The broad S&P 500 didn't reach 30,000%, including dividends, until last year. Since Buffett became CEO of Berkshire Hathaway, his company's Class A shares (BRK.A) have returned almost 4,700,000% (as of Jan. 26, 2024). This kind of return will attract professional and retail investors.
Warren Buffett's $371 billion Berkshire Hathaway investment portfolio is transparent, which is fantastic. Buffett's trading behavior has been replicated by investors for decades according to quarterly Form 13Fs filed with the SEC. Another highlight of Berkshire's $371 billion portfolio is its successful, well-established enterprises. It's a hub for great investment ideas. In the shortest month of the year, three Warren Buffett equities are must-buys.
SiriusXM Holdings Sirius XM Holdings (NASDAQ: SIRI) is Buffett's first recommended buy in February. Berkshire bought Sirius XM shares again in the third quarter after two years. Radio firms worry most about advertising. Businesses cut their ad expenses when problems arise because ad spending is cyclical. Predictive indicators and money-based measurements suggest a tough year for the U.S. economy.
However, Sirius XM Holdings is designed differently from terrestrial and internet radio companies, giving it competitive advantages in almost any economy. First and foremost, Sirius XM is the sole licensed satellite radio provider. It gives it stronger pricing power for subscription services, but it's not immune to competition.
Sirius XM's revenue model is its biggest difference from traditional providers. Advertising is crucial for terrestrial and internet radio. Sirius XM's advertising sales were 19.2% in the first nine months of 2023, mostly from Pandora, which it bought in February 2019. The majority of its net sales (77.2%) were subscriptions.
Businesses will cut ad spending at the first sign of economic turmoil. Sirius XM subscribers are less likely to cancel than marketers are to cut spending. Sirius XM would outperform its counterparts during recessions. Some Sirius XM expenditures are predictable. Transmission and equipment expenses are consistent, while royalty and talent acquisition costs vary per quarter. The firm may gain subscribers without raising basic costs. Finally, Sirius XM's projected P/E ratio of 17 is a decade low and 20% below its five-year average.
Bank of America Bank of America (NYSE: BAC) is another Warren Buffett stock to purchase in February and beyond. The bank, known as "BofA," is Berkshire Hathaway's second-largest stake by market value.
Bank stocks are cyclical, a drawback. They'll fluctuate with the U.S. economy. If 2024 recession estimates are right, bank stocks like BofA may experience more loan losses and credit delinquencies. I may comfort you by saying the economic boom-bust cycle is disproportionate. Recessions are common and expected, but they don't last.
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