It's no big secret that Warren Buffett has been a net seller of stocks recently. Thanks to several massive stock sales, and a few smaller ones, Berkshire Hathaway's (BRK.A 0.50%) (BRK.B 0.52%) cash stockpile has ballooned to $325 billion as of the most recent quarter, far more than the conglomerate has ever had on hand before.

However, this doesn't mean that Buffett and his team haven't been putting any money to work. In fact, there is one stock that Berkshire has been building a position in and recently added more. Now, Berkshire owns 35.4% of one industry-leading company in its massive stock portfolio.

The company is satellite radio leader SiriusXM (SIRI 0.33%), which operates its own radio subscription service and owns the Pandora platform as well. As we'll see, there's a lot not to like about Sirius, but there are also plenty of reasons to like it from a risk-reward perspective.

SiriusXM is down big – and for a reason

Sirius is down by about 50% over the past year, and to be fair, there are some good reasons for the move.

For one thing, Sirius' revenue has been essentially flat for the past four years and is expected to decline in 2025. Plus, the company's subscriber base is about 5% smaller than it was when it peaked in 2019, and many investors think the company's best days could be in the past.

Why SiriusXM could turn things around

On the other hand, there's a lot to like about Sirius. It essentially has a legal monopoly on the satellite radio industry, especially when it comes to new vehicle installations. As interest rates fall, it is likely to boost new car sales (financing gets easier and cheaper), and this is Sirius' bread-and-butter when it comes to attracting new subscribers. The company has rolled out several initiatives to boost its new car business, such as a three-year dealer-paid subscription program that is gaining serious traction.

The company also has a lot of potential to unlock when it comes to advertising. Programmatic podcast ad revenue has been an especially strong growth area, and the company has launched a free ad-supported membership tier, a strategy which has worked well for other streaming content providers.

In all, Sirius sees room to add 10 million new subscribers, which would easily exceed its 2019 peak, and to increase free cash flow from $1.15 billion (management's 2025 estimate) to $1.5 billion in 2027.

A cheap market leader

Finally, SiriusXM is a cheap stock. It trades for about 8.5 times forward earnings estimates and is a highly profitable business that could be even more profitable in the future. Based on the growth projections discussed in the last section, SiriusXM trades for less than six times management's 2027 free cash flow target. Management is targeting $200 million in annual cost savings in 2025, in addition to the roughly $350 million it has already achieved in recent years, which should go a long way toward meeting that goal.

Sirius XM has an excellent track record of capital return, both in the form of dividends and share repurchases. The stock currently yields about 4.1% and management has increased the quarterly dividend by more than 50% over the past three years. And there is a $1.166 billion stock buyback authorization in place, which will allow management to take advantage of weakness in the stock price.

To be perfectly clear, we have no idea exactly why Berkshire Hathaway is scooping up so much Sirius XM stock, or if Warren Buffett himself has anything to do with the decision to keep buying more. While Buffett controls the bulk of Berkshire's investment capital, his two investment managers, Ted Weschler and Todd Combs, manage billions of dollars independently and could be the ones pulling the trigger here.

Whomever is making the investment in Berkshire's portfolio, it's easy to see why the stock could make sense to Buffett or one of his managers from a risk-reward perspective. To be sure, there's quite a bit of execution risk, but if SiriusXM can achieve its targets, the stock could be an incredible bargain at today's prices.