WARREN BUFFETT JUST BOUGHT THESE 3 STOCKS!

Summary

Warren Buffett and Berkshire Hathaway have taken the investment world by surprise with their recent purchase of stakes in three companies: Occidental Petroleum (OXY), Sirius XM Holdings, and Verisign. This move is notable because Buffett's purchases are usually disclosed with a time lag due to SEC rules. However, as Berkshire owns over 10% in these firms, the transactions were reported immediately. These stocks are not game-changing major investments, but rather strategic 'stocking stuffers.' While Occidental represents a bet on future oil prices, Sirius XM is a high-risk value play, and Verisign stands out as a stable internet infrastructure investment. Each choice reflects Buffett's strategic thinking amid market conditions, but they diverge from the recommendations of the video's host, who prefers high-quality growth stocks.

Highlights

• Buffett's real-time purchase of three stocks is a rare move due to Berkshire's significant ownership. 🕒
• Occidental Petroleum is seen as a strategic buy banking on potential oil price increases. 🌍
• Sirius XM, despite shrinking revenue, presents a low-cost investment for potential free cash flow. 💸
• Verisign is favored for its reliable toll-booth business model and Internet infrastructure monopoly. 🔗
• Warren Buffett's diverse investments reveal adaptability in a volatile market landscape. 🔄

Key Takeaways

• Warren Buffett made a rare real-time stock purchase, buying shares in Occidental, Sirius XM, and Verisign. 📈
• Occidental Petroleum (OXY) purchase suggests Buffett expects oil prices to stabilize or rise. 🛢️
• Sirius XM was acquired due to its cheap valuation despite its declining revenue. 📉
• Verisign offers a stable investment with steady returns from internet infrastructure services. 💻
• Warren Buffett's investment strategy shows a mix of value and stability amid market volatility. 🌟

Overview

Warren Buffett, renowned for his deliberate investment style, recently caught the financial world off-guard by swiftly purchasing stakes in three companies: Occidental Petroleum, Sirius XM, and Verisign. Unlike his typical acquisitions, these were revealed in real-time due to Berkshire Hathaway's 10% ownership rule, sparking curiosity and speculation.

Occidental Petroleum is the largest of these investments, signaling Buffett's bet on the stability or potential rise in oil prices. Meanwhile, the purchase of Sirius XM, despite its waning revenue, highlights a value strategy focusing on low valuations and potential free cash flow extraction. Yet, it's Verisign that stands out in this trio, noted for its consistent performance and monopoly in .com and .net domain services, offering a steady cash flow.

The diverse nature of these investments showcases Buffett's strategic adaptability. While Occidental aligns with his traditional value-driven approach, Sirius XM raises eyebrows due to its declining business—even though it's a bargain buy. Verisign's consistent returns affirm its place as a reliable asset in an uncertain market, providing an interesting mix that reflects both value and stability.

WARREN BUFFETT JUST BOUGHT THESE 3 STOCKS! Transcription

• 00:00 - 00:30 Warren Buffett has been squeezing in some last minute holiday shopping and just earlier this week announced the purchase of not one but three different stocks this is a little bit surprising for folks cuz usually there's a significant lag you could see what Warren Buffett owned as of September 30th or June 30th or March 31st there's this lag if you're managing over $100 million and you're required to file with the SEC saying this is what I owned as of this period but there's this window in which you wait before you file that
• 00:30 - 01:00 doesn't hold when you are part of the management the board of directors or you own over 10% of the company in those situations when you're buying and selling you need to announce it in a more timely manner in this case Warren buffets Berkshire aaway owns over 10% in these three different companies and so that's the reason why you're getting this very real-time information that Warren Buffett has been buying these three stocks in just this past week which is exciting because you saw a little bit of volatility earlier this week so this means that Buffett and his
• 01:00 - 01:30 lieutenants see value in these three companies so the question is should these companies be part of your holiday shopping list so let's Dive Right In my name is Daniel you're watching unrivaled investing and I think before you look at what he's actually been purchasing it is important to have a little bit of context the biggest transaction buying or selling the biggest transaction this past year from Warren Buffett was selling over100 billion of Apple stock and the reason why that's important is because even if you buy let's say a half
• 01:30 - 02:00 billion dollars in a new position that's sort of a rounding error relative to the riskof that Burkshire hathway has seen with reducing their apple stake by100 billion so that's a significant larger cash position over $300 billion in cash at Berkshire hathway a lot of dry powder this is sort of buying around the edges these are stocking stuffers this isn't the big the big gift that everyone goes wow this is a this is a game changer but maybe some folks will find Value in it I suspect part of the reason why Buffett has been selling his Apple stock is the
• 02:00 - 02:30 existential risks that more and more folks might turn to their phones and say hey the most valuable part is no longer the ecosystem it's actually the AI and there Apple's been noticeably lagging and so could you have some sort of threat to Apple's pricing power as more and more devices and more and more consumers lean in on their future AI initiatives versus hey this is just a really cool brand and you know nice camera we'll see that hasn't played out yet but it is a risk I believe that he
• 02:30 - 03:00 sees plus you haven't really seen a lot of growth with apple and it trades at a premium multiple so looking at his purchases the largest purchase was with accidental oxy is the ticker over $400 million the pric is ranging from 45 to 47 you can see that oil prices this that's what oxy is strongly tied to has gone down over the last you know year at one point was closer to $90 per barrel now it's under
• 03:00 - 03:30 $70 per barrel and the reason why that's interesting is Buffett was previously buying closer to the $80 per barrel and he was buying at $60 per share and this is the first time that both the price of oil and oxy shares dip lower and that he sort of re-upped and he was buying around $46 even though oil was below 70 so you know I'd say this is an indirect call that he expects oil prices to be higher longer or at least flat so not to see a lot of downside from here I also think this is a call on oxy's assets the
• 03:30 - 04:00 long-term production and free cash flow potential that you could see from oxy looking at oxy in terms of their different assets they do have this decarbonization Venture and they do have transportation assets and chemical production assets that said the vast majority of the value comes from their domestic oil and gas production assets so it really is tied to the production of oil and you can see the change in West Texas intermediate Barrel per
• 04:00 - 04:30 barrel crude oil $1 change is a 240 million in annualized cash flow so this company oxy is highly levered to the changes in prices of oil so not surprising to see oxy sell off when oil sells off so when you know oil prices went below $70 per barrel not surprising that oxy also went from this 50 60 range to this 40 mid-40s range looking at oxy now it is a little bit up on the news that Berkshire was buying Trading around
• 04:30 - 05:00 $45 billion market cap based on their free cash flow and the current price of oil it's around 6 to seven 6 to 10 times free cash very wide range just depending on where you think you know oil prices bounce around you know if if you are in a new paradigm let's say in a year or two from now where oil prices are much much higher then arguably this would be much cheaper I look at this and it doesn't scream out to me I don't like commodity companies I'll talk about my checklist a little bit later his second purch was around $100 million of serus
• 05:00 - 05:30 XM Holdings s is the ticker with prices around $2 $22 per share in this case he owns around 30% of the company with oxy also owning around 30% of the company and I did a prior video on what he was buying with liberty and Sirus and you know if you want to understand the business in Greater detail personally I just don't like this I don't like declining sinking ship type of asset set
• 05:30 - 06:00 and you can see so far this year Revenue with Sirius has been shrinking both year-to date and in the most recent quarter subscriber Revenue lower year-over-year advertising Revenue lower year-over-year with Pandora their music streaming that was squeaking by a little bit higher advertising lower year-over-year so I just I just don't like it is is the short story you know looking at the the sales Trends and the subscriber trends that said what's you know Buffet see in
• 06:00 - 06:30 it it's that it has a market cap of under $8 billion and Management's goal is to run this as efficiently as possible and squeeze out more free cash flow yes there's a lot of debt but maybe they could squeeze out a billion dollars in free cash flow this year 1.2 billion next year and then maybe 1.5 in two 2027 and you know when you're talking about that versus the sub 8 billion market cap you're effectively saying hey it's somewhere between five and seven times free cash flows so once again this
• 06:30 - 07:00 Dirt Cheap multiple in the first case with oxy it's a dirt cheap multiple because you're dealing with the uncertainty of commodity prices in this case it's a dirt cheap multiple because the uncertainty of will this business even be around in 5 to 10 years from now will subscriber Trends and churn worsen significantly because at the end of the day you know some people love it some people go I don't see the need to pay for this I would rather just have YouTube in my car when I look at these purchases frankly I just think about it
• 07:00 - 07:30 would have been better off for Buffett to say I'm going off the valuation Spectrum I'm going to follow Phil fiser and focus more on let's say higher quality businesses maybe there's more uncertainty about the future trajectory and just pay a better multiple and I think shareholders in Burkshire hathway and Warren Buffett himself would have been better rewarded maybe even just buying Google over overtime or buying
• 07:30 - 08:00 Amazon where yes it's a little riskier of a venture but riskier just based on something like valuation with Google you have the uncertainty of will AI disrupt their search business but I personally if I were in that situation of managing $300 billion I would rather put the capital to work in something like that a Google or an Amazon where I you know I it's less likely that you see those signs of disruption versus something like serious where the of disruption are
• 08:00 - 08:30 already there it's already a sort of a churning business so I personally that's where I see the value you you can make a different argument with oil and maybe you know you have a lot of inflation in the years ahead so let's go through his third purchase real quick that is verisign before I go through it first of all as always this is not Financial advice on this channel and also a quick plug recently Michael a premium member of the unraveled investing Community shared this is direct quote so far the subscription has paid for itself in 3 months this follows venue venu another
• 08:30 - 09:00 premium member saying joining your membership has been one of my best investments both in terms of value and personal growth if you're looking for compelling ideas come check out unrivaled investing.com so looking at Burkshire Hathaway and their third purchase in verisign vrsn is the ticker this was around a $45 million purchase so just for perspective oxy was 400 million roughly Sirius was around 100 million
• 09:00 - 09:30 and veras sign was around 40 million and it's funny is my own perspective is I would probably say veras sign from a perspective of quality is probably better than the other three in my opinion uh and we'll talk about why in a second Berkshire owns around 13% of the company and they're purchasing around1 90 a share to let's say $196 a share you can see roughly and verine provides critical internet infrastructure the registry services
• 09:30 - 10:00 for.com and.net so the way to think about this is anytime someone wants to register for aom address that that domain or the annual renewal ver signs getting a cut it's a beautiful toll booth type of business model on critical internet infrastructure so I love those recurring Revenue Monopoly type of businesses uh and you could see it in the results you could see very steady Revenue very steady profits not a lot of volatility this is just a beautiful business and you could see for the last 5 years significant uh repurchases and
• 10:00 - 10:30 significant free cash flow and they've even borrowed a little bit money from time to time so that's the reason why their uh repurchases have exceeded their free cash flow in some years and overall you look at this business going from 700 million in free cash flow to around 900 million in free cash flow now so it's a reasonable clip you know I'd say high single digits and you know it's almost all going back to to shareholders via
• 10:30 - 11:00 BuyBacks that's what I like to see the challenge with this business is that arguably the doc.net new name registrations has been flat to down over the last few years and you can see how that's sort of been trending by quarter each of the last you know few few years and so that does raise the concern of maybe doc.net just isn't the place to be and more and more folks are going to be using something like like aai to register their new venture or their new businesses so you
• 11:00 - 11:30 do have this risk um that you are seeing play out with veras sign however trading around $1 199 billion market cap you know and generating let's say 900 Bill 900 million in free cash flow it's not crazy expensive it's definitely the much richer valuation than oxy and Sirus and this is an example of I think one of his lieutenants paying up saying hey I'd rather you know own this Monopoly typee
• 11:30 - 12:00 business that trades at 19 Times Free Cash Flow versus you know and 19 times free cash flow I I think the way you can think about these returns you know it's it's sort of a puzzle thinking about the different pieces you have valuation change you have fundamentals and you have cash flow think about those three buckets for verisign even if you don't get any valuation change better or worse in the years ahead you're probably still going to get either pricing power or you know let's say five to high singled digigit you know cash flow growth over
• 12:00 - 12:30 time in theory unless really starts deteriorating I don't I don't really see that playing out it's possible though so that's that's one angle so core growth at a reasonable rate then throw in the BuyBacks each year which if it's trading under 20 times free cash flow that's an incremental 5% you know that you can get for shareholders so shareholders are really talking about a 10 to 15% type of return return over time for ver sign
• 12:30 - 13:00 before any change in valuation so you know that's I think the the the return framework that they're they're considering from it and view it as a lower risk sort of bet versus some some other companies I look at you know each of these through my own personal checklists like for example with verisign you don't really have the aligned management Berkshire is one of the largest shareholders but it's not like they control the company I would say it's at a reasonable valuation not not a deeply compelling reasonable is
• 13:00 - 13:30 you know something that I I I would say it's passable with ver sign so it's not really passing here the obvious growth potential i' would say it's okay it's not really jumping off the page and you know from the others the no blowup risks I don't really view their contract um to lose the doc or.net registry as you know likely to play out uh and I view this as a win-win for consumers because consumers benefit from being able to securely and easily access com and net websites so looking at something like
• 13:30 - 14:00 this it's very obvious to me that neither of these three bets really fit my own personal investment checklist and I think that's the importance of recognizing it's okay for other investors to have a different journey and I think it is important to recognize you know Warren Buffett is in a different completely different game than you or I so you you know you at the end of the day need to figure out what's right for you maybe you want to just follow and copy along with what Buffett does oh I see buys oxy I'm GNA buy oxy for myself and maybe that works out I
• 14:00 - 14:30 you know good chance that it does especially if you see an uptick in inflation let's say in the years ahead personally I would rather for my own personal investment journey I would rather find situations that are more management owns 30% of the company 40% of the company and it still trades at a reasonable valuation let's say 20 times free cash flow or under and there's a very obvious path for why it keeps growing at 10% Plus in the years ahead um you know one example that I called out to my
• 14:30 - 15:00 subscribers earlier this year was shift four payments which in full disclosure I owned and at the time very clearly you know fit each of those uh you know criteria I think I even called it out uh Shi 4 indirectly through one of the videos where I I called out significant Insider buying because you had the Align management with Jared isaacman um you know buying Jared isaacman is the founder of shift for payment so he was uh owns 30% of the company so aligned plus he was buying shares compelling
• 15:00 - 15:30 valuation he was trading around 15 times free cash flow when I called it out to my subscribers obvious growth potential every single year that they'd been in operations they had grown either their volumes or Revenue by 10% plus so and and management saying look here's our playbook for why we're going to keep doing it in the years ahead which includes further m&a and expansion in internationally so I I felt based on their track record and what they were saying that struck me as obious the blowup risks was a little bit more
• 15:30 - 16:00 manageable we're thinking about the they did have some debt and so I I wanted to make sure that was taken care of and you know management correctly refi it so I I looked at you know that's the reason why I made Shi 4 uh Shi 4 payments part of my own investment Journey earlier this year is it's something where it's it's you know very easy for me to see personally and you know 15 times fre Catlow yes it's not as cheap as let's say a serus at six times but I think the durability aspect of saying do I think
• 16:00 - 16:30 this business is still around or much bigger 10 years from now is much easier for me to stomach at let's say 15 times free cash flow for something like Shift 4 than you know six times for something like Sirius if you have a different opinion I'd absolutely love to hear it in the comments below thanks so much for watching unrivaled investing and happy holidays