Warren Buffett appeared to take a hard look at the market last year and decided he wanted to sell shares in plenty of companies, including Apple, Bank of America, and Charter Communications. His holding company, Berkshire Hathaway, even sold every share (nearly 4 million) in Floor & Decor Holdings. Overall, Buffett unloaded $133 billion in shares in 2024.
Buffett is rarely interested in high-risk sectors with the potential to earn high returns. He wants steady, reasonable growth from well-managed companies. And currently three of the top stocks he’s betting on include Domino’s Pizza, Occidental Petroleum, and Sirius XM Holdings. Let’s take a closer look at why he’s betting big on these companies.
Occidental Petroleum
Berkshire Hathaway hasn’t historically invested excessively in the fossil fuels sector. That changed materially in 2019 when Buffett picked up a significant number of shares in Occidental Petroleum. By 2022, he owned $10 billion in Occidental Petroleum’s preferred stock.
The American oil and gas company has acquired several businesses, including Anadarko Petroleum and Carbon Engineering. These acquisitions are aligned with a world transitioning slowly to renewable energies. That transition will take decades, and it looks like Occidental Petroleum has a core competence in how to profit from changing technologies in the meantime.
Since 2022, Buffett and his team have changed tactics slightly by focusing on Occidental Petroleum’s common shares. Between 2022 and the end of 2024, they acquired 264,178,414 common shares. The substantial stake reveals that Buffett and his investment team appear to have found a way to capitalize on one of America’s most successful energy companies that uses unconventional oil directional drilling and enhanced oil recovery technologies.
It seems that Berkshire Hathaway is betting that prices of energy, particularly crude oil, will continue to rise in the foreseeable future. That’s a pretty reasonable wager, though, given that the United States has dominated crude oil production for nearly a decade. While renewable energy technologies certainly play increasingly important roles, they still provide a tiny portion of the energy consumed in the U.S. and globally.
Domino’s Pizza
Domino’s Pizza management reported exceptional growth in sales and locations. A decade ago, the company had about 12,000 locations. Today, it has more than 20,500 around the world, giving it at least 600 more locations than its closest rival, Pizza Hut. Domino’s also reported strong growth in retail sales, up 5.1% over the last year. Perhaps most importantly, Domino’s has the hallmarks of being an undervalued stock and that’s probably caught Buffett’s attention.
Last June, the share price peaked at nearly $534. But shares currently trade around $412, offering a 20%+ discount from June’s high. The team at Berkshire Hathaway likely saw this as an opportune time to invest in Domino’s Pizza while it still has time to grow internationally.
Seeing the opportunity that lies ahead, Buffett purchased 1,277,256 shares (roughly a $550 million value) during 2024’s third quarter. That only makes it 0.2% of Berkshire Hathaway’s portfolio. While that might not sound very impressive, Berkshire Hathaway’s portfolio includes fewer than 50 stocks. Just getting on that list is a badge of honor that puts it on par with Ally Financial, T-Mobile, and Charter Communications.
Notably Domino’s Pizza stopped trading on Jan 8, 2025 so investors can no longer purchase on the public markets.
Sirius XM Holdings
Berkshire Hathaway hadn’t invested in Sirius XM Holdings until last year, but when it did, it went in big by purchasing 112,504,729 shares. Sirius XM Holdings probably stands out to Buffett for several reasons.
First, Sirius XM Holdings initiated a 1-for-10 reverse stock split. Usually this kind of reverse split is taken to ensure a company is not delisted due to an excessively low price and often such stocks have low market caps but that’s not the case at all with SIRI, which trades at a $7.0 billion valuation.
Buffett has criticized splits for attracting short-term investors looking to make quick profits. When Sirius XM took the opposite approach, it signaled that it wanted more buy-and-hold investors.
Sirius XM Holdings also looks attractive because nearly 80% of its sales come from subscribers. About 20% comes from advertisements. This approach stands in contrast to other radio companies that primarily rely on advertising revenue. Should the markets enter a period of economic uncertainty, Sirius XM’s model could prove more resilient than ad-dependent firms.
Finally, it’s important to note that Buffett has a slight preference for dividend stocks. Of course, the dividend yield matters. At nearly 5%, Sirius XM Holdings stands out as a top performer within its sector and the S&P 500.
Should You Follow Buffett’s Lead?
Warren Buffett’s focus on steady growth and reasonable returns has made him one of the most successful investors in history. Does that mean you should follow his lead and buy shares of Occidental Petroleum and Sirius XM?
Occidental Petroleum is likely a hold at the moment, although there is some potential upside for new buyers. Presently, there are 5 Buy recommendations, 18 Holds, and 1 Sell. It’s been somewhat puzzling to see a stock which Buffett clearly has so much conviction in languish time and again, repeatedly falling below his estimated buy price. But clearly the Sage of Omaha has spotted something that he calculates the market has missed.
Sirius XM clearly has potential too, but like OXY the share price has sent a lot of mixed messages and analysts don’t seem to be all in agreement on the bullish prospects. Only two have issued Buy ratings, while six have said to Hold and three to Sell. It’s very much a bell curve distribution which makes new buyers a little skittish absent Buffett’s anointment.
With Occidental Petroleum and Sirius XM, at least, it seems like you might want to wait a while to see if the prices come back down over the next few months.
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