Does Sirius's Climb Indicate Short Covering?

Sirius XM Radio's (SIRI) climb to above sixty cents is worth noting as it may be an indication that some shorts are covering their shares in anticipation of a march towards the $1 mark.

In my opinion, Sirius XM could be a good rebound story as the economy and auto market recover, but the stock is definitely worth watching for the short term to ascertain as to whether or not Wednesday's price action is a head fake or the real deal.

Investors who may be looking for an entry point should watch this stock closely and pull the trigger on any dips back into the fifty, if not forty, cent range. If the broad market rally continues to look bullish, I can see SIRI reaching the dollar mark later this year.

If bad economic news were to push the markets lower, then that would open up a nice buying opportunity, in my opinion, for a broad selection of stocks.

My strategy is to stay prepared for both scenarios - buy a few shares now in case the economy - and the market - shows signs of recovery, but keep some cash readily available to buy on any significant market dips.

Either way, in my opinion, the small investor wins with that strategy.

Disclosure: VFC is long SIRI.

Comments

[jmsithy]

That would be a big short cover since this is already at .65

2009 Aug 20 10:00 AM

[mctaylor420]

I'm Cramerican at heart.... I use Jim's tactics not picks !

Like the JWill stated above my current position is at the .30 range. I sold 50% of my position at .60, if it dips I buy.... if it spikes to .70+ I still hold 50% of my shares...
This strategy has helped my port. gain 200% since March and is CRAMER 101 to a tee.

Knock his picks but the strategy is flawless.

As far as siri going to $4+ well JWill & SS everything mentioned and throw in a Cramer "BUY BUY BUY" then it could happen ! For now I'll ride the peaks and valleys to the tune of 30-50%

Fundamentals say sell on the news buy on the river- use the hype of the reports to your advantage.

Technicals have been too predictable....! $$$$$$

2009 Aug 20 10:09 AM

[R A F]

There is a lot more going on with SIRI than merely short covering. While it is obvious that shorts are now scrambling to cover - given the massive short interest that has prevailed for months (most recently 134,423,594 shares as of 7/31) - it is now observed that legitimate investment demand is also propelling upside momentum in the wake of substantial fundamental improvements in the outlook for Sirius XM Radio going forward. The major impetus to this has been recognition that the resurgent auto industry - and future demand for cars to replace the ageing US auto fleet - will drive revenue increases for Sirius far into the future. Satellite radio installation will be a core offering in a vast majority of these cars, as this is one upgrade that offers consumers substantial added value. All of this has transformed SIRI into a major turnaround story and institutions are starting to realize this - and act upon this through selective investment. This flow should continue into the future, and the moderate share price increases of SIRI over the last few weeks have served to draw attention to the attractiveness of this investment - and awaken interest in further upside potential. All of this is being confirmed by the strengthening of SIRI's technical framework, and all charts - short term to longer term - project further upside potential in the weeks and months ahead. Potential is indicated toward .75 around the time of the 3rd Qtr. earnings release in November, and toward 1.00+ over the next six months to one year. Additional upside potential toward 3.00 to 3.50 is projected longer term, as a 50% retracement potential of the declines since 12/05. Given this backdrop, risk/reward strongly favors holding long positions in SIRI at present, and day traders who seek gains of only a few pennies each day risk losing core positions that should be held. As SIRI continues to improve, this is no doubt catching analysts attention and it should not be too long in the future before upgrades of recommendations begin to be seen. So - all in all - there is a lot more going on with SIRI at the moment than merely short covering; The backdrop on all fronts has turned sufficiently positive to now be attracting substantial investment flows.

2009 Aug 20 10:19 AM

[464217]

I believe people strongly under estimate sirius. If the market turns back around and i think its more of a question of when this stock should soar. Im long on this and have the advantage of only turning just 19 so i can ride this stock out. The company has never posted a positive profit and this year it is expected to. While we just went through a horrific time dating back to the depression. Yet this stock still minimizes its losses. When the market turns around which will bring car sales back up this stock should increase drastically.

2009 Aug 20 10:31 AM

[Spiderman4]

I think Serious explodes very soon. You guys talk about SIRI being at .75 by november and a $1.00 by 6 months to a year, I totally disagree..Their already at .65 and climbing..Everyone is starting to see the potential and are jumping on board because they know very soon, the price will be MUCH MUCH higher to buy..So again, I think SIRI will be at $1.00 and higher much sooner than eveyone thinks....

2009 Aug 20 10:33 AM

[connorport]

I agree. I think we see a march to the dollar before Q3. Once the dollar hits then RS will be less feared and it should drive the price up higher. At that time we shall see what SIRI management has in store whether it be a positive or negative play for the commons.


On Aug 20 10:33 AM Spiderman4 wrote:

> I think Serious explodes very soon. You guys talk about SIRI being
> at .75 by november and a $1.00 by 6 months to a year, I totally disagree..Their
> already at .65 and climbing..Everyone is starting to see the potential
> and are jumping on board because they know very soon, the price will
> be MUCH MUCH higher to buy..So again, I think SIRI will be at $1.00
> and higher much sooner than eveyone thinks....

2009 Aug 20 10:47 AM

[Jerrold Williams]

Investing is a very tricky business and there are no "experts". In the same articles I am constantly seeing "I can see SIRI reaching the dollar mark later this year." and "pull the trigger on any dips back into the fifty, if not forty, cent range". The SIRI stock at this moment is at $.68. I am long on the stock and I am hoping it doesn't dip down to the $.40 range. If it gets to that level again this year, we won't see $1.00. Now is the time with the cash for clunkers, new products being announced next tuesday, and a overall improvement in the economy. If all this is going on and this dips back to $.40, In my opinion it would be a bad buy at that point. That would mean a over 30% drop with all this good news and you would then "pull the trigger"? Some people will pull the trigger all right...but now buying more stocks! My view is a lot of people missed the opportunity to buy this below $.55. It may dip down to high $.50s, but even that I would see as doubtful. lol...SIRI-DOOM still wating with you to buy back at about $.45...I;m laughing as my money stacks..!

2009 Aug 20 10:48 AM

[BRUCE E. W.]

I followed the article about institutional investments going long with interest yesterday, and watched in amazement this morning as SIRI continued to climb to just about .70 towards 11Am. Ordinarily I would be thrilled but I wonder if the Long postitions being set up by the institutions isn't simply a bubble to lure in real investors. Hopefully this level will be solid and continue to grow. But it seems just as possible that (having been short circuited by the SEC on naked shorting) these massive institutionally driven increases could be precipitously orchestrated to climb back down with incremental profit taking by the same process (obviously taking the real investor money with them)...only to create a new reentry low for themselves. Is this something the SEC should be on the alert to prevent. It seems that legal and ethical standards don't apply to profit taking, but the levels of exchange in masse should constitue manipulation. Anyone have input on this concern?

2009 Aug 20 11:03 AM

[connorport]

I agree with this as well. If you look at the graphs you will see more solid footing under the current run up versus the pops up and down a few months ago. Once a dollar is close and in sight then the run will get quicker.


On Aug 20 10:19 AM R A F wrote:

> There is a lot more going on with SIRI than merely short covering.
> While it is obvious that shorts are now scrambling to cover - given
> the massive short interest that has prevailed for months (most recently
> 134,423,594 shares as of 7/31) - it is now observed that legitimate
> investment demand is also propelling upside momentum in the wake
> of substantial fundamental improvements in the outlook for Sirius
> XM Radio going forward. The major impetus to this has been recognition
> that the resurgent auto industry - and future demand for cars to
> replace the ageing US auto fleet - will drive revenue increases for
> Sirius far into the future. Satellite radio installation will be
> a core offering in a vast majority of these cars, as this is one
> upgrade that offers consumers substantial added value. All of this
> has transformed SIRI into a major turnaround story and institutions
> are starting to realize this - and act upon this through selective
> investment. This flow should continue into the future, and the moderate
> share price increases of SIRI over the last few weeks have served
> to draw attention to the attractiveness of this investment - and
> awaken interest in further upside potential. All of this is being
> confirmed by the strengthening of SIRI's technical framework, and
> all charts - short term to longer term - project further upside potential
> in the weeks and months ahead. Potential is indicated toward .75
> around the time of the 3rd Qtr. earnings release in November, and
> toward 1.00+ over the next six months to one year. Additional upside
> potential toward 3.00 to 3.50 is projected longer term, as a 50%
> retracement potential of the declines since 12/05. Given this backdrop,
> risk/reward strongly favors holding long positions in SIRI at present,
> and day traders who seek gains of only a few pennies each day risk
> losing core positions that should be held. As SIRI continues to improve,
> this is no doubt catching analysts attention and it should not be
> too long in the future before upgrades of recommendations begin to
> be seen. So - all in all - there is a lot more going on with
> SIRI at the moment than merely short covering; The backdrop on all
> fronts has turned sufficiently positive to now be attracting substantial
> investment flows.

2009 Aug 20 11:08 AM

[connorport]

Liberty has already posted that SIRI's short term value should be around $8.3 billion which puts the stock price at $2.12 barring no delusion or catastrophic event take place.

2009 Aug 20 11:11 AM

[ObamaSucks]

this thing will be at $5 in 2-3 years, time to back up the truck

2009 Aug 20 11:18 AM

[464217]

I agree with the 5 dollar target if the economy recovers in 2-3 years if not i think in 2-3 years the stock will be trading between 1-3 dollars

2009 Aug 20 11:25 AM

[Jerrold Williams]

I am really anticipating the Tuesday announcement of new products and services and how they will be promoted. I have heard rumors of the new iphone dock that would allow iphone users to turn their iphones into "satelite" recievers when docked. This would be a good thing, since all of the advertisement for Sirius XM has been for the iphone app. I wonder if this has anything to do with the stock price surge the last few days....I hope not, because a dissapointing new line of products and services would crash the stock again. Similar to when the new iphone was launched without sports and Howard Stern. Hopefully, they will improve on the A la carte selection of radios for both Srius and XM. There are many that still balk at the $12.95 + fees price, since they will only listen to a few stations for short periods of the day. A la carte seems like it was just a ploy to get the merger through. Sacrifice a little ARPU for more subscribers would be a good thing. I still feel most would still take the full package if they had the option for the $6.99 limited. Considering multi-radio discount is $8.99, many would get family on the multi radio discount. I think the closer this gets to $1.00 the more people will stop thinking its a penny stock on the verge of bankruptcy and the push higher will be faster. I heard "experts" talk bad or smirk at Sirius, because it was only $.30 or a penny stock, why bother with it. When it's stock price is respectable, then it will take off like a rocket.....imho

2009 Aug 20 11:26 AM

[1more4me]

Far be it from me to be the Nay-sayer, but this .70 is too high too fast IMHO. Conference Call and QTR report was the last real news so this is beginning to look like an over reaction and emotional boil. Anytime the rubber band stretches too far there's going to be a snap back. I took a whole bunch out yesterday at .62- yeah sucks for me today- but momentum only last so long without support of new news and info. I'm feeling like a peak today- and now we'll see a few days of lower drifts until it settles into a range. If it will set a .60-.62 bottom and test it once or twice- next run will be way more dependable- especially if due out 8/15 short intrest report shows some significant decrease.

(And just for fun- anyone remember these guys bashing at .20-.30 cents;;; wholesalecd, bc charger, and Jay boy billy.... Wonder how they are feeling about SIRI these days)

Good Luck ALL- LONG SIRI PEACE.

2009 Aug 20 11:32 AM

[ObamaSucks]

time to jump in......things will get even better if Obama's disasterous healthcare plan and socialist tax policies are defeated...the more the Dems and Obama are rejected, the more your portfolio will grow!

2009 Aug 20 11:38 AM

[connorport]

If you've noticed this may be a solid bounce. I dont feel we are overbouncing as nearly every other stock out there has already had their bounce back but SIRI has lingered on the bottom. We may see heavy buying stay for a bit. If you listen to the street you will hear a lot of people making comments about how nice it would have been to have gotten in earlier. A lot of these people are now interested in the stock because it still sits too depressed. I think a good bottom for the stock should be around $1.20 after a run to $1.45. I feel we may get some of the affects of movement that happened in ETFC which sat under a dollar for a while and now has a strong foothold around $1.30 to $1.40 with worse conditions that this company faces. Thats just my thoughts. Who knows. Let us see what SIRI brings us.


On Aug 20 11:32 AM 1more4me wrote:

> Far be it from me to be the Nay-sayer, but this .70 is too high too
> fast IMHO. Conference Call and QTR report was the last real news
> so this is beginning to look like an over reaction and emotional
> boil. Anytime the rubber band stretches too far there's going to
> be a snap back. I took a whole bunch out yesterday at .62- yeah
> sucks for me today- but momentum only last so long without support
> of new news and info. I'm feeling like a peak today- and now we'll
> see a few days of lower drifts until it settles into a range. If
> it will set a .60-.62 bottom and test it once or twice- next run
> will be way more dependable- especially if due out 8/15 short intrest
> report shows some significant decrease.
>
> (And just for fun- anyone remember these guys bashing at .20-.30
> cents;;; wholesalecd, bc charger, and Jay boy billy.... Wonder
> how they are feeling about SIRI these days)
>
> Good Luck ALL- LONG SIRI PEACE.
>

2009 Aug 20 11:43 AM

[Novice Trader]

I jumped on this bandwagon recently, 10k @ $0.50 & 11,150 @ $0.57... $$$

PMI & SRZ are my next big gambles. Already in on ETFC, 6k @ $1.21. I got scared on Monday and sold SRZ @ $2.04 & PMI @ $1.32... waiting fo the next dip to jump back in them.

2009 Aug 20 11:45 AM

[scots slant]

Scot's Slant here. What the hell!!! $.70!!!? I've been playing Rip Van Winkle and I wake up to this? That $.05 a share not to long ago almost makes me want to vomit. I sat scared on my averaged down share price of $4.25. What a nitwit I am for listening to others to not buy. A measly $500 worth of $.05 shares would have been cheap insurance to cover my first bet.

Oh well, all I can do now is watch and wait in hopes that SiriusXM continues to rise out of the basement.

And there is one more thing: Siri Doom is curiously quiet this morning. Bleeding cash and reverse split? Hmmm... I guess the investors, at least temporarily, don't give a damn....

Scot's Slant

2009 Aug 20 12:08 PM

[connorport]

This is what im talking about. This guy here. Here is one example of over 20000 shares being purchased. Multiply people like this by a few hundred thousand and some institutional buying, short covering etc and you have some solid ground above a dollar. If we see the mid 80's a dollar run will happen with some panic purchases. Everyone wants to recover their portfolios using these severely depressed stocks as the backbone and they are able to accumulate a volume. It feels better owning 50000 shares of a $1.20 stock than 650 shares of a $65 stock. I think this will be way more basic than one would conceive. Its always seems more simple than metrix and watching graphs because in trading conditions today they seem to mean nothing.


On Aug 20 11:45 AM Novice Trader wrote:

> I jumped on this bandwagon recently, 10k @ $0.50 & 11,150 @ $0.57...
> $$$
>
> PMI & SRZ are my next big gambles. Already in on ETFC, 6k @ $1.21.
> I got scared on Monday and sold SRZ @ $2.04 & PMI @ $1.32...
> waiting fo the next dip to jump back in them.

2009 Aug 20 12:09 PM

[connorport]

Looking back at the graph you see we've been on a run up for the last month. Thats a little more than short covering.

2009 Aug 20 12:13 PM