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I believe the writing is on the wall for shares of Sirius XM (NASDAQ:SIRI) here yet again.

When Liberty Media (NASDAQ:LMCA) first entered into its forward contract for 302 million shares of Sirius XM at a price of $2.15 earlier in the year, I hypothesized that $2.15 would become a floor for Sirius XM shares. Granted in the short term I was quite wrong as the share price was driven down to the $1.80's as the overall market sharply fell in April and May, but ultimately for those who held until the contract was delivered, they were rewarded with a share price that literally catapulted up in two stages from $2.20 to $2.60, and then again to $2.97.

To me the idea was simple. The fact that Liberty Media was initiating its quest for control of Sirius XM at $2.15, it was sending a clear signal that this price was not the most it would pay, as many argued, but rather a price it would pay, period. If Liberty Media was willing to buy 302 million shares at $2.15, certainly it would be happy to pay the same price for the hundreds of millions of shares it still needed. As I said back then:

His (Malone's) $2.15 buy of Sirius XM shares should be viewed as a rough floor, and an excellent purchase price for investors moving forward assuming you have a time horizon beyond a few months. This will take a bit of time to play out.

Interestingly enough, as soon as the overall market returned to bull territory in early July, Sirius XM shares returned above $2.15 per share and then took off in a rash of short covering and heavy buying right up to $2.60.

One of the buyers was Liberty Media, which was purchasing shares by the tens of millions in slow methodical fashion. Something was quite clear during Liberty's buying, and that is that Liberty was purchasing increasing numbers of short sale shares from traders hoping to capitalize on a potential pullback after the rapid gain. The result? No such luck for the short sellers, and again Sirius XM shares took off, this time reaching $2.97 just as the market took a nose dive the day after the presidential election.

And with short positions in Sirius XM up once again, guess who is buying at current levels? Liberty Media.

It is important to note that among the traders I speak with, it seems the majority are looking for an end to this market correction fairly soon. Most have covered significant parts or all of their short term short positions, and those still holding short positions are doing so in anticipation of "one more leg down." I know of none that have gone long yet, but there's the electricity of anticipation in the air for that one "higher low" bounce that should signal a return to a bull market.

So the question here is, how do these two things tie together for Sirius XM? In my opinion, we are seeing more of the same here. Liberty Media is buying additional shares to great extent at current pricing, and shorts have been increasing their exposure, likely into the strong hands of Liberty Media. With Liberty Media currently sitting at around a 49.8% stake in Sirius XM, it is one more large block of shares away from a controlling stake as soon as the green light is given from the FCC.

Coupled with a potential market turnaround, I believe shares of Sirius XM could take another leg up in rapid fashion, moving back to $2.97 and beyond up to a high near $3.30. Why $3.30? Because the last two legs were appreciations of roughly 18% and 14% over recent highs. I've applied what I feel is a reasonable 11% appreciation for the next leg up which would take the stock to a share price near $3.30. This is a short term 1 to 2 month price expectation for when the market returns to bull territory, and 22% above present share price levels.

Think of Liberty's buying as pulling back the arm of a catapult. The more it buys, the further that arm pulls back and likewise the further the share price should go once the pent up money flow into the stock is released. I'd even argue that we are seeing institutional investors increasing stakes with year end repositioning, preparing to capitalize on the impending buybacks. This data won't be known until it is released early next year, though, so it's merely a guess.

Further confirming my sentiment is money flow into Sirius XM which has been in the hundreds of millions of dollars despite the downturn in share price. It's called "buying on weakness" and it's what the smart guys do when the overall market drags such a strong performing equity down. This is where the big guys place their bets, and this is where you, too, should place your bet to capitalize on the next leg up.

There certainly are concerns here. If the market takes a nose dive and does not bounce as many are expecting, it may be a rough ride in the short term for Sirius XM's share price.

But consider this fact: if the share price of Sirius XM decreases significantly, the company will be able to repurchase more shares for less money in a share buyback program, either saving capital or increasing the value returned to shareholders through quantity. It's the elephant in the room, really, and impossible to ignore. Share buybacks, which are expected shortly after Liberty Media goes to control, should keep the share price afloat even in poor market conditions.

I'll put it plainly. This is the time to buy. Before 2013 guidance is released, before Liberty Media goes to 50% control, before share buybacks are announced, and before Sirius XM's shares hit the next wave up. You may argue that a month ago, two, three, were the times to buy but the past is the past, we can only invest from today forward. If you're not in, or seeking to add to a position, you need a good entry point. For that, "yesterday" is an impossibility. One can mire themselves in the millions of questions such as "When will Liberty find a new CEO?" or "How does a 0.004% difference in churn affect subscriber rates?" and skirt that elephant for another week or two or three, or one can jump on that elephant now for the ride of their life.

It's your choice. My suggestion? Keep it simple. The answer is staring you straight in the face. Don't play chicken with what could be a few pennies. Grab a long position while the market flounders here, hold tight through buybacks assuming the company continues to perform well, and make for yourself a handsome reward.

Source: Sirius XM: Opportunity To $3.30