Perspective on John Malone's Sirius Stance

It seems some people have nothing better to do than to attack me for my analysis of Sirius XM's (SIRI) proposed authorized share hike. He said, she said, yes, no, maybe. There is obviously major disagreement regarding the terminology of past SEC filings. Rather than delve into them and open a dialogue, some people find it easier to attack my work personally. I guess this is how Jim Cramer must feel. I have made my position clear based on data that is available through SEC filings, and data-sourced that information through links. To jump up on a pedestal and critique my work is no less than childish.

The truly sad aspect of once reputable writers who choose to attack my research is the complete lack of forward thinking on their part. I will take a look from their perspective, however, in which I can actually draw a different analysis that does not change the end result.

Let us assume that the preferred shares are not in fact part of the "deal" as stated in the filings. Let's even go so far as to say that the reference to December 31, 2009 is moot. None of this changes the fact that those preferred shares can be repurchased outright, by means of the very same proposed equity offering I alluded to yesterday! The end result is the same: The removal of over 2.5 fully converted shares from the books.

The problem, I believe, stems from the perception of John Malone and what his intent was when making this loan to Sirius XM. I believe that Mr. Malone has faith in Mel Karmazin and the management team at Sirius XM. He has been wrongly labeled as a sort of corporate raider. It boils down to motives. Did Mr. Malone extend this deal in an effort to take over a company's infrastructure, or was he looking to do a win-win deal that would benefit all parties? Investors in Sirius XM should get to know the man that wields so much power and uncertainty over the company. I suggest they start with this Time article: The Third Man: John Malone.

Position: Long SIRI

Comments

[Polly Purep...:]

eluded = escaped
alluded = referred to

FWIW I agree with you about Malone's positive intentions.

Apr 23 07:36 AM

[burnout:]

It eludes me why anyone would take the cash from 1 billion shares in exchange for the 2.5 billion shares the preferred represents. The deal you alluded to does not add up unless Malone does not care about profit.
At $.5 per share the market cap is $1.95 billion. 1 billion shares = $500 million.
Add 2.5 billion shares to that market cap and they are worth $902 million. I don't see why anyone wouldn't want $402 million more for the same amount of shares. Even if he never converts why would you sell something worth 900 million for 500 million?

Apr 23 08:26 AM

[ZenInvestor:]

I don't get your idea at all, and don't think it is probable, but mentioning 'attacks' in both your articles today seems a little 'thin skinned' to me.

About 75% of what you write makes good sense, stuff like this is 'out there', but not offensive. Don't spend a reader's time with 'defense', it makes you look petulant. Just a thought.

Apr 23 10:11 AM

[relmar2003:]

Ooooo...
Petulant
I love good diction.
Not necessarily agreeing with you , I just really like that word.

Apr 23 10:42 AM

[burnout:]

Brandon, please do not take my comments as an attack on you. Not that anyone really cares what I think. Many here have much invested and tend to get more excited than they should if they do not agree with what you write. I for one appreciate and respect the research you have done on this stock. I have read nearly everything you have written on SIRI for the last 2 years. I believe your thoughts on the .42 to .65 price range to be right on, as well as much of what you have written about over that time. Thanks to some of the opinions you have expressed I took some profits, and rebought my position, on the dip this week.
I just think on this topic what you have said the past 2 days is more wishful thinking than actual probability. Little could make me happier than a trade of 1 for 2.5 on the share dilution of this stock, but I do not think that will happen. Maybe we can save some money on interest but I think that will be about it.
As for Malone, nominate the guy for Sainthood. I saw an 80K investment in SIRI go to 10K with the chance of it being worthless. Now thanks to him, whatever his motives are, it is worth about 100K.
As for you feeling like Cramer, I doubt you do. Narcissists don't care what anyone else thinks about them. Just saying some here may have been too hard on you proves you don't.

Apr 23 10:44 AM

[connorport:]

I personally find Brandon and Tyler informative. Do i always agree? No! Thats why i blog here to get more information about how i dive into this investment. I have to say to date that i sit in a good place for the first time in months but alot of that decision was based on following these blogs and trying to understand more truly the equity that i invest in. We blogged heavy around the BK time and i was convinced we were good so i purchased an additional 50k shares at that time for .11. I still sit on the equity and will continue to do so until my gut says to move on. I have always tried to look at this business as i do my own. So far its paid off. If Mel runs this business like i do then i see huge gains for all who believed at that depressed level. I carry alot of what i learn here to other investments and so far it has paid off for me big.

As i said i find Brandon and Tyler very helpful and discussions by real people such as Relmor, Cos, 163888, Mogami etc. to sort out what i am thinking and give me a different perspective as looking at financials on this stock would have anyone running.

I hate to see an article such as this defending what one thinks. Thats why we are Americans and are free to trade and discuss our opinions regardless of what the rest of the world thinks. I say if you don't find help here or are here to bash then please move on so real people can discuss the strategies that best suits our portfolios.

This is only my opinion.

Apr 23 10:45 AM

[connorport:]

Brandon and Tyler..Please don't take questioning ones data as an attack. Take it as a lack of understanding. I understand the equity as i have read nearly every article that has come across for months. I am one who tries to research but as i said earlier i run a business of my own and sometimes travel makes it very difficult. Please keep interested parties informed whether there's debate or cheer.

Apr 23 10:52 AM

[El Guapo jefe:]

He was talkin about the poster with handle 16888...you guys aren't the ones. ahh sweet retribution....2x pwnt.

Apr 23 11:06 AM

[163888:]

Just as I said would happen Brandon is now trying to back out of a ridiculous statement he made. Now by the only means he has left he is coming up with a far fetched scenario. Yea right, lets see I just got 40% position of a company for loaning them 530 million, now instead of waiting to get a buck or more I sell now. Makes alot of sense, NO it doesn't the reason it does not is because it is Brandon running for what ever cover he can.

Brandon, Just admit it was a bad statement because you did not take the time to research the agreement fully. People will forgive that, they wont if you continue down this line. YOU MADE A BAD CALL, just admit to it and then you can move on.

Apr 23 02:11 PM

[NP Refugee:]

I worked for John Malone at one time in my career, so I can speak with absolute authority when I tell you that he is not only smart, he is very keen when it comes to perception about the potential of businesses. He is looking beyond the surface and has probably sized up the business wisely. I haven't spoken to him in over 10 years, but his way of thinking would be this:

If the Fairness Doctrine comes back, then talk radio goes to satellite radio. Whatever his motivation, he is betting on some event that will fundamentally alter the chess board.

I will say this about him too. I had to present my budget to he and several others every year. The others always appeared distracted--some to the point of reading the WSJ as I presented. Not John. He hung on every word I said and I felt he was scanning my brain. That is one seriously focused and engaged man.

Apr 23 02:45 PM

[hernje:]

Thanks for the interesting insight.


On Apr 23 02:45 PM NP Refugee wrote:

> I worked for John Malone at one time in my career, so I can speak
> with absolute authority when I tell you that he is not only smart,
> he is very keen when it comes to perception about the potential of
> businesses. He is looking beyond the surface and has probably sized
> up the business wisely. I haven't spoken to him in over 10 years,
> but his way of thinking would be this:
>
> If the Fairness Doctrine comes back, then talk radio goes to satellite
> radio. Whatever his motivation, he is betting on some event that
> will fundamentally alter the chess board.
>
> I will say this about him too. I had to present my budget to he and
> several others every year. The others always appeared distracted--some
> to the point of reading the WSJ as I presented. Not John. He hung
> on every word I said and I felt he was scanning my brain. That is
> one seriously focused and engaged man.

Apr 23 04:55 PM

[connorport:]

I still say the 12.5 million preferred shares represent a partnership and helps keep Liberty an exclusive with SIRI. If I'm Malone, I would want to create my own synergies with SIRI by trading advertisement agreements. Both companies could boost subs, save advertisement costs which would equate to 100's of millions a year for both sides which is far more valuable than a quick two cents. The partnership would work similar to AAPL and AT&T. Apple's iphone helps move subs to AT@T and AT&T pushes the iphone. Both gain tremendously. Why would i want 500 million now when i could have 350 million a year for years. These companies are on top of the Sub game and gaining. Working together they could capture major market share like NIKE did with its advertisement campaign without spending hundreds of millions like they did.

Anyone see some positive here? I still say we are sitting on a gold mine stock and a few months will tell me if i'm right or not. The days of blogging about how we sell some of our shares and beat the tax man are coming. I look forward to that time.

Apr 23 04:57 PM

[connorport:]

The deal will be made that will put the stock to a dollar. When it hits the dollar, RS will be off of everyones minds and we're off to two quickly.

Apr 23 04:59 PM

[mlongj:]

Brandon

You have much to offer investors with the articles that you submit. I appreciate your insight and speculation. It adds much needed perspective to the ongoing situation with Sirius.

Thanks for what you do everyday.

Long SiriusXM

Apr 23 05:43 PM

[163888:]

Yea Brandon I found The bankruptcy article off a boiler plate statement after the 1st phase of the liberty deal was done to be most helpful. The next helpful was the one that said SIRIXM would lose 2 MILLION net subs in 2009. That helped alot. This last one on SIRIXM being able to totally reverse the Liberty deal and get the shares they gave to liberty back, was the piece de resistunce though. Those all pointed me in the right direction and did not confuse anyone.






For the nit wits who cant grasp to much, I was being sarcastic.

Apr 23 06:05 PM