Warren Buffett's Berkshire Hathaway has turned heads once again. While the company ended the third quarter of 2024 with a jaw-dropping $320 billion in cash and short-term Treasury bills, signaling caution in an overheated market, recent SEC filings reveal something unexpected.
According to Barron's, Berkshire has invested $563 million into Occidental Petroleum, Sirius XM and VeriSign. Occidental Petroleum took the lion's share of the investment, with Berkshire spending $405 million to increase its stake to 28.2% or 264.2 million shares.
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This makes Berkshire one of Occidental's largest shareholders. According to the Energy Information Administration, despite U.S. crude oil production hitting an all-time high of 13.46 million barrels per day in October, Occidental's stock has been battered, down 24% this year.
Analysts have noted that such investments reflect confidence in the energy sector’s recovery. For instance, Ben Cook from Hennessy Energy Transition Investor suggests that supportive commodity prices and solid earnings in well-positioned companies indicate growth potential in the energy sector.
Sirius XM was next on the list. Berkshire added $113 million to its holdings, owning around 35% of the satellite radio and streaming company. Sirius XM has had its struggles, with subscriber numbers falling and fierce competition from digital streaming giants like Spotify.
Yet the company has been investing in podcasts and restructuring its shares to appeal to investors. Analyst Jeff Wlodarczak from Pivotal Research commented on the situation, stating, “The stock is laughably cheap unless you think the business is falling apart.”
He believes that while Sirius XM doesn’t have much of a growth story, the business is durable and should generate ample free cash flow. Wlodarczak suggests that the company consider boosting the dividend by 50% in the fourth quarter.
In late December 2024, Berkshire acquired an additional 377,736 shares for approximately $73.95 million, bringing its total ownership to 13,193,349 or 13.7% of the outstanding shares.
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Simply Wall Street says VeriSign's stock has slipped 1.0% this year, partly due to regulatory woes. However, the company remains a powerhouse in domain name registry services, boasting impressive profit margins – 88% gross and 71% operating in the last quarter of 2024.
Interestingly, these investments come at a time when the broader market has been soaring. The S&P 500 hit 57 all-time highs in 2024, as reported by Motley Fool and briefly surpassed the 6,000 mark.
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