Purchase Two Stocks Advised by Warren Buffett at an Accelerated Rate in November
Warren Buffet, regarded as one of the finest investors, if not the best, oversees Berkshire Hathaway, a massive corporation with a stock portfolio valued at approximately $294 billion. This portfolio comprises 45 stocks and exchange-traded funds, which have significantly contributed to Berkshire's substantial growth.
Despite this, Berkshire has recently exhibited a slower pace in stock purchases and share repurchases. The third quarter saw minimal stock acquisitions, an absence of stock repurchases for the first time since 2018, and an increase in the hoard of cash and short-term U.S. Treasuries to more than $320 billion.
Although Buffet and Berkshire appear to be uninterested in stock investments, they still hold numerous companies with solid faith in them. Two such companies that are worth investing in during November include:
1. Sirius XM Holdings (33% stake)
Berkshire Hathaway possesses a 33% stake in the digital audio firm, Sirius XM Holdings, making it the 15th significant position in their equities portfolio. Buffet has had a long-term involvement with Sirius, buying and selling stakes.
Buffet's confidence in Sirius significantly increased in October, as shown by a 940% increase in his stake in the company. Sirius underwent a separation from Liberty Media and a stock split earlier this year. Despite the bull market, the stock has experienced a 50% decline in 2023, causing worry among investors due to decreasing subscribers and high debt.
However, Sirius is planning a new approach to attract more paying subscribers, as they have secured exclusive advertising and distribution rights for popular podcasts such as Call Her Daddy, SmartLess, and Conan O'Brien's Team Coco. While Sirius continues to lose subscribers, the rate of loss has moderated in the last two quarters.
Sirius is a unique entity, with a sole satellite radio license in the United States, making it virtually a monopoly. Despite this, the stock is affordable, with a price-to-earnings ratio of less than 8, and it offers a dividend yield higher than 4%, incentivizing investors to wait for the company to execute its transformation plan.
2. Visa (0.4% stake)
Buffet is known for investing in companies with or capable of establishing strong competitive moats. While Sirius has a legal monopoly, Visa is not far behind, with its vast and intricate global payments network, making it difficult for competitors to replicate.
Berkshire owns 0.4% of Visa's shares, making it the 17th largest holding in their equities portfolio. Visa's network is a critical component of the global payments system, and with time, it has become tough for competitors to emulate.
Although you may see the Visa brand on your credit and debit cards, Visa does not offer loans to consumers. Instead, it serves as an intermediate for banks, consumers, and merchants in more than 200 countries. Whenever there's a card transaction, Visa plays a pivotal role in facilitating it, collecting a small fee on each transaction and contributing to the rules of the payments system.
Visa handled 233 billion transactions in its fiscal 2024, an increase of 10% from the previous year. Despite a few competitors, such as Mastercard, Visa dominates over 60% of debit card transactions in the United States.
However, the U.S. Justice Department has raised concerns about Visa's excessive fee extraction, which they believe is far beyond what would be fair in a competitive market. Regulators have grown more aggressive in their antitrust scrutiny in recent years. Yet, the expectation is that the Justice Department will exhibit a more relaxed approach due to the electoral victory of Donald Trump.
Visa has recently reported impressive earnings and has returned approximately $28 billion to shareholders through dividend payments and share repurchases. The company sees the Justice Department's claims as unfounded and has expressed its intention to defend itself rigorously in court. Given the stock's underperformance compared to the broader market, this appears to be a favorable buying opportunity for interested investors.
- In light of Buffet's increased stake in Sirius XM Holdings, some investors might consider investing in the company, despite its 50% decline in 2023, as its affordable price and high dividend yield provide opportunities for potential growth.
- Berkshire Hathaway's investment in Visa, with its strong competitive moat and global payments network, underscores Buffet's strategy of investing in companies that establish long-term competitive advantages, which could make Visa an attractive choice for investors seeking stability and growth.
