If you are a retail investor holding stock in a company with substantial institutional ownership it can be a great thing. Sirius XM (SIRI) has been known as a retail investor's stock for years, mostly related to a low share price, but that dynamic is shifting to institutions
NASDAQ currently has institutional ownership in Sirius XM at 35%. The most recent report actually has institutional ownership dropping from previous levels. Investors need to bear in mind that the institutional holding summary does not include the Liberty Media (LMCA) stake, which for all intents and purposes is much like an institution and quite substantial.
Institutions now hold 1,817,333,613 shares of Sirius XM. Liberty Media holds the equivalent of 3,207,705,669 shares. Sirius XM's most recent fully diluted share count sits at about 6,577,654,000 shares. Between Liberty Media and institutions 5,025,039,282 shares are held. This would imply institutional ownership of 76%. That could be a good thing for Sirius XM shareholders.
The interesting dynamic is that with the latest NASDAQ ownership report it seems that some institutions are exiting positions. The report indicates:
- 58 New Positions accounting for 78,339,665 shares
- 192 increased positions with 295,220,116 shares
- 163 decreased positions with 483,284,028 shares
- 48 sold out positions with 45,584,485 shares
It would appear that 188,000,000 shares have left the institutional ranks with the most recent report. Is this a situation that should concern investors? The short answer is no. However, this dynamic should not be ignored. People and institutions sell equities for a number of reasons. There is a lot of tax strategy happening, as well jockeying for position in various ways.
The most interesting play in the recent report was that of UBS. It was just 6 months ago when UBS raised its stake to become the biggest institutional holder. Prior to this report UBS held 304 million shares. In the last quarter the institutional giant sold a massive 257,926,180 shares! UBS now holds a bit over 45 million shares! In fact, the slight decrease in institutional ownership is directly attributable to the UBS activity.
Is UBS seeing something compelling? Remember, this data is as of 9-30-2012 so it is dated. However, the shift was huge. Could it be that UBS was playing SIRI in an effort to cut a deal with Liberty's Malone in some way only to find that Liberty essentially got what it needed through forward contracts and open market purchases? Could UBS have strategically been selling into the market coupled with Liberty buys? Getting 258 million shares sold is no easy task, but this data does shed light on some of the massive volume trading days we saw in September of this year.
So what does all of this mean? Well, institutional holdings (including Liberty) are above 75%. That should bode well for retail investors. If we remove the UBS sales from the equation, the institutional ownership would have risen slightly. Essentially there is still upward momentum in institutional holdings. It may not crest 80% by the end of the year, but it is headed in that direction. What we want to watch for is how these institutions position themselves going into 2013 when Sirius management will shift and Liberty Media will begin to play its hand.
Simply stated, institutional ownership is down slightly on the heels of a big fish (UBS) that entered into a massive position early in the year selling off late in the year. Stay tuned because institutional holdings and trading Sirius XM could get very interesting in 2013, especially if share buybacks enter the equation.