Berkshire Hathaway
purchased 2.8 million shares of the Liberty SiriusXM tracking stock in recent days, apparently seeking to capitalize on Liberty Sirius’ discount relative to the value of its stake in
Sirius XM Holdings,
the satellite radio company.
Berkshire paid about $82 million for its recent purchases of the tracking stock, bought from Jan. 2 through Jan. 4, according to a Form 4 filing with the Securities and Exchange Commission late Thursday.
Berkshire now holds about 66.2 million shares of the tracking stock, valued at $2 billion based on Thursday’s closing price. Its stake in the tracker is about 20%.
Berkshire purchased both the voting and nonvoting tracking stock. It bought 1.1 million shares of Liberty SiriusXM class A voting stock (ticker: LSXMA) and now holds 21.3 million shares. It also purchased 1.7 million shares of the Liberty SiriusXM nonvoting class C stock (LSXMK) and now owns 44.9 million shares.
The class A stock finished Thursday at $29.91, up 0.3% while the nonvoting C stock gained 0.5% to $29.93.
Sirius XM stock finished Thursday at $5.43, down 0.2%
The tracking stock was issued by
Liberty Media,
controlled by media mogul John Malone.
Some Berkshire watchers think the Liberty Sirius XM investment is managed by Ted Weschler, rather than CEO Warren Buffett. Weschler and Todd Combs run about 10% of Berkshire’s roughly $350 billion equity portfolio, with Buffett managing the other 90%. Weschler is believed to have a good relationship with Liberty Media CEO Greg Maffei.
Liberty Media and Sirius announced a deal in December that will combine the tracking stock with Sirius XM Holdings in what Liberty expects to be a tax-free exchange. The tracking-stock shareholders will get Sirius XM Holdings stock.
The companies said the deal will be beneficial to both sets of shareholders by simplifying the structure of Sirius XM Holdings.
Liberty now holds a roughly 82% stake in Sirius XM Holdings through the tracking stock.
Investors will be watching to see if this marks the beginning of a larger accumulation of the tracking stock by Berkshire.
The appeal of the Liberty SiriusXM tracker is that it trades at about a 35% discount to the value of Liberty’s SiriusXM stake, Barron’s estimates. Bulls are betting that the gap closes as the transaction approaches; it is due to close in the third quarter. If the gap closes, holders of the tracking stock could score gains.
The spread remains wide in part due to a thin float in Sirius XM stock and difficulty in shorting it, making it tough for arbitragers to buy the tracking stock and sell short Sirius XM.
Some think that Sirius XM stock now is overvalued and that its price will fall sharply once the Liberty transaction closes.
Corrections & Amplifications:
Berkshire paid $82 million for a SiriusXm tracking stock. An earlier version of this article incorrectly said it paid $82 billion.
Write to Andrew Bary at [email protected]
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