Inside Sirius Institutional Ownership

By Brandon Matthews

As Sirius XM Radio (SIRI) continues to improve fundamentally, I have noted in the Satwaves stock discussion forum the importance of keeping tabs on institutional holdings. I personally find this information beneficial when looking at a stock's price movements to gauge whether a particular equity should be considered overbought or oversold. There is a considerable delay in the reporting of this information, but nonetheless the information, when combined with other data, can help investors and analysts make better decisions.

Typically, there are large share purchases as well as sales recorded in any given quarter. Recent filings that have been reported to the SEC through 13F filings have made their way to the NASDAQ where retail investors can access the information. Another good source of institutional holdings is MFFAIS.com. These sources offer a basic black and white picture of which institutions bought and which had sold in the previous quarter. If a stock such as SIRI seems to be moving up, it's a good bet that institutions are accumulating. Likewise a stock in decline should signal that institutions are more likely than not taking profits and reducing their positions.

Investors need to look deep into the actual filings and circumstances to correctly process that information. As an example, the NASDAQ site reports that institutional holdings of Sirius XM Radio have fallen to 23%. Down 1% from the last time I checked. This would usually cause me concern, but I stress again that the data is significantly delayed. The significant price appreciation of Sirius XM common stock on a percentage basis recently, combined with rapidly declining short interest tells me that the low percentage of institutional holdings leaves a lot of room for institutional buying as Sirius XM continues to improve its balance sheet in the current quarter. Stocks simply do not rise 44.1% in a month when institutions are selling.

In the case of SIRI, the data shows that some big name firms have taken positions in Sirius XM Radio’s common stock. As we reported recently, Bank of America took a large stake in Sirius XM Radio through the purchase of 11,201,675 shares of the company’s common stock. Merrill Lynch reported on Friday that it had acquired 8,462,164 as it took a new position in Sirius XM during the second quarter of this year. Citigroup added 2,357,542 shares bringing its total to 3,897,357 shares. T Rowe Price added 19,423,825 shares, which is up from only 270,000 shares in the prior quarter. New players such as FMR Corp. picked up 71,779,200 shares and are now Sirius XM Radio’s third largest shareholder. The top position goes to Vanguard, which added 22,962,896 to bring their total up to 141,326,619. Even Goldman Sachs reportedly owns not only a significant number of SIRI shares but call options as well, as there are no call options below a dollar on the market. A very bullish sign.

Interestingly, Jennison Associates which had held the top spot since the merger of Sirius and XM Radio, are reported to have liquidated their position of 171 million shares. In most cases, the new buys that are being reported are truly equity stakes, whereas the vast majority of the reported large sales are related to fund managers which just recently unwound their arbitrage plays as a result of the merger of Sirius and XM.

By looking back at SEC filings from last year, we can determine that Jennison Associates never intended to hold a position in Sirius Satellite Radio. They did however have a large stake in XM Satellite Radio prior to the merger. As many are aware by now, smart money uses a tactic known as merger arbitrage which takes advantage of the difference in the spread in stock prices relating to mergers and acquisitions. Simply put, a fund will purchase the equity being acquired while shorting the stock of the company that is making the acquisition.

In this case, Jennison Associates were in prime position to take advantage of such a play. It is this type of short selling that leads to a record number of FTD’s in Sirius common stock during the second quarter of 2008, also known as failures to deliver or naked short sales. The arbitrage play in this case is perfectly legitimate; legal and well known. Just a thought…wasn’t Jim Cramer telling you to buy Sirius on CNBC at that time? But I digress, that is another story.

Sirius and XM announced their merger in February of 2007. We can clearly see that as the merger application progressed, Jennison continued to accumulate shares of XMSR, which means of course that they were shorting an equal number of shares of SIRI.

Jennison’s reported holdings:

First Quarter 2007: 1,629,000 shares of XMSR

Second Quarter 2007: 17,483,400 shares of XMSR

Third Quarter of 2007: 22,729, 626 shares of XMSR

Fourth Quarter of 2007 : 20,697,646 shares of XMSR

First Quarter of 2008: 14,074, 973 shares of XMSR

Second Quarter 2008: 30,361,501 shares of XMSR

***** Merger Approved 3rd Quarter 2008 (4.6 shares of SIRI per XMSR share)

Third Quarter 2008: 61,931,684 shares of SIRI (reported)

Fourth Quarter 2008: 169,457,749 shares of SIRI

Clearly, Jennison’s stake came as a result of the merger arbitrage play as 30,361,501 X 4.6 = 141,962,904 after conversion. In the second quarter of this year, Sirius XM Radio was removed from the Russell index. Institutions such as Jennison used that event as a means to unwind their open positions. By selling their Sirius shares that were acquired through merger arbitrage, rather than actual purchases, while covering their Sirius short positions simultaneously, they accomplished their goal.

The moral of this story is that the institutional landscape of Sirius XM Radio is undergoing a dramatic change, and will continue to require monitoring. Firms that were short the equity are now going long, and arbitrage plays that were unwound during the Russell rebalance are just now being reported which will tend to skew the data. Look to Barclay’s as another example. I’ll save you the details at this time. Knowledge of this is power. The smart money is accumulating shares of Sirius XM Radio’s common stock, and in the long run, that is what is important to know.

Position: Long SIRI

Comments

[Siriusly Long:]

I have somewhat sat silent on the sidelines watching things on this site unfold and I also can't grasp why "someone" who claims to be making boat loads of cash on a stock would care so much about the morale fiber of it's CEO... If "someone" feels the company is so EVIL, and that "someone" must save everyone here from the horrors, how do you justify making money on it yourself? Are you going to donate your profits to charity?

Truth of the matter is Sirius delivers a quality product which I've owned for years now... It is extremely undervauled as a stock and much of it's potential as a product has yet to be tapped...

Win, lose or draw I'll ride the ups and downs without having to day trade to make money... The potential is there for this stock to pop significantly over time... To be fair there is also potential for the stock to fail... but to me the rewards heavily out weigh the risks involved...

There is obvious demand for the product with 16+ million subscribers (I am sure I am off on this figure) who are willing to pay for it... Although there has been a decline over the year... what else would you expect during a recession!? Luxuries go first... Suprising that number haven't sunk more drasticly in such bad times but that just speaks volumes of the product that Sirius offers...

Sirius is obviously a sticky product who relies on a numbers game to gain subscriptions... They know the percentages of people who will retain a subscription when buying a new car and with cash for clunkers putting a ton of people in new cars that audience has significantly increased short term... All it took was a 3 month trial for me to realize that AM/FM radio blows in comparisson... I am confident that I am not the only one out there who feels the same...

If and when the company turns a profit in the near future watch for obvious sharp increases in the stock... Which is much more possible with how they've cut costs over this year... Might just be my jaded opinnion on all of this... But as of today I'm up 70-80% already and I'm not ready to collect any profits... It's worth the roll of the dice to me but I'm a gambling man...

On Aug 19 12:07 PM connorport wrote:

> So far SIRI DOOM you have stated you got in on the stock in Feb and
> now you claim to be a day trader. Those .57 look better at .62. Where
> does your logic come from? I really did get in back in Feb and i
> couldn't be happier. I must be missing something. I thought i was
> doing well with my measly 400% gain for the year so far.

Aug 19 12:50 PM

[tech man:]

siri-doom, i know what you are doing. in short, having trouble covering your short. don't try and lead these good people down the wrong road just because you are having trouble covering your short. they do not deserve this. so in other words GET LOST BUSTER we know your game here. you know and i know.

Aug 19 01:08 PM

[464217:]

I hear people saying how much money they are making however your forgetting the people who lost so much. This stock used to be 60 dollars at one point and was trading between 3-10 dollars for awhile. Think about all the people that invested then and lost so much. Its nice you made a 400 percent gain but people lost a lot on this stock due to Mel. Mel crushed a lot of peoples dreams and money. I love siri i think the programing is amazaing and i bought stock at a relatively low but I feel bad for the people who got tricked into the stock before hand. I would be extremely pissed if i bought this stock higher and it sunk this much

Aug 19 01:15 PM

[scots slant:]

Scot's Slant here. Mr. Doom, what are you so angry about? Just the other day you said you traded 70,000 shares with a buying price of $.53 and a selling price of .57. You made $2,800 that day; nice profit for wiggling a finger in an air conditioned room and punching a few keys on a keyboard. In the past, with hammer in hand and heavy nail bags weighing me down, I busted my ass under the heat of a desert summer sun all day long and I was lucky if I made $200....

And as for your claim that Mel is a crook (or KarmaCrook as you have unfondly named him), what is your beef? You've made a ton of money off a company led by a person who you've deemed a thief and a liar.

And there is one more thing: In you're daily lectures and moral preachings where your sole intent is to expose corrupt business practices by less than honest principals and organizations, then this question must be asked: How do you justify receiving profit from a company or market where share price is manipulated by such an immoral bunch of rip-off artists?

Scot's Slant

Aug 19 01:24 PM

[connorport:]

Right now i have $36k in write downs on the books from SIRI so this is only a recovery for me at this point. I know a lot of people who bought at $3-4 but they would not take any risk to average down when it hit .10. I'm not sorry for someone who didn't win the lottery because they didn't play. The opportunity was the same for me as it was for those who sold their $4 shares for .50. They did not do the homework needed to recover quickly. I'm definitely not saying that those who got in under .10 are smarter than the ones that sold out but there was a lot of positive information being passed around at that time to form a better conclusion than to dump and run.


On Aug 19 01:15 PM 464217 wrote:

> I hear people saying how much money they are making however your
> forgetting the people who lost so much. This stock used to be 60
> dollars at one point and was trading between 3-10 dollars for awhile.
> Think about all the people that invested then and lost so much. Its
> nice you made a 400 percent gain but people lost a lot on this stock
> due to Mel. Mel crushed a lot of peoples dreams and money. I love
> siri i think the programing is amazaing and i bought stock at a relatively
> low but I feel bad for the people who got tricked into the stock
> before hand. I would be extremely pissed if i bought this stock higher
> and it sunk this much

Aug 19 02:10 PM

[scots slant:]

Scot's Slant here. Connorport, point well taken. I was one who did not want to risk more when price was a lousy nickel per share. Today it's called, "I shoulda bought when I coulda mentality."

But, as it is today, I'm still hangin' with my shares where I need to see $4.25 to break even. Oh well, like I said when I bought in, I'll either lose it all or make a couple bucks. So far, I'm glad I didn't hightail it out when the gittin' got bad.

And one more thing: I've asked this before with no reply: Does anybody want to share a guess as to when price per share might reach my magical number of $4.25 or above?

Scot's Slant

Aug 19 03:05 PM

[SIRI-Doom:]

Stock Price be darned, tell the story…

Expose Mel Karmazin and Goldman Sachs as crooks...


On Aug 19 01:15 PM 464217 wrote:

> I hear people saying how much money they are making however your
> forgetting the people who lost so much. This stock used to be 60
> dollars at one point and was trading between 3-10 dollars for awhile.
> Think about all the people that invested then and lost so much. Its
> nice you made a 400 percent gain but people lost a lot on this stock
> due to Mel. Mel crushed a lot of peoples dreams and money. I love
> siri i think the programing is amazaing and i bought stock at a relatively
> low but I feel bad for the people who got tricked into the stock
> before hand. I would be extremely pissed if i bought this stock higher
> and it sunk this much

Aug 19 03:07 PM

[jmsithy:]

I do believe this will hit almost .70 by next week like I predicted after the S&P was raised on this from CCC+ to B-

Aug 19 03:13 PM

[jmsithy:]

got to love those flash trades at the very end when this was at .609 to go back down .60 at the last 30 sec not even a real volume was push through at that time

Aug 19 04:03 PM

[jmsithy:]

I think It will be 4.25 in about 2 years or so / right now they are trying to push this to 1.00 so lets take one step at a time / The GS computer is still manipulating this at a certain lvl but not as rampid as before when this was at .30/.40 as you saw today with the flash trades. the .006 float theory (from Siri-Doom)is out the window now
I do feel since this did break .60 today and held levels this is a confidence boost which i can say I can leave my money in there and not worry as much if an immediate drop of .10 like it was back when it was trading in the 30s plus I can finally say i have anything but profit in there now. even if it does drop. I was worried about today at first and sold some at .56 seeing that was where it was ending up, but this stock has now performed as the market has so i can say if the market is up then this stock will be as well and vice a versa.

happy days more than 1/2 way to the 1.00 goal gratz all

On Aug 19 03:05 PM scots slant wrote:

> Scot's Slant here. Connorport, point well taken. I was one who did
> not want to risk more when price was a lousy nickel per share. Today
> it's called, "I shoulda bought when I coulda mentality."
>
> But, as it is today, I'm still hangin' with my shares where I need
> to see $4.25 to break even. Oh well, like I said when I bought in,
> I'll either lose it all or make a couple bucks. So far, I'm glad
> I didn't hightail it out when the gittin' got bad.
>
> And one more thing: I've asked this before with no reply: Does anybody
> want to share a guess as to when price per share might reach my magical
> number of $4.25 or above?
>
> Scot's Slant

Aug 19 04:12 PM

[connorport:]

I will answer your question. You will see the stock at that level on or before Q2 2011. It will hit higher than that number if SIRI can make liquid all of its unneeded assets sooner to clear the debt scale that it has. You can see a return quicker if you take advantage of the market conditions to margin yourself down to a lower level. I myself had an average at one time of $3.11 and when the ship tipped i bought all the way down making a huge buy near the bottom. My average turned into .546 until i sold some uppers to utilize a tax writedown. At this point i can look at my portfolio and dump whats up but not moving and post profits against these losses without the tax burden or earn money selling covered calls paying off my margin increasing my portfolio value without adding any new cash and ride the lowers.


On Aug 19 03:05 PM scots slant wrote:

> Scot's Slant here. Connorport, point well taken. I was one who did
> not want to risk more when price was a lousy nickel per share. Today
> it's called, "I shoulda bought when I coulda mentality."
>
> But, as it is today, I'm still hangin' with my shares where I need
> to see $4.25 to break even. Oh well, like I said when I bought in,
> I'll either lose it all or make a couple bucks. So far, I'm glad
> I didn't hightail it out when the gittin' got bad.
>
> And one more thing: I've asked this before with no reply: Does anybody
> want to share a guess as to when price per share might reach my magical
> number of $4.25 or above?
>
> Scot's Slant

Aug 19 04:46 PM

[cos1000:]

Hey folks,
Haven't been here for a long time and reading through all the posts here I can remember why I use to come here so often. Intelligent posters with good intentions....... even SIRI-Doom has, as he so clearly stated, his right to post his opinions... Normally that's fine but, in this case, with *-Doom, we are dealing with an obsessed individual who knows the facts.... or at least knows them as he interprets them. The rest is rather futile.... Engaging the *-Doom only furthers the obsession that this poster has with Mel and the management of the company most here who post, are invested in.... He / She or the Child that is *-Doom has knowledge of how the game works and I congratulate on that recent buy / sell trade..... (hands clapping) Now give us that info as it happens rather than your continuous antagonistic approach to being investors in this company. You are a shameless individual, who appears to take joy only from reading your own posts and the negative feedback that they embrace..... I hope that you do well and get some Sirius Help with your "hating" Mel issues.... For the rest here, who I know come for information and intelligent debate, utilizing the facts at hand, not "tea leaves" and "meaningless accusations" regarding management, I wish you all good luck on your trades.

Still with SIRI, Long and Strong, and as a friend of mine would say if he were here......"Runnnnnn Blue Dog Runnnn!"

Aug 19 07:00 PM

[scots slant:]

Scot's Slant here. Hello Cos1000. Where have you been? I've had my rear kicked here on occasion and I'm lonely without you and Mr. Kaul for backup.

And one more thing: Since Vicar of Value left the house, something is missing. I sort of enjoyed his posts as they were most entertaining. I wonder what happened to him? He made me laugh....

Scot's Slant

Aug 19 08:11 PM

[Jerrold Wil...:]

I don;'t feel bad for the people that lost money in the past. The stock market is a risk/reward activity. If you invested at $60.00 and it went all the way down to $.05, that's part of business. Sirius was a new business with a lot of risk. You win some you lose some. When I invested at $3.00 range and it went down to $.05 I didnt want pity! I just realized it's part of the game, and invested a lot more when the stock went back up to about $.30. One mans loss is another mans gain, that is life, stop whining and deal with it. If you can't lose the money dont invest in stocks! especially high risk...invest in safe Bonds or put your money in a savings acount! We all here have big dreams of high returns..with that comes high risk! I'm up about 80% on SIRI in the last 3 months or so...and I want more! If this goes to the pits...then I took the risk and I will deal with it..No one should feel bad for me! If I make a lot of money...dont envy me either...Big Risk/Big reward!!!I'm happy the stock went down to those ridiculous levels..it gave me a great opportunity...Mel didnt crush peoples dreams, He did what he had to do to get the merger passed. you dont think he lost some money too?


On Aug 19 01:15 PM 464217 wrote:

> I hear people saying how much money they are making however your
> forgetting the people who lost so much. This stock used to be 60
> dollars at one point and was trading between 3-10 dollars for awhile.
> Think about all the people that invested then and lost so much. Its
> nice you made a 400 percent gain but people lost a lot on this stock
> due to Mel. Mel crushed a lot of peoples dreams and money. I love
> siri i think the programing is amazaing and i bought stock at a relatively
> low but I feel bad for the people who got tricked into the stock
> before hand. I would be extremely pissed if i bought this stock higher
> and it sunk this much

Aug 19 10:23 PM

[Siriusly Long:]

I bet you feel bad for the guy who sits at the black jack table all day and loses his shirt as well... What makes him any different then the guy who makes a bad investment in the market?? They both should know the risk involved and only play with money they are willing to lose... There's no such thing as free lunch or a sure fire investment for that matter... If you don't want to lose what you have leave it in a savings account but then again you won't have the opportunity to make the big splash you we're all seeking (alpha)

Aug 19 11:47 PM

[jmsithy:]

yes will we see .70 today?

Aug 20 10:17 AM

[jmsithy:]

.70 kind of puts a tear in your eye

Aug 20 11:00 AM

[christy:]

I'll venture a guess for you...it will reach your magic number next year when all the big money guys have bought in at these ridiculous prices then they send out their minions to stroke Cramer and the other pundits..ratings will be buys...Mel will go on CNBC and make the rounds. I really believe that this stock will soar very soon. Christy


On Aug 19 03:05 PM scots slant wrote:

> Scot's Slant here. Connorport, point well taken. I was one who did
> not want to risk more when price was a lousy nickel per share. Today
> it's called, "I shoulda bought when I coulda mentality."
>
> But, as it is today, I'm still hangin' with my shares where I need
> to see $4.25 to break even. Oh well, like I said when I bought in,
> I'll either lose it all or make a couple bucks. So far, I'm glad
> I didn't hightail it out when the gittin' got bad.
>
> And one more thing: I've asked this before with no reply: Does anybody
> want to share a guess as to when price per share might reach my magical
> number of $4.25 or above?
>
> Scot's Slant

Aug 20 12:07 PM

[2tipdotbiz:]

SIRI got a bright future for them in store people. Get in and reap the $$$


Search the Web:www.2tip.biz

Aug 20 12:16 PM

[Value Seeker:]

Rocket is better for looking at institutional holdings because it incorporates the disclosures made on 13Ds and 13Gs, not just 13Fs. You can see SIRI's ownership here: www.rocketfinancial.co...

Aug 20 04:08 PM