the stock trading below 8x EPS targets. Big Investor In somewhat of a surprise move, Warren Buffett's Berkshire Hathaway (BRK.B) is now the largest shareholder of Sirius XM. The investment firm regularly bought the stock in October at prices in the current $25 range and now owns 112 million shares for ~$2.8 billion.   Source: Finviz The move is interesting with Sirius XM having $10 billion in net debt. Buffett has long been a fan of companies with a dominant market position, strong cash flows and share buybacks, but Sirius XM has seen cash flows under pressure with declining revenues. The stock only has a market cap of $8.8 billion, so Sirius XM only trades at 7x free cash flow of $1.2 billion. The stock only trades at 5.5x the targeted free cash flow of $1.6 billion. The company currently pays a quarterly dividend of $0.266 for a dividend yield of 4.3%. The annual dividend payout is ~$360 million. This leaves the audio leader with over $800 million in free cash flow to use towards paying down debt or repurchasing cheap shares here with the amounting rising to at least $1.2 billion in excess free cash flow. Sirius XM has the authority to repurchase stock, with the current authorization at $1.17 billion. The audio entertainment company could drastically reduce the share count with the limited market cap while repaying debt. The company pays ~$500 million in interest expenses, providing another path to boosting free cash flows without growing subscribers. Takeaway The key investor takeaway is that Sirius XM Holdings Inc. appears an undiscovered gem. The stock could definitely turn into a value trap, if management can't return the business to growth, after Q3 revenues just slipped 7% YoY. Ultimately, though, Sirius XM just needs limited growth to boost investor sentiment while the company has tons of free cash flow to return capital to shareholders and repay debt.  Investors should use the rare opportunity to buy at the same prices as Warren Buffett to build a position.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485475085"}