Buffett's Bold Pivot: Dumping BofA While Going All-In on Satellite Radio

The Oracle just dropped a major signal. Over the past 9 months, Buffett’s Berkshire Hathaway sold off 39% of its Bank of America stake — more than 401 million shares — reducing it from one of his crown jewels. Why the sudden exit?

Three factors likely at play:

1. Valuation flip: When Buffett first bought BofA’s preferred stock back in 2011, it traded at 62% below book value. Today? Trading at 29% above book value. That’s not cheap by his standards anymore.

2. Rate environment: With the Fed now cutting rates instead of hiking, BofA’s interest income — its lifeblood — faces headwinds. As a super interest-sensitive bank, it feels rate cuts harder than peers.

3. Tax math: Buffett hinted at 2024’s shareholder meeting that corporate tax rates would rise. Lock in gains at 21%? Smart move.

But here’s the plot twist — while ditching BofA, Buffett is aggressively loading up on Sirius XM (SIRI). Since late September 2024, he’s scooped up 14.6 million additional shares, bringing Berkshire’s total stake to 35% of the company.

Why? Sirius operates as a legal monopoly in satellite radio — nobody else has a license to operate. But the real magic is its revenue mix: 77.5% comes from subscriptions (not advertising like terrestrial radio). Translation: recession-resistant cash flow.

The kicker? Sirius trades at less than 8x forward earnings — a 60% discount to its 5-year average. For an Oracle hunting for deals in an expensive market, that’s catnip.

The takeaway: Buffett’s exit from BofA and pivot to Sirius isn’t random. It’s classic value investing — sell when valuation breaks, buy when monopolies get cheap.