Berkshire Hathaway, the holdings company founded and led by renowned investor Warren Buffett, bought 1.9 million shares Liberty Sirius XM last week for nearly $50 million, according to filings with U.S. Securities and Exchange Commission.
Berkshire has bought shares of the tracking stock every trading session since March, Barron’s reports.
A tracking stock is a type of equity offered by a parent company that tracks the performance of a specific division. In this case Liberty Media, which owns about 83% of Sirius XM, offers a tracking stock of Sirius XM. The satellite radio company Sirius XM Holdings operates Sirius XM and the online radio service Pandora and sells its own stock under the ticker symbol SIRI.
Berkshire now owns more than a 21% stake in Liberty Media Sirius XM, which was worth about $2.6 billion on Friday. The stock is currently down 13%, to about $25.30, since the start of the year. Sirius XM Holdings is down 40% to $3.20.
It seems like Buffett is attempting to capitalize on the looming combination of the two stocks. In December, Liberty Media, which also owns Formula 1 and LiveNation, announced that it had reached a definitive agreement deal with Sirius XM Holdings to combine their stocks and create a new public company called “New Sirius XM.” The new company would continue to operate under the Sirius XM brand.
“We have reached an important milestone in Liberty’s ownership of SiriusXM,” said Liberty President & CEO Greg Maffei in a press release at the time. “This combination will create value for all stockholders by eliminating the tracking stock structure, enhancing liquidity and allowing former LSXM stockholders to participate directly in the ongoing performance of SiriusXM.”
The deal will grant holders of Liberty Sirius XM 8.4 shares of Sirius XM for every share they own of the tracking stock, according to Barron’s.