The short interest of Sirius XM (SIRI) continues to climb at an alarming rate. Just released data show the current number of shares sold short at a staggering 414 million shares, which is almost 13% of the public float. According to Nasdaq:
| Settlement Date | Short Interest | Avg Daily Share Volume | Days To Cover |
|---|---|---|---|
| 2/28/2013 | 414,016,386 | 59,194,373 | 6.994185 |
| 2/15/2013 | 406,288,219 | 58,657,871 | 6.926406 |
| 1/31/2013 | 401,633,942 | 38,833,084 | 10.342571 |
| 1/15/2013 | 379,000,361 | 80,896,167 | 4.685022 |
| 12/31/2012 | 355,434,274 | 54,445,673 | 6.528237 |
| 12/14/2012 | 370,368,894 | 76,216,420 | 4.859437 |
| 11/30/2012 | 339,089,166 | 66,204,795 | 5.121822 |
| 11/15/2012 | 296,274,375 | 77,234,323 | 3.836045 |
| 10/31/2012 | 297,872,278 | 89,227,709 | 3.338338 |
| 10/15/2012 | 274,885,838 | 78,466,299 | 3.503234 |
| 9/28/2012 | 288,562,482 | 71,537,122 | 4.033745 |
| 9/14/2012 | 298,931,286 | 51,620,375 | 5.790955 |
| 8/31/2012 | 283,157,528 | 49,200,676 | 5.755155 |
| 8/15/2012 | 259,752,029 | 105,444,881 | 2.463392 |
| 7/31/2012 | 329,897,851 | 38,065,661 | 8.666547 |
| 7/13/2012 | 304,461,310 | 43,694,659 | 6.967930 |
| 6/29/2012 | 289,951,168 | 33,488,425 | 8.658250 |
| 6/15/2012 | 298,260,697 | 28,277,090 | 10.547786 |
| 5/31/2012 | 306,525,780 | 59,829,225 | 5.123345 |
| 5/15/2012 | 294,106,223 | 87,262,664 | 3.370356 |
| 4/30/2012 | 271,252,407 | 42,569,238 | 6.372029 |
| 4/13/2012 | 285,024,747 | 67,168,964 | 4.243399 |
| 3/30/2012 | 287,587,035 | 40,523,817 | 7.096741 |
| 3/15/2012 | 307,802,184 | 47,153,056 | 6.527725 |
My biggest question is why? The shares have been heading steadily higher for the last three years, soundly beating all three of the major market indices:
The earnings for Q1 are expected to jump 50% over last year, and the revenue is expected to come in over $100 million higher than Q1 last year. This quarter will be over at the end of March, and so far it looks like the results will be very strong. New car sales continue to rise, which will lead to even higher subscriptions than originally anticipated. And then there is the 2 billion dollar share buyback the company has initiated. To short a company like this could be quite costly, to say the least.
| Earnings Est | Current Qtr. Mar 13 | Next Qtr. Jun 13 | Current Year Dec 13 | Next Year Dec 14 |
|---|---|---|---|---|
| Avg. Estimate | 0.03 | 0.03 | 0.10 | 0.13 |
| No. of Analysts | 12.00 | 12.00 | 12.00 | 13.00 |
| Low Estimate | 0.02 | 0.02 | 0.07 | 0.08 |
| High Estimate | 0.03 | 0.03 | 0.13 | 0.17 |
| Year Ago EPS | 0.02 | 0.48 | 0.51 | 0.10 |
| Revenue Est | Current Qtr. Mar 13 | Next Qtr. Jun 13 | Current Year Dec 13 | Next Year Dec 14 |
|---|---|---|---|---|
| Avg. Estimate | 909.85M | 939.33M | 3.81B | 4.17B |
| No. of Analysts | 11 | 11 | 14 | 14 |
| Low Estimate | 896.95M | 919.18M | 3.74B | 4.03B |
| High Estimate | 928.00M | 957.00M | 3.87B | 4.29B |
| Year Ago Sales | 804.72M | 837.54M | 3.40B | 3.81B |
| Sales Growth (year/est) | 13.10% | 12.20% | 11.90% | 9.50% |
But, this is good news for the Sirius Bulls. As I wrote in an article last month, the share price goes up during the option activity each month as the shorts are forced to cover:
On the chart below, which only shows weekly prices in an effort to save space, there are distinct highs in the first part of the month leading up to a peak in the middle of the month when the options close. Then after the shorts have covered, there is a low period after the options close.
| Price Of Sirius XM |
|---|
| Date | Open | High | Low | Close | Avg Vol | Adj Close* |
|---|---|---|---|---|---|---|
| Feb 25, 2013 | 3.06 | 3.10 | 2.97 | 3.06 | 69,392,400 | 3.06 |
| Feb 19, 2013 | 3.16 | 3.20 | 3.02 | 3.05 | 50,763,100 | 3.05 |
| Feb 11, 2013 | 3.13 | 3.23 | 3.13 | 3.15 | 47,217,700 | 3.15 |
| Feb 4, 2013 | 3.23 | 3.24 | 3.10 | 3.12 | 67,168,800 | 3.12 |
| Jan 28, 2013 | 3.15 | 3.25 | 3.12 | 3.23 | 45,349,300 | 3.23 |
| Jan 22, 2013 | 3.17 | 3.17 | 3.08 | 3.15 | 45,649,800 | 3.15 |
| Jan 14, 2013 | 3.15 | 3.19 | 3.12 | 3.16 | 46,870,300 | 3.16 |
| Jan 7, 2013 | 3.11 | 3.19 | 3.06 | 3.16 | 83,933,700 | 3.16 |
| Dec 31, 2012 | 2.88 | 3.15 | 2.88 | 3.10 | 80,038,300 | 3.10 |
| Dec 24, 2012 | 2.93 | 2.96 | 2.88 | 2.89 | 24,436,300 | 2.89 |
| Dec 17, 2012 | 2.86 | 3.01 | 2.85 | 2.95 | 80,986,000 | 2.95 |
| Dec 14, 2012 | 0.05 Dividend | |||||
| Dec 10, 2012 | 2.78 | 2.93 | 2.68 | 2.91 | 66,648,400 | 2.91 |
| Dec 3, 2012 | 2.79 | 2.85 | 2.73 | 2.76 | 88,461,600 | 2.71 |
| Nov 26, 2012 | 2.76 | 2.80 | 2.67 | 2.77 | 70,113,500 | 2.72 |
| Nov 19, 2012 | 2.71 | 2.82 | 2.69 | 2.78 | 59,787,300 | 2.73 |
| Nov 12, 2012 | 2.77 | 2.84 | 2.55 | 2.69 | 82,238,900 | 2.64 |
| Nov 5, 2012 | 2.90 | 2.90 | 2.66 | 2.75 | 69,293,800 | 2.70 |
| Oct 31, 2012 | 2.84 | 2.96 | 2.74 | 2.90 | 85,045,500 | 2.85 |
| Oct 22, 2012 | 2.94 | 2.95 | 2.79 | 2.82 | 75,907,400 | 2.77 |
| Oct 15, 2012 | 2.78 | 2.97 | 2.76 | 2.92 | 104,194,800 | 2.87 |
| Oct 8, 2012 | 2.67 | 2.79 | 2.63 | 2.78 | 95,109,900 | 2.73 |
| Oct 1, 2012 | 2.59 | 2.75 | 2.56 | 2.69 | 67,363,800 | 2.64 |
| Sep 24, 2012 | 2.53 | 2.60 | 2.44 | 2.59 | 63,530,700 | 2.54 |
| Sep 17, 2012 | 2.44 | 2.59 | 2.33 | 2.54 | 81,172,600 | 2.49 |
| Sep 10, 2012 | 2.51 | 2.53 | 2.39 | 2.47 | 63,045,400 | 2.43 |
| Sep 4, 2012 | 2.53 | 2.56 | 2.49 | 2.53 | 39,204,000 | 2.48 |
| Aug 27, 2012 | 2.55 | 2.56 | 2.49 | 2.53 | 51,697,700 | 2.48 |
| Aug 20, 2012 | 2.60 | 2.64 | 2.47 | 2.54 | 44,230,600 | 2.49 |
| Aug 13, 2012 | 2.49 | 2.60 | 2.47 | 2.56 | 72,447,000 | 2.51 |
| Aug 6, 2012 | 2.17 | 2.51 | 2.17 | 2.48 | 168,687,700 | 2.44 |
| Jul 30, 2012 | 2.18 | 2.20 | 2.09 | 2.16 | 30,977,000 | 2.12 |
| Jul 23, 2012 | 2.07 | 2.17 | 2.03 | 2.16 | 40,531,100 | 2.12 |
| Jul 16, 2012 | 2.04 | 2.16 | 2.02 | 2.10 | 41,829,900 | 2.06 |
| Jul 9, 2012 | 2.11 | 2.12 | 1.99 | 2.05 | 39,842,900 | 2.01 |
| Jul 2, 2012 | 1.84 | 2.13 | 1.84 | 2.05 | 50,902,700 | 2.01 |
| Jun 29, 2012 | 1.88 | 1.89 | 1.82 | 1.85 | 37,077,600 | 1.82 |
| * Close price adjusted for dividends and splits. | ||||||
It is difficult to time the exact day of each month that the buying pressure will be the highest, but according to the chart above, it is usually between the 11th and the 20th. So, I expect Sirius to bust through the $3.25 high that it has been stuck at before the 20th of this month. A short squeeze like this does not affect the rising price cycle of the stock that is caused by good company leadership and fundamentals. But rather, it causes huge buying pressure near the option expiration time which sends the shares higher than normal. And as the chart shows, the price comes back down after the options close as the price continues its upward cycle. The bears continue to bet that this cycle will eventually end. I wouldn't count on it. Sirius CFO David Frear will speak on Tuesday at the Piper Jaffray Media Conference. Anything positive that he has to say will just add rocket fuel to the share price.
Disclosure: I am long SIRI.
