Warren Buffett's Strangest Investment Raises Eyebrows

Legendary investor Warren Buffett's company, Berkshire Hathaway, owns about 93 million shares of Paramount, a company currently navigating troubled waters and which experts believe might be sold soon.

Shares of the entertainment giant have been sliding for quite a while now. The stock first tumbled significantly last year after the company outlined its new, more aggressive targets for its streaming business to compete with rivals like Netflix, Disney+ and Hulu. The decline continued in the following months as Paramount suffered increased streaming losses despite gaining millions more subscribers for Paramount+.

There have been talks of selling Paramount and merging with other entertainment giants—the latest of which is Warner Bros. Earlier this month, The New York Times reported that media mogul Shari Redstone, the controlling shareholder of Paramount Global, was considering selling her stake to Skydance Media. News of the potential deal sent Paramount's stock up by 12 percent earlier this month.

On Wednesday, Axios reported that Warner Bros Discovery CEO David Zaslav met with Paramount Global CEO Bob Bakish on Tuesday in New York City to discuss the potential merger. The market did not appear impressed by this possible union, with Paramount's stock dipping slightly in after-market trading and Warner Bros Discovery's stock falling after news of the deal emerged.

Newsweek reached out to Paramount for comment via email earlier this week but did not receive a response.

What's baffling to some about the Paramount situation is that one of the most famous and trusted investors in America, Buffett, has a 15.4 percent stake in the company. Finance blogs like The Big Fat Whale have calculated that the legendary investor is down by nearly 60 percent on his investment in Paramount stocks. Does Buffett know something we don't—or is this going to be the investor's biggest mistake?

"As someone who advises people on financial planning, investments, and starting companies, I'm always keeping an eye on Buffett's moves," Steven Kibbel, a Certified financial planner, entrepreneur, and financial advisor at Day Tradingz, told Newsweek. "He's shown for decades that he knows how to pick winning stocks. So why would he make such a big wager on Paramount when its future seems so unsure?"

According to Kibbel, who describes himself as a fan of the so-called Oracle of Omaha, "Buffett doesn't look at stocks the way a lot of traders do. He doesn't worry about what the price will do in the short term or whether some new fad will boost it up. Instead, he thinks like someone looking to own the whole business."

"He wants great companies that make quality products and will earn profits consistently year after year. With Paramount, he must believe the studio still has what it takes to entertain audiences and rake in the bucks, even if the road gets bumpy sometimes," Kibbel added.

"Another thing Buffett is big on is the management team at a company. Like anyone starting a new project, he only wants to invest if the leaders know what they're doing. So the fact that he's backing Paramount this much suggests he thinks highly of their plans and abilities," he said. "In the end, only time will tell if Buffett made a good call on Paramount or if the stock keeps dipping."

Malcolm Ferrante, an expert specializing in international finance, investment, and taxation leading the Investment Migration Unit at CSB Group, told Newsweek that it might be too early to write off Paramount despite the recent "stock nosedive" being worrying.

"Media trends can change fast, so it's hard to say what comes next for certain," he said. "Warren Buffett's investing billions in the company raises questions—he doesn't make mistakes often. He may see hidden value or believe in where they're headed long term, even if streaming hasn't impressed him. Other big investors also seem interested in media companies these days."

With the right moves, Ferrante said, Paramount could win back viewers and compete with its bigger rivals. "But they need to act quickly while also making wise choices. It will be fascinating to see which path they choose from here. Their next steps could shape the industry for years to come."

Keith Donovan, startup advisor and founder of Startup Stumbles, told Newsweek that Paramount still has potential. "In my view, Buffett sees long-term value. The company is aggressively entering the streaming wars," he said. "If they leverage franchises like Star Trek and Mission Impossible, they can carve out a niche."

While it might take time for the company to come out of this troubled period as a winner, "Paramount has the brand power for a comeback," Donovan said.

"With the right strategy of maximizing IPs, controlling costs, and investing in fresh content, the company can bounce back."