Paramount soars 16% after Warren Buffett's Berkshire Hathaway reveals $2.6 billion stake in the media company
Paramountstock soared as much as 16% on Tuesday after Warren Buffett's Berkshire Hathawayrevealed a stake in the company.
- The conglomerate owned $2.6 billion worth of the media company at the end of the first quarter,
- Paramount Global, which recently changed its name from
ViacomCBS, owns MTV, Nickelodeon, and CBS, among other television channels.
The conglomerate's quarterly 13F filing made with the SEC showed that Berkshire owned $2.6 billion of Paramount at the end of the first quarter. Paramount investors likely view the purchase by Berkshire as a vote of confidence for the media company given that Buffett's US stock portfolio owns less than 50 individual equities.
There is no indication of whether the new stake was purchased at the direction of Buffett, his right-hand man Charlie Munger, or by one of his lieutenants that help manage the $364 billion portfolio of US stocks.
Paramount is a value stock based on its forward price-to-earnings ratio of 13x, which is right up Buffett's alley given his long-held strategy of value investing.
Paramount, which recently changed its name from ViacomCBS, owns various television channels, including MTV, Nickelodeon, Comedy Central, and CBS, among others. The media company also owns the movie studio Paramount and recently launched its own streaming service, Paramount+.
Berkshire's near-69 million-share stake in Paramount makes it one of the largest owners of the company after the Redstone family, which has been in control for decades. Buffett now owns 10.6% of Paramount, and the position is Berkshire's 18th largest position, representing about 0.70% of the entire portfolio.
This isn't Buffett's first foray into media companies, as Berkshire has recently purchased Activision Blizzard as it bets that Microsoft will be able to close its proposed acquisition of the video game company. Berkshire also previously owned a portfolio of newspaper companies for decades before selling them in 2020.
While Buffett's stake in Paramount has led to buying pressure in the stock, it is still just a drop in the bucket relative to its largest portfolio holding: Apple, which represents 42% of the entire portfolio.
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