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Which Warren Buffett quote is most relevant right now? My vote goes to his classic statement, "Be fearful when others are greedy and greedy when others are fearful."
Many investors seem fearful. The Nasdaq Composite Index (NASDAQINDEX: ^IXIC) has dropped 13% below its previous high, putting the widely followed index in correction territory.
But is Buffett becoming greedy? We don't know for sure yet. However, I wouldn't be surprised if he is -- at least to some extent. Here's my opinion: Buffett is likely buying these two stocks during the latest Nasdaq sell-off.
Taking a bigger slice
Buffett (or one of the investing managers that report to him) initiated a new position in Domino's Pizza (NASDAQ: DPZ) in the third quarter of 2024, buying around 1.28 million shares for Berkshire Hathaway's portfolio. The next quarter, Berkshire picked up another 1.1 million shares of the pizza maker.
I suspect Buffett and his team are taking a bigger slice of Domino's Pizza, with the Nasdaq in correction territory. Domino's stock has pulled back roughly 10% from its peak this year. Its share price is also slightly below the average level since the beginning of Q3 when Berkshire first began buying the stock.
Granted, Domino's isn't exactly cheap, even with its recent decline. The stock trades at a forward earnings multiple of 25.5. Ordinarily, such a high valuation might cause Buffett to look elsewhere. However, the legendary investor has been willing in the past to pay more for a high-quality business with solid growth prospects.
Domino's Pizza's board of directors and management team probably view the sell-off as a buying opportunity. The company repurchased $112 million of its stock in the fourth quarter of 2024 and still has $814.3 million authorized for stock buybacks. With Domino's share price now lower than it was throughout most of Q4, I'd bet some of that money is being put to work.
Getting Sirius
You could make a pretty good argument that Sirius XM Holdings (NASDAQ: SIRI) ranks among Buffett's favorite stocks these days. Berkshire now owns 35.4% of the satellite-radio company.
In some ways, Sirius XM fits the bill of a textbook Buffett stock. For one thing, Sirius XM is cheap, with shares trading below 8x forward earnings. The stock's price-to-earnings-to-growth ratio (PEG) of 0.66 is also quite attractive.
Buffett likes to invest in businesses that he understands, and Sirius XM likely checks off that box pretty easily. The company is the only satellite-radio provider (although it competes against traditional and internet radio). Sirius XM generates revenue from subscriptions, a business model that former newspaper boy Buffett can appreciate.