Goldman's Wienkes No Longer Covering Sirius 35 comments
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In news that will likely be welcomed by long investors in Sirius XM Radio (SIRI), Mark Wienkes of Goldman Sachs is terminating coverage of the sole satellite radio player. Wienkes is continuing employment at Goldman, but the firm announced Tuesday, “We are terminating coverage on the following companies: Entercom Communications (ETM), Entravision Communications (EVC), and Sirius XM Radio. This is our final report on these companies.”
Wienkes may well be known as the satellite radio analyst who was right for all of the wrong reasons. While his price targets came to fruition, his models were a stark difference in many instances from actual numbers reported by the company. The fact of the matter is that a negative report and lower price target could have been issued on virtually any company over the past 6 months and come to fruition.
Investors and Mongo alike may have a reason to keep their chin up today, as Wienkes has been vocally critical of the company, and seemed to have the uncanny ability to issue his reports at the most inopportune times.
Goldman Sachs did disclose the following, specific to Sirius XM:
- Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: Entercom Communications Corp. ($0.96), Entravision Communications Corp. ($0.62) and Sirius XM Radio Inc. ($0.17)
- Goldman Sachs had an investment banking services client relationship during the past 12 months with: Entravision Communications Corp. ($0.62) and Sirius XM Radio Inc. ($0.17)
- Goldman Sachs makes a market in the securities or derivatives thereof: Sirius XM Radio Inc. ($0.17)
Position: Long Sirius XM
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This article has 35 comments:
The only one looking like an idiot here is you. Tyler has never subscribed to the idea of a short squeeze. Even before the merger, as early as May 08, Tyler took a lot of grief from investors looking for a pop in the stock price post merger because of a short squeeze. He always was of the position that there was weary investors willing to sell at just about all price points making a short squeeze unlikely. Do some research Moron before making accusations on individual's positions.
Tyler, thanks for keeping us up to date on the goings on of Sirius Xm. Not everyone who reads here blames others for their investment decisions. Good bye and good riddance to Weinkes.
This move is no surprise a la Citi. More fat cutting. Why does SIRI even need SP analyzation at this point? Until they get restructured, there is little reason for targets or further reports. As said before, CC, in BK, is a higher SP than SIRI. In addition, with GS getting closer to becoming a legit bank, their old services model days are waning. Their stock price also reflects this and will continue to decline until it reflects their new reality...which will be at about $30 along with their buddy JPM. Think of it as a sex change operation lol...Weinkes is just one gonad being lopped off.
Weinkes was the low that you throw out in the average anyway. It does end a very insestuous and certainly tempestuous business relationship with GS. I love their little disclaimers, which they should have included with every report. No way should a company or firm be allowed to have an investment relationship of any kind with another company and still be able to review performance and set SP targets. Doesn't matter if they are two separate divisions or whatever the excuse. It's not kosher. With GS stil having a vested interest in seeing SIRI's price decline from their '04 bond deal, no way should they have been allowed to opine publically and set targets.
So when's that short squeeze supposed to happen?...
Couldn't agree more on GS' conflicted relationship with Sirius Xm. Holding debt on dead paper due in Feb 09 and hammering the SP with Weinkes to accumulate additional shares for debt before going long is just wrong. Have no fear though, Merrill's Jessica Rief Cohen adjusted her target to .25 cents after the CC to take up the banner for the run back up when the debt is resolved.
I agree, the departure of Mr. W is long overdue. There was a conflict in reporting price targets and owning debt. Any attempt for GS to stay long in SIRI must be coupled with the exiting of an analyst for the stock. I believe GS took the steps to short the stock to it's legal limit. The continued relationship of setting price targets by Mr. W would be too Obvious, and open GS to litigation. The increase in the stock will now be in line with the Credit Market conditions. These conditions are also predisposed to the LOANS given to the Domestic Auto companies.
How's there going to be a "short squeeze" in the 8 trading days between the meeting and the end of the year??????????
We all know the dilution and split will be approved.................
So from 8 days from there, how in the world will the sp rise due to a squeeze and more importantly, WHY would the shorts want to cover after hearing the wonderful news of dilution and split???????????
Hope all is well. Thanks for that info on Merrill, I missed that she finally got off the dime. Last I remember she was reserving her opinion. .25 huh? What a joke. Who sets a price target of .25 at this point? Best thing to do at that point is just opine without a target. These analysts are funny. Well, I believe the average is around .90. Which I see as perfectly legit.
I agree with your sequence of events scenario. I'm just holding my current .20's position and waiting for any drastic drops to add one more time before then. I was just about to buy in that last day it was @ .14 last week. Took some new funds to my broker but it takes a day to get into my account so I missed it. I think this time I will start buying in @ .14 and add lower as needed. I will be somewhat surprised if the SP is under .30 by meeting time (I have to keep citing Circuit City, who while in BK on pink sheets is .20 and higher). But I guess stranger things have happened. Can you imagine them trying to justify a .17 SP? I really can't but we'll see if that plays out. If so, as you say, approval news is the next trigger for short exit. Could be days after. Maybe on news of new shares and reverse, they slam it down one last time to that .10 - .07 area, then all jump out at once. Just from experience, I've seen many a mass exit right on Dec. 30/31 for EOY accounting as you mention. And if not, we go into Jan. I'm cool with that too. Now worries, I'm just sticking with this until something breaks. When it does, we will be there to get paid! As we know, this is otherwise known as the "work" part of investing--which many here don't get. They cry like babies when their easy money doesn't just drop in their laps.
I have not ascribed to the short squeeze theory, I simply said that they will close out their positions by the end of the year. The stock price will rise based on company performance and the desire of institutions and individuals to own the stock once debt refinancing is announced. The dilution and RS approval is already in the SP. IMHO. After the the annual meeting, when management has what it asked for, they will start to put clarity on financing and 4Q. There isn't much to go down from here.
After getting out at just under .21 last week, I just started with a third back at .16 and the rest I will have to wait and see. Much more cautious this time around.
I'm not trying to make you feel worse, but you haven't been trading long I take it. 8 days? My goodness. This stock could go to .75 in 8 minutes in the right conditions, considering their short interest. End of year also brings many accounting reconciliation trades, so stay tuned. 8 days is a lifetime on Wall Street.
My advice to you... Just try to relax and have a decent holidays. The anxiety is over. The stock has crashed and it's bubbling at the bottom. There's nothing left to worry about except the next moves to remedy/reconcile the situation. If you've stayed in until now, or are back in now, just let the final scenes unfold. This is actually good theater! An expensive ticket I know, but just try to allow the being to be...
Not a bad strategy. I think we both probably want to see if they take out that .14. If they do, as when they took out the .21, it's about .06 - .07 down from there IMO.
I thought the Autos testimony was yesterday but that turned out to be submitting plans. Now it's Thur. /Fri. And probably a vote next Tues/ Wed. I find it interesting that Pelosi said yesterday after the bell that there will be aid and bankruptcy is not an option, and SIRI is down today. Give this adjusted timeframe of testimony EOW this week and vote next week, they might just try to retest the SIRI lows in the meantime (now knowing money will be approved--which makes this playtime for shorts)...then snap it back on the approval. I hope they do. I'd love to go in heavy @ .10 or under...then just wait.
I'm aware of what can happen in 8 days on wall street.
My point is, there's ONLY 8 days between the meeting and '09. After all this, after all the torture the "shorts" have handed out, I do not see them running to the door 8 days after they get the wonderful news that dilution and split have approved.
That's exactly what they want, to beat it down again after is splits and the sp lands at 6.00 or 8.00.
As cos just pointed out, this stock isn't making a letitimate move until it proves it can perform. That moment is not near by.
And cos, I never said you believed in a short squeeze, but what else do you call a couple hundred million shorts trying to cover within 8 days??
They also cite an investment banking relationship in the past 12 months and that they make a market in the securities and derivatives of the stock they are covering. Why in the hell were they not required to disclose this in each and every one of their analyst opinions?!
Lastly, people say that GS was the low and the low always gets thrown out. My observation is that they were the extreme low, and the stock always moved on their announcements (always in the direction of their price) more so than any other analysts. Other analyst opinions appear to bear no weight at all. I too have been waiting to make another buy in at an appropriately low price (trying to get my avg price down to around 0.20-0.24 with this buy), and have been worried about when GS will next chime in. At least now I don’t have to worry about that!
Point taken on your POV but a few things to think about...
First, as I have said here many times before, you can't change the game arbitrarily (meaning the SP performance model). Many factors have contributed to SIRI's precipitous decline--some of which have also affected many other stocks in much better internal positions than SIRI. But also one that we know about that hasn't affected every stock...and that's the hedge-related short. My point is, you have to stay on one model, not jump to another after you've hit bottom. Meaning...if you believe the hedge helped get us here, you must believe that has also to be reconciled. You don't just short, then nothing. For every action, there is an equal reaction. Further, regarding the overall beatdown the market has taken, there must be the same eventual reconciliation--or normalization. Right now, things are still depressed. I believe the worst is past us (for now) and now you will see more and more toes checking the water. Then one will jump in, then people follow him, etc...Believe it, sideline money wants to be back in stocks, they just want to believe the bottom is in--which many are beginning to believe (including me). So give that a bit more time.
Regardng the short interest...that works on the same mechanics. When a stock climbs a wall due to exuberence, it must peak. When it peaks, it's look out below as people jump off following the leader. Why would you not believe the same on the opposite end? This is physics. What goes up must come down and vice versa (unless that something is broken). In this case, it's not broken. Also you have to forget about the dilution, reverse, and new short as it relates to the current situation. That is its own deal and not related to this deal in of itself. Much of this current deal still needs to resolve before that new scenario becomes reality. You will not see an almost 300M short interest going through a reverse. Some might but many won't just due to the uncertainty of the other side. Further, no one even knows any timeframes or specifics yet. You must wait and take one step at a time here. I think you're causing yourself undo stress by trying to think about all the steps at once. They won't all happen at once. Hope that helps.
I appreciate your efforts.
I have succumb to the role of devils advocate on any optimistic point of view for this stock.
Logic has never applied for this stock and optimism has consistantly been defeated.
Instead of trying to make decissions based on what I know and what should happen, I'm left to continue to try to disprove every worst case scenario as the only means of protecting myself.
I'm not sitting here and simply holding, I'm also trying to add and average down as best I can.
And maybe that helps you understand why I'm so contradictive.
Cool...that's all you can do. We've all hoped this could have had a truncated timeline...but as we know hope is not a strategy...and it has turned out the full downside treatment was in effect. Not much we can do there. But as all stories do have a beginning, middle, and end, we are finally about at the end of this little diddy...whew! High drama!!
the balance sheet of SIRI. As the debt increased the overall expenditures
for operating expenses did not rise as a necessary factor. The debt was
used as an irresponsible outlay for high talent fees and excessive payments toward the merger. The problem with the management's fiscal
policy is the unrealistic goals they would be able to pay down the debt while bleeding money. There is fiscal incompetence.
For everyone's information, any stockholder with proper purposes, can look at the books, accounts and meetings logs at a reasonable time. This
is a legal right by coroporation law.
What happened was the bosses realized they would not be able to meet
debt obligation and so they needed another plan. The plan was to raise money by new issues. The only way to dump more issues was limited.
Dilution meant the stock price would be devalued and possibly not reach
the PS needed to fund debt. The other option would be a RS, which would basically cause most investors in the $2 range to eventually lose their money but give the bosses the chance to raise money to pay debt.
At the expense of current investors.
In order to convince people that a RS split was necessary the pps had to go lower than $1 to frighten investors that SIRI would delist. Enter the
short sellers. Either by unsuspecting collusion or subterfuge alliances
that drive the pps so low investors would opt for RS.
The market collapse threw a curve when Nasdaq suspended delisting.
Now a RS was not necessary based on delsiting. Even though Mel in the call at the very end pumped that into the conversation. One last attempt
to use RS for eventual fund raising with new issues. The backlash from investors means it's not a sure thing. Hence funding of the debt is again the main issue.
Even though the ecomomy is tanking, SIRI holds steady with it's subs
revenue. This makes it a valuable commodity with almost $3 bil in ann.
revenue. But the debt the bosses put on SIRI cripples the chances for
a recovery. It was the management, past and current, that has ruined SIRI. Overspending, reckless pay compensations and mismanagement
of the business model has destroyed the chances of survival. Now the
manipulative way the bosses are trying to raise money is thru losses
to the current stockholders to raise capital.
In addition, the current ad program as seen in last weeks full page ads
shows a marketing plan geared to people 45 years and older. The images in the ads of talent and programs are from an era gone by as
seen by bosses who are out of touch with the new generation. The
generation of 20-35 year olds ride in their cars a lot more than people
50 years of age.
The reason this management has failed is because they were fiscally
irresponsible, they are out of touch with the new generation for product and they are trying to manipulate their way out of debt that they made by
causing the current investors to lose everything.
The management should be replaced, no RS, and no dilution.
The only rescue plan would be to talk to bond sellers and see if they could sell corporate junk bonds at 3 and 5 year maturities. The corporate junk bond market has some life because treasuries offer no yields and there are still some risk takers. With the solid $3 bil revenue, there could be a
perception that SIRI junk bonds have a good chance to pay off. A 3 year bond could pay short term debt and a 5 year bond could raise capital
to stabilize the cash balance. At the current CCC rating it would be a junk
bond grade but there are other corporate junk bonds out there that do
well and are traded successfully. If this were possible, then it would buy time waiting for the investment banking sector to recover and maybe refinance with new loans.
The way the current bosses have it set is to raise money on new issues
while the previous investors lose thier investment. It's a play for the current management to have their cake and eat it to. They are not needed, and based on their past performance they don't deserve to stay.
For everyone's information, the prospectus is invalid because it does
not notify potential investors of pending lawsuits. The requirement in the incorporation rules is to publish all potential liabilities. In this regard, there should be an injunction at this time against any motions by the
current management to institute any RS or dilution based on the incomplete disclosures in the publications as required by law. This omission presents misinformation to potential investors as to the true
risk and may be a fraudulent representation.
The two issues on the table is the current managements handling of the
fiscal plans for SIRI and how they plan to take care of the debt. Without their full disclosure to stockholders about the next stage of financial plans, there is no way they present credibility. For instance, if they weren't up to something they didn't want disclose, as to how they
plan to use the RS or dilution, or file BK, then why didn't they buy
shares back at .17. Wouldn't it be a good deal if they knew SIRI would
be profitable and pps would go up. But if they knew the RS would mean
losing their money, or they are considering BK, or they knew the stock would not go up because they knew short traders were working, then sure they wouldn't buy back at .17. They know it would be a loser. And
if they were honest and their remarks about a return to profitability were
true, then they would buy back at .17. So it really seems they are playing it against stockholders. NO RS, NO DILUTION, NO MANAGEMENT
THEY SHOULD BE REPLACED
Good thoughts and some valid points although I disagree SATRAD is for 20 year olds. I see their target demo as 27 - 50.
I also think regardless of what is motivating this new share offering, it willl happen. Sometimes, it's critical to look at how a company is doing business when considering them as a long-term investment. I have to say that those who bought in during the 2004 - 2006 area would have done well to recognize a bad pattern emerging--(no offense personally to anyone but which is now about to hit new heights. The bad pattern is paying for things via shares. They seem to have done that consistently through the period...and as late as a month ago, they are still using equity to pay for things (the recent paydown of the 09 debt). We have tended to justify this recent activity as them "positioning" themselves for a more shareholder-friendly effort going forward. But in actuality, it is the same philosophy they have had now for quite some time--and which is ALWAYS a bad sign common investment-wise. Further, I believe it is the continued method of choice going forward and there is no law against it. Your point about Mel not mentioning the recent NAS rule change, was a tell that we missed initially but realized shortly thereafter. Any company seeking to raise their SP the organic way would have cited that as a positive for the company and would have delineated the time frames we did here (no actual delisting until at least July). But this is not, nor ever was their plan. They went ahead with the buyout knowing full well they were going to do this 2nd leg of dilution due to the enormus XM debt they were assuming. Hence the SP being where it is, with this dilution essentially already priced in (at next to BK levels). And for several reasons, but not limited to that they can't keep an 8B share float, they will have no choice but to reverse (under the guise of raising the SP over a buck for compliance). According to my math, when all is said and done, I expect them to windup with an SP of about 3.50. From there what happens will happen. We all know what tends to happen but no one can know for sure.
We also do not know when any of this restructure will happen. Soon we will know but until then, we just wait. Your junk bond idea is potentially good but if that were on their mind, they would have already begun that process (I think you said that). I've said before, no company I've ever seen asks for shares, then doesn't use them--esp. not what we are to believe is a random amount of 3.5B. For me, that's a premeditated amount as part of a plan. So...we just wait and see. In the meantime, there is still the current SP and related issues to be dealt with....IMHO.
Looks like the Beige Book numbers leaked out...down we go!
Nice! Winter ammo..I like it...and we need it. Well, I can now manufacture as many bullets as needed. 'Here' is the windy city...where when you throw that ammo, you have to aim a little to the right then the wind blows it back in to the target...
I see the BB numbers jerked the market down but from what I'm seeing, they are having a tough time mounting losses. Looks like the follow the leader chain has been significantly reduced. They tried a take down in the futures also and couldn't make it stick. This type of action bodes well...unless it's another trick! lol.
That's about what I was thinking numbers-wise. In the meantime, I also expect an artificial inflation of the SP as shorts close out positions at some point...but then a crash back to reality going into the actual event. The end of this year should be highly volitile as it's also the end of the Q. You've got meeting news, short interest, possible Funds liquidating this stock due to EOY accounting. They may be waiting as we all are for some kind of cover event. That's why I see a crash after a move higher. At some point. there will be a boatload of people clearing out previous positions ahead of the restructure. Even though we don't know management's time-fame on the restructure, there are many volitile variables waiting in the wings before we hit Jan 1.
And...your point is not lost. This is what I call legal stealing. I've seen it before and was on the short-end as well. The last time though I blew off the last minute cover thinking things were just getting better--a lesson learned. I have called the SEC on these things in the past and was told it's all perfectly legal but I could get my own lawyer if I wanted to...ah the plight of the common...
You made good sense... I just picked up more shares @ .1711. This is a decent intermediate position. My last bullets are reserved for some where in lower land. lol
very possible scenarios...issue 2.5B for debt and making Howard and his agent whole... and keep 1B for safe keeping as they have done historically...cause we know they'll use 'em when they need to pay somebody!! They can't use cash because Mel is locked on his jock in reporting plenty of free cash. He'll keep the cash to show the Street and we'll pay for debt and talent!... lol
I picked up 15K at .1701 at 3:59pm. Will wait to see what tomorrow brings with the Autos on the Hill with their Tin Cup out. Pelosi already tipped their hand so all that left is the Humiliation and details.
I certainly can understand playing Devil's Advocate with this security at this point in time. I myself, contrary to the feeling last week, sold off my position again, feeling certain that the SP would go down and not wanting to kick myself in the arse for not trusting my gut..... again. My gut lately has been supported by two technical indicators that have rung true over recent months. Bollinger Bands and the 13DMA. We have not effectively broken through the 13 DMA in weeks and have continually made new lows on every retrace. My Bollinger spec is 20 day MA with 2 standard deviations. Using these objective criteria has taken my emotion out of it. If the SP does break the 13 DMA and the 20DMA it is cause for attention and a good sign to not miss the Bus on the short term up. When I sold shares Friday it just tapped the 13DMA. This time it worked to hold off, watch the manipulation, and decide on a good re-entry point. Today .17 was a starting point for me, but .14 is a close price that either will break or hold. If it breaks, then s162 is probably correct on his downside prediction of .05-.07 further down. If it holds then I will make sure the next trading day it holds again or is slightly up before committing more funds. No one has a crystal ball for accuracy here. These Technical events help me to keep the emotion out of it and like you, I have plenty of emotion regarding this company. Good luck with your trades and lets hope we all can make a little back..... while we wait for more significant performance events.
Yeah, they tucked it down under .17 EOD but plenty of resistance in upper .16's. I got in today @ 10K shares because I didn't want to miss any move back up to my original basis @ now .26...or of course beyond moving into the hearings. The last move up was very insidious and fast. At some point, news is going to change the whole complexion of this flow..just when. IMO..
Hey, Mel speaks! But typical Mel.,,spreading his usual no confidence! lol. I like his refi blurb...yeah, on the backs of shareholders he's going to refi. There you go..looks like he's going to take out all the '09 on our dime--in about 2 weeks! But then we already knew that!! Hey, if we play this right, we can still salvage something while he gets his funny money.
******
Karmazin: Sirius Met Easy Black Friday Goals, Not Cutting Subscription Rates (SIRI)
Dan Frommer | December 3, 2008 4:15 PM
mel-karmazin-reuters-s... did satellite radio company Sirius XM (SIRI) do on Black Friday? Depends how you look at things.
"We did exactly what we wanted to do for Black Friday," CEO Mel Karmazin said today, "which is not great news because we didn't have high expectations."
Karmazin says Sirius is on track to grow Q4 revenues in the double digits, percentage-wise, according to Reuters. Analysts expect Sirius to post $627 million in Q4 sales, which would represent 12% pro-forma sales growth.
Mel also said:
* He "is confident the company can refinance debt due in 2009." ($1 billion worth.)
* Sirius "will also be able to boost revenues in 2009 and has no immediate plans to cut its subscription prices."
* He also "ruled out any interest in selling Sirius XM in the near term." "We don't feel that we need to be acquired," he said. "You should assume the company is not for sale."
Karmazin spoke at Reuters' media summit, which is not open to non-Reuters journalists.