2 Warren Buffett Stocks to Buy Hand Over Fist in December

Berkshire’s long-term outperformance frames two Buffett-linked stock ideas: Sirius XM and Citigroup. Sirius, now with Berkshire as its largest shareholder after a corporate simplification and reverse split, has plunged over 50% amid high leverage, softer ad revenue and subscriber pressure, but management is pivoting to podcasts and subscriptions (Q3 added ~14k subscribers; podcast ad revenue +6%) with targets of 50m subscribers and $1.8bn FCF; the shares trade below 8x earnings with a ~4% yield, presenting an asymmetric risk/reward if execution and deleveraging proceed. Citigroup, where Berkshire holds roughly 3%, is undergoing a multi-year simplification under CEO Jane Fraser including a phased Banamex exit (partial IPO and asset sales) that should free capital; the bank is repurchasing shares while trading below tangible book (~$71 vs TBV ~$90) and yields >3%, implying meaningful upside if regulatory/headwinds abate, though long-standing execution and governance risks mean the stock could remain a value trap until results materially improve.

Analysis

Berkshire Hathaway's multi-decade outperformance (4,384,748% total return, 19.8% CAGR from 1965–2023 versus the S&P 500's 31,223% or 10.2% CAGR including dividends) frames interest in two Buffett-linked names highlighted here: Sirius XM and Citigroup. Investors track Buffett's positioning because his purchases can signal asymmetric opportunity sets relative to market benchmarks.

Sirius XM, where Berkshire is now the largest shareholder, has fallen more than 50% year-to-date after a corporate simplification (Liberty split and 1-for-10 reverse split), elevated leverage, declining paying subscribers and a lowered full-year revenue outlook due to softer ad demand. Management added roughly 14,000 subscribers in Q3 to reach 37.4 million (Sirius XM plus Pandora) and grew podcast ad revenue 6%; targets include 50 million subscribers (25% growth from 2023) and a 50% increase in FCF to $1.8 billion. The shares trade under 8x earnings and yield about 4%, offering a pronounced risk/reward if execution on subscriber growth, podcast monetization and deleveraging materializes.

Citigroup remains a long-duration turnaround: Berkshire holds nearly 3% of Citi (about 1.3% of its $300bn+ equities book) while the bank trades near $71 versus tangible book value of roughly $90 (under 80% TBV) even as management conducts repurchases and aims to simplify operations. CEO Jane Fraser has sold many international consumer franchises and is pursuing a phased Banamex exit (system split, partial IPO in 2025–2026, asset sales) that should free capital; regulatory consent orders, governance history and extended execution risks keep the stock as a potential value play rather than a certainty despite a >3% dividend and peer TBV multiples nearer 2x.

Key Decisions for Investors

• Consider a small, staged, high-conviction position in Sirius XM given the sub-8x earnings valuation and ~4% yield, but size exposure conservatively and tie incremental purchases to clear operational milestones (sustained subscriber growth, ad revenue stabilization, visible FCF improvement and deleveraging)
• Accumulate Citigroup on price weakness or as a tactical value position since the stock trades materially below TBV (~$71 vs ~$90) while management repurchases shares and progresses on the Banamex divestiture; monitor consent-order remediation and any changes to bank regulatory capital rules that could accelerate buybacks or capital returns
• Limit overall allocation to these names and use stop-losses or hedges given execution and governance risks; require quarterly evidence of progress before increasing position size
• Income-oriented investors can justify modest holdings for the dividend income (Sirius ~4%, Citigroup >3%) while awaiting corporate simplification, but should monitor macro signals that affect banking margins such as the yield curve and Fed policy