Sirius XM: Is There Value In 'I Told You So'?

| About: Sirius XM (SIRI)

Another day, another dime...

Well, to be fair, another seven cents, but that doesn't sound quite as catchy to start with here.

Sirius XM (NASDAQ:SIRI) shares have risen over the last several sessions from a low of $3.04 per share, to a high of $3.43 per share. That's nearly 13% in four trading days.

Remarkable? Not really. When you consider the shares fell about the same amount the few days preceding this rise, investors are right back at square one.

But there's a lesson to be learned here. Those of you who have followed my writings for quite some time should know what I am about to say.

Buy Sirius XM at or below the 50 day moving average on the daily chart absent any fundamental changes in the company.

Is bold necessary? Yes, it most certainly is. Because it does not seem that some are getting the message here. When my inbox receives messages like the one below when Sirius XM turns down, it tells me I have failed at least one reader.

Messages like this frustrate me. I have been crystal clear on Sirius XM's fundamental prospects. I certainly don't know everything (and never will), but I don't "know nothing" either.

  • Watch auto sales. These are the source of many of Sirius XM's new subscribers. Increasing auto sales bode well for the company.
  • Be mindful of Sirius XM's $2 billion buyback which is already in progress, and what it means for the stock.
  • Be mindful of Liberty Media (LMCA) which is Sirius XM's controlling owner. Sirius XM is of critical importance to Liberty in terms of market cap and thus as a source of margin borrowing capacity. Liberty Media will not harm Sirius XM.

And none of these things changed. What did change? The market fell on the usual nonsense reasons the market falls on. And what does that do? Offers investors a great buying opportunity as share prices plunge on what amounts to temporary fear, as names you have not heard from for the last couple of months go on a frenzy of "I told you so! The market will crash!" posts.

Keep calm. Yawn if you want to. You have a plan for when the market takes Sirius XM down and that is to add to your position at or under the 50 day moving average. The most recent dip afforded wonderful opportunity to add at prices over 10% below current pricing. The 50 day average can be seen as the red line in the chart below.

And if share prices dip again? The story will be the same. Add to your position assuming you are comfortable with Sirius XM's fundamentals. After all, if you are happy to hold the stock at $3.62, then I would think you would be happy to buy the stock at $3.10, am I right?

Stick with the plan. Long holders with a longer term viewpoint should seek to add to position on sharp dips. If you missed the last one then pick up some shares on the next. Most importantly, remain disciplined and hold strong to your strategy.

Disclosure: I am long SIRI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am long SIRI Jan 2014 calls at $2, $2.50, $3 and $3.50 and short SIRI Jan 2014 $4 calls against most of these long positions.

About this article:

Author payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500. Become a contributor »
Tagged: , , , Broadcasting - Radio
Problem with this article? Please tell us. Disagree with this article? .