Recently Warren Buffett increased his stake in SiriusXM (SIRI) to over 32% of all available stock. However, with the company losing subscribers – where revenue and earnings in decline – why would the Oracle of Omaha increase his ownership? Two reasons: (a) first its return on invested capital and free cash flow; and (b) the value offered. This post explains both the quality and value arguments for Buffett choosing to increase his exposure to this unloved stock…
Finding Value
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Simplifying Quality & Value
Charlie Munger once joked “all I want to know is where I’m going to die, so I’ll never go there.” Jokes aside – it’s the same approach you should apply with investing. And it’s not difficult to do. The math is very simple — addition, subtraction, division and multiplication. If you have access to a calculator – you’re all set. The challenge is mastering your emotions (and any self-defeating behaviors). A calculator (or AI) can’t help you with that. This game is more EQ than it is IQ. Think of it as a test of your character versus your intellect. For e.g. – many highly intelligent people get investing wrong (e.g., due to emotions such as greed, fear or some inherent bias). This post talks about how we can simplify our approach to avoid taking excessive risks
2025 – Finding Quality at Reasonable Prices
The S&P 500 recorded a 23.3% gain for 2024. For the first time since 1998 – posted two consecutive years of gains above 20%. Not bad right? Well if we extend our time horizon to include 2022 – the market’s CAGR is just 7.2% (below its long-term average of ~8.0% exc dividends) Mmm. Not as good. And over 5 years – the S&P 500 CAGR is is 12.7%; and over 10 years its 12.4%. It’s important we measure results over a period of at least 5 years (preferably 10). 2-3 years is a very short amount of time… where all kinds of distortions will happen. But over time – these distortions are always corrected. My point? Things always mean revert… and one should never ‘cherry pick’ dates to fit a narrative.