Liberty Tycoon John Malone has been shopping again. On December 18, he bought over $56 million worth of Liberty Media (LMCA), and paid top dollar, at $115 a share. The 52 week high is $116.92. This was one of the largest insider trades last week. Liberty Media is the company that is in the middle of taking control of Sirius XM (SIRI):
|Dec 18, 2012||MALONE JOHN COfficer||490,597||Indirect||Purchase at $115 per share.||56,418,655|
Sirius (green) has been outpacing Liberty (blue) over the last year. Even though the radio giant lost its beloved CEO Mel Karmazin a few days ago, it continues to maintain, with new reports that its President of Operations James Meyer will step in as Interim CEO, and Sirius XM Board member. The shares have also stayed above Liberty (percentage wise) due to the impending share buybacks that were announced in December, and set to begin at any time.
Once the FCC approves Liberty's application for total control of Sirius, it will be free to buy enough shares to take it over 50%. Right now the company needs less than one percent. So there could be a scenario where Sirius is buying its own shares while Liberty is also buying Sirius shares. It is unlikely, but if the price drops low enough, it is a possibility.
Malone's Liberty purchases will be fuel for the Liberty camp that believes that Liberty Media shareholders will get a premium if Sirius is "spun off" in a tax free Reverse Morris Trust. And that is a definite possibility that should not be ignored. However, coincidentally, Liberty insider Robert Bennett sold a total of 450,000 shares worth $51,750,000 on the same day that Malone bought his shares:
|Dec 17, 2012||BENNETT ROBERT RDirector||198,118||Indirect||Sale at $115 per share.||22,783,570|
|Dec 17, 2012||BENNETT ROBERT RDirector||251,882||Direct||Sale at $115 per share.||28,966,430|
But, Liberty CEO Greg Mafei dumped five times that. He sold over $253 million worth of Liberty without any sort of fanfare. Granted these appear to be options, and there are many analysts that feel that insider selling to collect bonuses pales in comparison to insider buying. And there is the tax scare for 2013 that is causing massive amounts of investor selling. But, either these guys are not expecting a premium that would be more than a tax increase, or John Malone knows something that the rest of them don't.
|Dec 3, 2012||MAFFEI GREGORY BOfficer||2,784,883||Direct||Option Exercise at $3.57 - $54.13 per share.||N/A|
|Dec 3, 2012||MAFFEI GREGORY BOfficer||813,647||Direct||Acquisition (Non Open Market) at $105.56 per share.||85,888,577|
|Dec 3, 2012||MAFFEI GREGORY BOfficer||2,401,305||Direct||Disposition (Non Open Market) at $105.56 per share.||253,481,755|
The week before last, Malone was in the spotlight again, with the week's biggest insider buy. His Liberty Interactive (LINTA) bought almost 5 million shares of TripAdvisor (TRIP) for $62.00 a share. This purchase combined with the TRIP shares LINTA already owned, will give Liberty majority voting power in the company. As you can see Malone also paid a hefty premium for those shares:
TripAdvisor shares are tracked through the tracking stock Liberty Ventures (LVNTA). Its holdings include interests in AOL, Expedia, Interval Leisure Group, Time Warner, Time Warner Cable, Tree.com (Lending Tree), TripAdvisor and some green energy investments. Right now it is doing extremely well (purple) compared to some of the other Liberty companies on the chart above.
I think Malone's purchase of Liberty Media last week is very interesting. But considering the fact that some of the other top executives are selling, it seems unlikely that this is purely a bullish move. I continue to believe that Sirius is the "pure play" in all of this. And there is a really good chance that the market will drop next week due to extremely negative fiscal cliff chatter; and the low volume which the holidays always cause anyway. This has been expected for months now, and there are only 9 days left until the end of the year. When both sides seem to be talking, there is hope and the market jumps. And when the talks stop, the market drops. But the silver lining is that investors can buy at a discount. How low will Sirius go? First of all, these are uncharted waters. However whenever the shares drop below the 50-day EMA it is only for a very short time. Right now the 50-day EMA it is at $2.80 (green). So the odds are against it going lower than that.
If you want to use John Malone's insider trades to make a decision, on what company to buy, Sirius is the winner. Considering that he has bought almost half of the company, or close to 3.25 Billion shares, now worth almost $10 Billion. It is the pure play.