BREAKING: Warren Just Dropped $400 Million on a Media Stock That’s Circling The Drain (Down 41%)

When Warren Buffett sold off half of his Apple position, causing one of the biggest market meltdowns in years, everyone figured the old man was cashing out and bunkering down for the apocalypse. But instead of stashing his billions under the mattress, he’s been quietly doubling down on a stock that’s been a bit of a dumpster fire in his portfolio: Sirius XM Holdings (SIRI).

You’d think Buffett would stick to his usual winners, right? Yet, out of all the stocks in his vast collection, he’s decided to triple down on Sirius XM. That’s right—Berkshire Hathaway didn’t make many moves in the second quarter, but one of the few tweaks was to go all-in on the satellite radio provider. Berkshire’s stake in Sirius XM ballooned from 36.7 million shares to 132.9 million shares by the end of June, a nearly $400 million bet. The only problem? Sirius XM’s stock is down more than 40% this year. So, what’s Warren thinking?

Sirius XM isn’t exactly thriving these days. The company saw its revenue slip by 3% in the second quarter, making it one of the toughest quarters in its 30-year history—second only to the brutal hit it took during the pandemic in 2020. On top of that, the latest subscriber numbers don’t offer much comfort, with both self-pay and promotional subscribers on the decline.

While most investors are running for the hills, Buffett’s strapping on his hiking boots and heading straight toward what everyone else thinks is a disaster. Sirius XM is trading at less than 10 times its trailing earnings, but even with that revenue dip, the company’s still raking in profits and snapping up its own shares with a fat stack of free cash. And let’s talk about that 3.7% dividend yield—it’s been growing every year since 2016, like the one plant you just can’t kill, no matter how hard you try.

In what seems like a last-ditch effort to turn things around, Sirius XM recently inked a massive exclusivity deal with Alex Cooper, the host of the “Call Her Daddy” podcast. We’re talking about a multiyear deal reportedly worth around $100 million. It’s a bold move, especially since the podcast’s popularity has taken a hit, dropping to number 6 on Spotify’s U.S. charts. But hey, desperate times call for desperate measures, right?

This isn’t Sirius XM’s first foray into the podcast world either. Earlier this year, they shelled out big bucks for the “SmartLess” podcast, which, let’s be honest, hasn’t exactly been a smashing success. The show’s rankings have slipped, and it’s nowhere near the top of the charts.

So why is Buffett so bullish on Sirius XM? Maybe he sees something the rest of us don’t. Maybe he’s banking on the company’s ability to leverage its massive subscriber base and proprietary content to bounce back. Or maybe, just maybe, he knows that Sirius XM’s deeply discounted stock price is too good to pass up.

Buffett doubling down on Sirius XM might seem like a head-scratcher, but it’s classic Warren in action. Remember when he bought into American Express back in the 1960s after the salad oil scandal? (I wasn’t around either, but stay with me.) Everyone thought he’d lost his marbles, but Buffett saw potential where others saw a sinking ship. That $1 billion investment has since turned into over $150 billion in gains for Berkshire Hathaway—more than 150 times the original stake.

Sirius XM might not have the instant appeal of a tech giant, but it’s got all the elements that Buffett loves—undervalued stock, consistent cash flow, and a potential long-term payoff. The company’s future might seem a bit cloudy, but Buffett isn’t fazed by short-term hiccups. He’s in it for the long haul, and if history has taught us anything, it’s that betting against Buffett is like trying to win at a rigged game—you’re probably going to lose.

Stock.News has positions in Apple, Spotify, and Sirius XM.