Sirius XM: An Equity Adrift 48 comments
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As the new year came, many people took the time to reflect on all that transpired during 2008. High gas prices, banks failing, and investment portfolios taking a beating like many have never seen before. For satellite radio investors, 2008 meant a united front against the NAB, and endless waiting on the FCC for a decision on the merger. The merger process during 2008 took a toll on this equity that it has yet to recover from, and many still are betting against a recovery.
What will 2009 bring the satellite radio investor? Most of what anyone will say is based on speculation and opinion. Car sales, which have been down to record lows, need to recover at some point. This could happen in 2009, but it will not be early in the year unless something extraordinary happens. This means that OEM installations of satellite radios will be slow as new year begins.
Sirius XM (SIRI) has some refinancing to do as well. The first order of business is the February converts. While I see no real problem for the company to deal with the just under $200 million, there is still another $800 million to deal with throughout the year. If the company is unable to wrap up all 2009 financing in one neat package, then the equity could well tread water until all of the hurdles are cleared. This could mean investor frustration for some time to come. On the flip side, should the company announce that they are able to get the financing needed, the equity could recover on that news. The debt issues seem to be a major overhang, and any progress that handles all of the debt would be a positive for the company as well as investors.
The merger synergies should begin to bear substantial fruit in 2009. Savings on many line items will help the bottom line, and may make the balance sheet more attractive to investors. Combine good news on synergies with positive financing, and the end to the auto crisis, and the viability of people's confidence in the business model may be revived.
All of this boils down to speculation. Sirius XM stock is highly speculative at this point. Perhaps more-so now than in several years. What makes things more difficult now is that investors are a lot less willing to speculate in the current environment. Some investors have even gone so far as to cease investing altogether in favor of holding cash and waiting. I can’t say I blame these people. Looking at my portfolio over the past few months has been frustrating to say the least.
At this point investing in Sirius XM means a series of questions that each investor must ask themselves. Do I believe in the product? Do I feel that others will believe in the product? Do I believe that the financing will get settled… In one fell swoop, or piecemeal? Do I believe that the OEM channel will turn around? Do I believe that the retail channel will revive? Do I believe that the “push” marketing of the OEM channel will deliver enough subscribers? Do I believe that “pull” marketing of retail can maintain and grow? Will media companies once again become Wall Street darlings, or will they continue to be treated as yesterday’s news? Can the company make the necessary steps without eroding shareholder value? Do I have extra money that I want to speculate with, and if so, is satellite radio what I want to hitch a portion of my portfolio to?
If all of these questions seem overwhelming, consider the vast difference of opinion for those who invest in this equity. People that bought at $5 have a much different opinion than those who bought at $1, and the opinion changes even more starkly for those who bought at 15 cents. Now throw all of the shorts into the mix, and you will find that Sirius XM Radio has a very “bi-polar” group of investors. This equity is riddled with an investment base that is not in unison. The only way, in my opinion, that this equity will see any near term stability is for the majority of investors to be of a like minded opinion on the business, and have the confidence that a longer term hold on the company is the way to go. Until this happens, this is an equity adrift. The only real solution is positive numbers from Sirius XM on a consistent basis combined with good cash flow, merger synergies, and news that leads to the demonstration of these things.
It has been said that fortunes can be made from the ashes of a bear market. While others stand by scratching their heads and wondering what happened, those that will make fortunes are doing their homework across many investment sectors looking for a few diamonds in the rough. They seek out companies that took a beating like all others, but will be able to rise up the fastest. Right now Sirius XM is a speculative equity that needs to rely on outside factors to see them through the storm. Reliance on outside factors adds additional risk. Betting on an equity such as this means betting on banks to deliver financing, cars to begin to sell, and a product that consumers want. This is a major reason that we have a stock like this at the level we see it at currently.
Are you a speculator?
Position - Long Sirius XM
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This article has 48 comments:
As for Tylers article, you obvioiusly dont read my posts much. I am not a fan, and have never claimed to be. In fact, your interpertations of his writing is mild compared to mine. No, I am not a fan of this stock at $1, but at .12 cents I will speculate at these prices. Thats it, nothing more to say. Bash sirius all you want, but dont bash the product, bash the owners.
Competition? Sirius has NO COMPETITION. No other radio can receive songs and never touch a computer, or be link to a cell phone signal(unreliable, slow). Sirius may become the #1 downloading music source at some point(internet radio is dead, thanks to the music industry).
Your articles state the obvious and provide no real substance; and much of your so called substance is generally weak -- such as "Do I believe in the product?" -- of course I do but a company's ultimate enterprise value is also driven by its capital structure, and also in Sirius's case, poor decisions around expense management.
Go back and re-read most of your column's -- they either: a) summarize public info; b) communicate Captain Obvious; c) or are full of gross opinions lacking facts/analysis. Stuff you probably write before sleeping at night.
On Jan 04 08:13 AM Round & Long wrote
> Sorry Tyler, even the investors that bought at $1.00 have a poor
> opinion on SIRI. Only the ones that got in at .12 to .08 feel halfway
> good and they are just gambling. The real longs lost all their money
> because they got out a long time ago. How many shares do you own
> Tyler? This stock should not even be considered as speculative. Drive
> down the road and throw your money out the window. You will make
> someone happy.
On Jan 04 08:13 AM Round & Long wrote:
> Sorry Tyler, even the investors that bought at $1.00 have a poor
> opinion on SIRI. Only the ones that got in at .12 to .08 feel halfway
> good and they are just gambling. The real longs lost all their money
> because they got out a long time ago. How many shares do you own
> Tyler? This stock should not even be considered as speculative. Drive
> down the road and throw your money out the window. You will make
> someone happy.
Looking forward to a successful 2009.
Long Sirius.
If it goes down lower, then id have sold and rebought even lower...Good...Dont care...If it goes sub penny it would have to have real news to back that up, and I wouldnt be in at that point...This will be a wonderful present if it goes up...To someone, not us..I want institutional ownership up more...Might not be buying anything till next year...09 might be a lets get out as high as possible before everything comes crashing down, then rebuy at prices that arent low, or bargin, but ownership changing...
You forgot the obvious: Sirius won the battle but lost the war. Just what shareholders need, a phyric victory.
The shorts and hedgies step on it and can't put it out; the NAB jumps up and down over and over, and yet it still glows.
Eventually they all leave thinking it will burn itself out.
Then the wind picks up just a bit, it dosn't rain for a few days and some leaves start to fall. The forest is dry.
You all know how the story ends, especially y'all from California.
Siri can ignite. No one has put it out yet. It ain't over till it's over and it only takes one small glowing ember to burn down an entire forest.
One of three outcomes in 2009 - either a takeover, a deal with someone like Buffett who gets really good terms, or bankruptcy.
Think you are dead wrong on the money for refinancing angle. True that lots of supposedly"better" companies are paying a premium for their debt refinance.....but it's also true that those "better" companies continue to refinance the same debt over and over again....with very little change in the bottom line. That isn't the case with Siri...they are on the edge of actually being profitable and getting rid of that debt in a reasonable amount of time. I would have to believe that one of the big houses is looking to take advantage of that fact....especially in the current business climate!
will go to .13 and wouldn't be great if it went back to .15. Boy, now were
on the move. We're looking at pennies while some have lost 10's of thousands and some 100's thousands of dollars. These penny numbers
are for the bottom feeders who want a couple of hundred dollar pops.
It's not a part of the big picture.
The article attached to todays blog shows no insider info and just reflects
a very lazy amount of low level financial news and analysis.
Can anyone explain why management won't spill the details on their actual realistic plans to refi and restructure. If they told the street what
the actual plans were then confidence would be restored for ps rise.
The problems are this: One, there is no real info about refi, Two, management doesn't have innovative ideas how to market and use
Sat Rad so that it becomes the must have techy, and Three, the revamping of talent does not inspire new subs. Even with the bad econ.,
tight credit, and slow auto sales, the ipod world keeps humming along.
Those subs pay $75 and higher in monthly fees. And there's alot of them.
So some people are still in the money. Sta Rad could do better if there was the need like ipod demand. Monthly sub prices could rise if people wanted the product and more would sign on, even in the bad econ.
So what's the reason why they won't spill the beans on refi. If they knew
ps would rise wouldn't they do a buy back at .13. Things don't add up.
At .13 it's a great chance to buy back and for them to make a killing.
They must know something is coming down the pike that means ps share will not rise.
Lets go back a few months...
A senario is playing out that is STILL a possibility.
I mentioned a long time ago that those converts want as cheap a stock price as they can get. Spreading out these sales looks less suspicious and makes the stock move smoother. But selling shares for debt is good news if you bought at .12 cents. Not good if you bought at 2 dollars.
We can now safely say that the 187 million left in debt due in FEB is officially not a problem. They are still getting market value for there shares, meaning they still have value. And if they still have value, then the game isnt over. Today was a win for Sirius longs, and you bashers can take a back seat today. Loved todays action. Teased us with a break out to 13.5, then retraced to 12.8, then rebounded back to 13. I said it needed to close above 13 cents, and we got that. I expect tomorrow is another attempt at 13.5. If we get a close over that, then 14 cents is possible very soon. That would be a 22 percent increase from .11 cents.
Since we know the SP is not going to recoup our loss in 1 day we look at days where it closes up as good. I don't get excited unless it climbs 7% or more for several days and then does not give everything back the following week. (So I am not excited yet)
This stock has to find it's bottom before it can begin the long slow climb back.
I get excited when I think we've reached bottom.
On Jan 05 04:59 PM dayworker wrote:
> It's unbelievable that the discussion has no come to, wow, maybe
> ps
> will go to .13 and wouldn't be great if it went back to .15. Boy,
> now were
> on the move. We're looking at pennies while some have lost 10's of
> thousands and some 100's thousands of dollars. These penny numbers
>
> are for the bottom feeders who want a couple of hundred dollar pops.
>
> It's not a part of the big picture.
> The article attached to todays blog shows no insider info and just
> reflects
> a very lazy amount of low level financial news and analysis.
> Can anyone explain why management won't spill the details on their
> actual realistic plans to refi and restructure. If they told the
> street what
> the actual plans were then confidence would be restored for ps rise.
>
> The problems are this: One, there is no real info about refi, Two,
> management doesn't have innovative ideas how to market and use <br/>Sat
> Rad so that it becomes the must have techy, and Three, the revamping
> of talent does not inspire new subs. Even with the bad econ., <br/>tight
> credit, and slow auto sales, the ipod world keeps humming along.
>
> Those subs pay $75 and higher in monthly fees. And there's alot of
> them.
> So some people are still in the money. Sta Rad could do better if
> there was the need like ipod demand. Monthly sub prices could rise
> if people wanted the product and more would sign on, even in the
> bad econ.
> So what's the reason why they won't spill the beans on refi. If they
> knew
> ps would rise wouldn't they do a buy back at .13. Things don't add
> up.
> At .13 it's a great chance to buy back and for them to make a killing.
>
> They must know something is coming down the pike that means ps share
> will not rise.
Sharebuilder (ING) does not let me buy it (it is not on their list even though when you enter the ticker symbols it knows what it is) I was attracted to stock because they had just paid off their debt and the insiders (CEO etc) were buying shares.
It does show these little "penny" stocks can move when they want to. LVWR went up .04 after lunch. Of course it does not have the volume Siri has.
Don't mean to be rude....but if someone is losing thousands of dollars on this stock it's their own fault! There is no reason.....especially at these bargain basement prices, to be at a huge loss if you bought something you believe in. Even if you hate the stock...why wouldn't you try to lower your cost basis and buy at this level if you are in much higher! If the stock goes belly up...you're going to lose anyway...so why not take advantage and buy at a cost that will allow you to realize some profit....instead of crying about how you own it at 5, 6,7, 8 ...or wherever it is. I don't feel bad for those who have nothing to do but complain about the stock price. I have bought and sold this stock several times over for both profit and loss. Bulls and bears make money.....pigs get slaughtered! That is the absolute truth...from the beginning of the stock market till this very day and it will not change. You don't buy an emerging company and not have growing pains...it's that simple. And for all the complaints about SIRI...things could be much worse...look at Bear Stearns....think those stock holders are happy? Sorry for going off here...its just annoying as hell seeing all the whining that goes on here. I first bought Sirius stock several years ago because I saw value in the business and I wanted to make some money.....those original thoughts haven't changed...only now I am purchasing at a much lower cost and will hopefully make some more money before I am done.
I am guessing "piecemeal"
On Jan 08 10:50 AM shure46 wrote:
> Tyler said - " Do I believe that the financing will get settled…
> In one fell swoop, or piecemeal? "
>
> I am guessing "piecemeal"