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Here’s the 1 Stock We Know for Certain Warren Buffett and Berkshire Hathaway Are Buying
Warren Buffett hasn’t seen a lot to like in the stock market lately.
The Oracle of Omaha has sold more stocks than he bought in each of the last seven quarters reported by Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). That includes a massive sale of around $75 billion worth of Apple stock in the second quarter and over $10 billion in Bank of America shares over the last three months. That pattern makes it likely the third quarter was the eighth straight quarter of net sales for Buffett and his team of portfolio managers.
But Buffett (or one of his fellow managers) is buying at least one stock for Berkshire Hathaway shareholders based on required filings with the SEC.
Buffett’s typical buying behavior has changed
Over the last few years, Buffett had some predictable stock purchases, but even those might not be so reliable in today’s market.
Despite reducing or selling out his exposure to equities in Berkshire’s portfolio, Buffett could be counted on to repurchase shares of Berkshire Hathaway over the last six years. But share buybacks may be less appealing at Berkshire’s current price, which has climbed 30% year to date.
Buffett didn’t buy back a single share in June, and the stock has consistently traded higher in the third quarter. That could lead to the first quarter where Buffett didn’t buy back a single share since the board of directors changed the repurchase authorization in mid-2018. Investors will have to wait until Berkshire’s Q3 earnings report in early November to know for certain.
Buffett has also given the cold shoulder to another stock he’s consistently bought over the last few years. Any time Occidental Petroleum saw its share price dip below $60 per share, investors could reasonably expect a filing showing Berkshire Hathaway had purchased more of its common stock. Despite plunging oil prices in Q3 leading to a two-year low stock price for Occidental, those SEC filings never materialized.
It could be that Buffett is content with a 27.3% stake in the company at this point. He mentioned that he has no interest in taking a controlling stake of Occidental, and he praised CEO Vicki Hollub on multiple occasions, indicating he believes his investment is in good hands.
Just one SEC filing since the end of June showed that Berkshire added to an existing position. In October, Berkshire Hathaway bought $87 million worth of Sirius XM (NASDAQ: SIRI) shares.
Berkshire now owns a huge portion of this company
Berkshire Hathaway had previously owned shares of Sirius XM, but it started acquiring its stake in the company in earnest late last year. The vast majority of the stake was acquired through a position in the Liberty SiriusXM tracking stock, which aimed to track Liberty Media’s stake in the satellite radio operator. The two stocks merged earlier this year, leaving Berkshire Hathaway with over 30% of the total outstanding shares.
Sirius XM is the only satellite radio operator in the United States. Unlike terrestrial radio, Sirius XM makes the bulk of its revenue from subscriptions instead of advertising. Its method for attracting new subscribers primarily relies on free trials with new car purchases. Over the years, it’s managed to attract about 33 million paid subscribers, and it counted 7.4 million free-trial listeners as of the end of the second quarter.
Its free-trial strategy and focus on exclusive content takes care of much of the marketing Sirius XM needs, which helps it keep operating expenses low. On top of that, Sirius XM benefits from lower music royalty rates than on-demand streaming services, paying just 15.5% of gross revenue for music licenses. On-demand streaming pays about twice as much.
As a result, Sirius XM produces steadily rising operating profits as its subscriber base grows. While its subscriber base has stagnated recently, the company remains nicely profitable.
There’s no indication that Sirius XM is facing a mass exodus of subscribers, but the stock appears to be trading as such. Shares are currently priced at just over 8 times analysts’ estimates for 2025 earnings. Its enterprise value is just 6.8 times management’s forecast for 2024 EBITDA.
With shares trading at such a low valuation and Sirius XM’s simple-to-understand business model, it’s a prototypical Warren Buffett investment.
A warning from Buffett
As of this writing, Sirius XM is the only stock we know for certain that Buffett and his team bought in recent months. That speaks to a broader warning from Buffett about the current stock market.
Sirius XM is a relatively small company with a market cap just over $9 billion. That won’t really move the needle for Berkshire Hathaway (and its nearly $1 trillion market cap), even if it acquires the entire company.
But Buffett hasn’t found much else to put Berkshire’s cash toward. The bigger companies that could move the needle likely aren’t attractive right now (in Buffett’s eyes) from a valuation standpoint, which explains why he’s been a net seller of stocks.
But for everyday investors, i.e. 99.99% of the world, there are a ton of opportunities. Sirius XM may be just one of many small- and mid-cap stocks investors should look to add to their portfolios in the current market.
Should you invest $1,000 in Sirius XM right now?
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Adam Levy has positions in Apple. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
Here’s the 1 Stock We Know for Certain Warren Buffett and Berkshire Hathaway Are Buying was originally published by The Motley Fool
The habits of millionaires are a topic of interest when it comes to financial advice. After all, unless they received a large chunk of money as an inheritance or gift, most millionaires had to be smart with their money to get where they are.
Learning how millionaires accumulate wealth — and where they keep it — can provide valuable insights for anyone focused on growing their money. One common question is whether or not millionaires keep money in checking accounts.
Studies show that in recent years, millionaires are keeping a significant portion of their wealth in cash. According to CNBC’s , that portion was about 24% in 2023. While this doesn’t necessarily mean a quarter of a millionaire’s wealth is sitting in a checking account, it does indicate the importance of maintaining liquid assets. And a checking account can be a helpful tool for doing so — whether or not you’re a millionaire.
Anyone, regardless of net worth, can find value in a checking account. Checking accounts allow unlimited deposits and withdrawals, check writing, bill pay, and other features to help you manage your money day-to-day.
While millionaires may keep large portions of their wealth in other deposit accounts and investments, some may use a checking account to manage daily spending. Millionaires also recognize the importance of having liquid assets, like funds in checking and savings accounts. Accessible cash lets you cover unexpected expenses without needing to sell off investments, borrow money, or pay a penalty for tapping your retirement savings early.
The amount of money a millionaire keeps in their checking account is highly personal and depends on preference. However, because checking accounts rarely earn competitive — if any — interest, some millionaires intentionally limit their checking account balance. Some may choose to keep the bare minimum, such as a couple of months’ worth of essential expenses, in their checking accounts, keeping the rest of their wealth in more lucrative assets.
Regardless of preference, it would be surprising for a millionaire to keep more than $250,000 in a single checking account. That’s because the Federal Deposit Insurance Corp. (FDIC) only insures up to $250,000 in deposits per institution, per account holder.
While millionaires may use checking accounts for day-to-day financial transactions, they may also use some of the following accounts in addition to, or in place of, a checking account:
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Savings accounts: Like checking accounts, savings accounts provide a high degree of liquidity, allowing you to access your money as needed for regular or unexpected expenses. High-yield savings accounts, in particular, give millionaires an extra bang for their buck. Some of the best accounts currently offer rates upwards of 4% versus the national average savings account rate of 0.46%.
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Cash management accounts: Cash management accounts (CMAs) pay competitive interest rates while maintaining more accessibility than a savings account. Some CMAs come with a debit card and ATM access, and many provide extended FDIC coverage limits by “sweeping” additional deposits into partner banks. CMAs are available at brokerages, not banks, facilitating easy transfers between investment and cash accounts.
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Money market accounts: Similar to CMAs, money market accounts combine features of checking and savings accounts, often paying competitive interest rates and providing check writing and ATM access. Banks and credit unions offer these accounts, which are federally insured. Minimum opening deposit and minimum balance requirements are often higher than those for standard savings accounts.
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Retirement and tax-advantaged accounts: Millionaires understand the importance of investing for their later years, and retirement accounts such as 401(k)s and IRAs allow them to do so in a tax-advantaged way. Some retirement accounts, like 401(k)s, are offered by certain employers. Others, such as traditional and Roth IRAs, are available to anyone.
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Brokerage accounts: The IRS limits contributions to tax-advantaged accounts, and millionaires typically invest beyond these limits. They do so with taxable brokerage accounts, which can hold investments such as stocks, bonds, and mutual funds without contribution limits.
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Other investments, like real estate, commodities, and art: Some millionaires may decide to diversify their portfolio with other investment types. These could include real estate investments, such as investment properties or real estate investment trusts (REITs); commodities, such as metals or energy products; art; and more.
The amount of money millionaires keep in their checking accounts depends on personal preference. While some millionaires may keep six figures in their checking account to maintain a comfortable cash cushion, others may choose to keep the bare minimum in checking. You wouldn’t expect millionaires to keep more than $250,000 in a checking account, however, because balances over this threshold aren’t typically insured.
There’s no single bank that’s a favorite among millionaires; it’s another matter of preference. However, millionaires are likely to bank with institutions that offer private banking to those who meet specific financial requirements. Private banking may include wealth planning services, waived fees, dedicated bankers, and additional perks. J.P. Morgan Private Bank, Citi Private Bank, and Bank of America Private Bank are among some of the most popular banks for millionaires.
Billionaires may have checking accounts, but they likely use accounts that cater to ultra-high-net-worth individuals. These accounts may come with perks such as a dedicated banker, waived fees, and competitive interest rates. Alternatively, billionaires may opt for a cash management account with higher FDIC insurance coverage limits and checking account features.
No rule says you can’t have a million dollars in a checking account, but FDIC insurance typically only covers up to $250,000. Plus, you can get a bigger return on your investment by keeping $1 million elsewhere. One alternative is a cash management account, which acts like a checking account but generally earns higher interest. Plus, many cash management accounts insure more than the standard $250,000 by sweeping funds into multiple partner banks.
Lumen Technologies, Inc. (NYSE:LUMN) shares are trading higher on Monday after the company announced it is partnering with Meta Platforms, Inc. (NASDAQ:META) to significantly increase Meta’s network capacity and help drive its AI ambitions.
Lumen’s partnership offers Meta enhanced flexibility with secure, on-demand bandwidth, supporting its complex computing requirements and enabling it to serve billions daily.
Ashley Haynes-Gaspar, Lumen’s EVP and chief revenue officer, said, “We’ve transformed our company to meet this demand. As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.”
Lumen Technologies said its Private Connectivity Fabric enables long-term network capacity for Meta’s AI.
Alex-Handrah Aimé, director of Meta’s Network Investments stated, “Our AI tools are performing increasingly more complex tasks including enabling conversations in a variety of languages and translating text to images in real time, while helping people interact with the world around them in new, immersive ways.”
Lumen will report third quarter 2024 results on November 5, 2024.
Investors can gain exposure to the stock via Invesco S&P SmallCap Utilities & Communication Services ETF (NASDAQ:PSCU) and First Trust Cloud Computing ETF (NASDAQ:SKYY).
Price Action: LUMN shares are up 9.50% at $7.38 at the last check Monday.
Image via Shutterstock
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This article Lumen And Meta Join Forces To Boost AI With Flexible, On-Demand Network Solutions originally appeared on Benzinga.com
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