Sirius XM's Nasdaq Non-Compliance Opportunity

By Brandon Matthews

By now many are aware that Sirius XM Radio (SIRI) will soon receive a letter of non-compliance from the NASDAQ regarding its sub one dollar share price, a fact not lost on short sellers last week, as they hope to turn event risk into profit. The media will no doubt help these short sellers by referring to the non compliance letter as a “delisting notice,” helping to fuel investor fears. There are no doubt writers who already have their “delisting” articles ready to publish as soon as the news breaks. It’s typically a good short bet as a company faces such a notice. Some may look at this event risk as offering the potential for short sale gains. I look to this event risk as two separate events. The first event is the letter itself. The second event is the short covering that will accompany it, providing a means to acquire shares at discount prices. Sirius XM Radio is not your typical troubled company.

As the week begins, E-Trade and TD Ameritrade customers are receiving a message that states:

*Nasdaq FSI: *Deficient: Issuer Failed to Meet NASDAQ Continued Listing Requirements.

Actually this is not new news, as Sirius XM Radio had already been placed on the non compliance list when an independent director was named to the Obama Administration, resulting in a temporary board vacancy. Sirius XM received a letter in July, and then submitted a plan to the NASDAQ to fill that vacancy at the next meeting of shareholders. There was no sell-off created from such a letter because in the end, it is a non event that will be dealt with in due time, due time meaning that the post will be filled before there is any chance of NASDAQ delisting.

As another letter is being prepared to warn about the minimum bid requirement, short sellers may find that the event they hope will cause a selling situation may leave them a bit short in the end. As I stated, this is not going to be a delisting notice but a warning letter that will give the company 180 days initially to regain compliance, and another 180 days following that to appeal. In other words, any potential delisting or delisting notice for that matter is still a year away.

This is not something that the company is ill prepared for. In fact, with the exception of the one dollar minimum bid, Sirius XM Radio remains compliant on all other required metrics and not by a slim margin. More importantly, the company has been preparing for this event for some time, and has even filed a petition with the Securities And Exchange Commission to have this requirement waived in lieu of the company’s market cap, which stands at $2.51 billion, dwarfing the exchange's requirement of only $15 million.

With a reverse split already authorized as a last resort, there is absolutely no chance that the company will ever receive a delisting notice or be delisted. Let me say that again for the benefit of those who may be fearful of things they may read this coming week. NO CHANCE! And therein lies the problem for short sellers. Because the company is financially stable there is a higher probability than not that the company’s shares will recover to the required one dollar minimum bid, as Media Analyst Tuna Amobi of Standard & Poor's Equity Research has increased his 12 month projection to $1.00.

Position: Long SIRI

Comments

[Hawk180:]

After reading Doom's past posts, let's do a little speculating on our own. He's lost 280K on SIRI stock. He's has claimed to be an insider. He has claimed that Mel personally lied to him.....Circumstantially, that adds up to a disgruntled ex-employee or ex-partner. So I can see why he is spreading so much hate. What that also does is reinforce his lack of credibility.

So as has been said. Don't even bother to read his waste of bandwidth. Just click on thumbs down and move on.

Oh, as far as my being a paid blogger; where do I collect my check?

SIRI-long.

Sep 11 09:02 AM

[between the...:]

Mel: Hire a strategic planning firm to assist you in a plan to move Sirius to an international player.

Sep 11 10:33 AM

[jmsithy:]

Market is up today Siri is down I guess manipulation is still the culprate. Sold at .67 after buying in @.67 now waiting for .60 and below again because there is no news out right now until the next qtr report

Sep 11 10:57 AM

[jmsithy:]

I mean bought at .60 sold at .67


On Sep 11 10:57 AM jmsithy wrote:

> Market is up today Siri is down I guess manipulation is still the
> culprate. Sold at .67 after buying in @.67 now waiting for .60 and
> below again because there is no news out right now until the next
> qtr report

Sep 11 10:57 AM

[GeorgeS:]

Oh grow up RAF. The movie Stock Shock was produced to no avail with people like you. Poor Brandon is speaking to deaf ears. Goldman Sachs has not engaged in manipulation, Karmazin has no "plans" in his mind, his mind is empty and just rolling with the flow like yours.


On Sep 11 07:47 AM R A F wrote:

> Virtually all of SIRI-Doom's comments are patently false - having
> been repeated verbatim since the stock began rallying from the low
> .30's several months ago. Moreover - it is important to recognize
> that many of his comments are actionable as libel and slander -
> accusing persons and institutions of criminal behavior without providing
> factual substance. All of this is designed to pressure unsophisticated
> investors in SIRI into decisions that are unwarranted by the true
> performance of the company. Perhaps this continuing behavior by
> SIRI-Doom will earn him a reward he is not expecting - a day
> in court to face charges of libel and slander.

Sep 11 11:21 AM

[Scooterpod:]

For someone as supposedly informed and educated as SIRI-DOOM, I found his reference to the "Criminal Mined" pretty telling.

Pretty damned funny, SD. I keep finding guys like you on other forums of other subjects, and you all have one key, common trait. Cowardice and bad spelling.

Sep 11 12:43 PM

[Come on Guy...:]

Hey guys been watching Level2 and there is a lot of support around .63 .64 .65 dont see it dropping below that.

Sep 11 01:50 PM

[between the...:]

I have found out who Siri Doom really is and where he lives!!! He lives in childrens books in the Chicken Little aisle.

Sep 11 01:59 PM

[between the...:]

2 alternate scenarios to Doom's forecast: 1. Nasdaq merely waives rqmt due to market cap. 2. Similar to the other "delisting event" no one cares. Shorts, relying on a sell off, panic and cover driving the stock upwards. If the alternate scenarios are correct, then this stock will smell very fishy. Why you ask? Because Tuna will be all over it!!!

Sep 11 02:31 PM

[jmsithy:]

this will be below .65 if not down to .60 by Monday like it was last week when it bottomed if this was a buying oppertunity at .65 this would be back to .68 Im out until monday got a little profit from this sell off today maybe Monday


On Sep 11 01:54 PM Come on Guys Lets get Sirius! wrote:

> SIRI DOOM:
>
> THERE IS A LOT OF SUPPORT TO BUY THIS STOCK AROUND .63, .64, .65..
> ITS NOT GOING LOWER!!
>
> SO DE-LIST MY ASS BITCH!

Sep 11 03:12 PM

[1more4me:]

Here's a bit of depressing news;
Short intrest increased a bit. On 8/14/2009 it was 119,653,289.
As of 8/31/2009 it's back up to 124,769,729. So- it went up by about 5 mil shares. Not much of a worry since the stock price in the same timeframe went up about 25% and included the run up to .78. Hell- I would have shorted at .75 ish if I could have...
And one more bit of not good news: Insiders made 30 trades in the last 3 months. All sells- totaling about 4 Million shares. Again, not much of a worry since it is in fact a form of paycheck...But sure wish they would do a bit of buying and holding to help support confidence... Guess this proves I'm not a paid SIRI promoter---just have not seen this reported any other place and it may minimally influence my trading activity. Which is currently BUY-BUY-BUY!!!!

Long SIRI - PEACE

Sep 11 03:16 PM

[jmsithy:]

get ready for another pull back Monday .61/.62 maybe lower

Sep 11 04:14 PM

[R A F:]

While a few comments on these pages come from day traders trying to skin a few pennies per trade by selling and then re-establishing positions a few cents down, by far the greatest majority of investors in SIRI are now holding positions while awaiting the substantial upside potential that is projected over the intermediate to longer term. The narrow focus on only a few cents potential from this type of day trading runs the risk of losing positions that should be held based upon upside potential that greatly exceeds downside exposure from current levels. One of our favorite lunatic posters on these pages made quite a point of bragging to everyone how he had gotten out at .37 and planned to get back in at .34 and he is still ranting and raving about the world coming to an end in the hopes that his fantasy bid will be hit! As someone once told me ..."You can go lion hunting in Central Park but that doesn't mean you are going to bag a lion!". So - for all you day traders trying to skin a few cents along the way - I would suggest you try to see the forest instead of just a few trees.

Sep 11 04:25 PM

[jmsithy:]

I sold today as well at .67 I see this going back to .60/.59 maybe lower and I will be there to catch this during the panic on Monday lol
After hrs .655/.659 means going down on Monday at opening using the model from last week when this went to .65 then bottomed at .58 seems like GS is trying to push this down somewhat to make this low enough for desktrades to make a fortune. I would not put back in until close to .60 especially on Monday. Monday this will struggle to get over .65 before opening then this will drop by .02 real quick at opening


On Sep 09 01:54 PM Mr. Stupid wrote:

> I am selling some now and then buying back after the warning. The
> market will act on the news which isn't anything suprising. This
> is actually a good opportunity to rack up on more shares after the
> news hits.
>
> Mr. Stupid

Sep 11 07:09 PM

[Mr. Stupid:]

Ok, you just told on yourself. You are Relmar. How come you would lower your intelligence so much to think we wouldn't figure that out by this comment.

Really man, Get a life!

Mr. Stupid


On Sep 10 02:45 PM between the hedges wrote:

> The warriors, like Relmor, who have been long this stock since .05,
> are basking in the glorious victory of 1400% gains whilst you are
> cowering down, shadows of men, whispering venemous gossip like church
> ladies when a new beautiful girl joins the congregation. You cover
> your mouths and whisper to each other, look at Relmor making all
> this money. I wonder what it is like.

Sep 12 01:40 AM

[SIRI-Doom:]

SIRI NASDQ ALERT
SIRI NASDQ ALERT
SIRI is officially noncompliant of the NasDq $1.00 rule. The clock for SIRI delisting from the NasDq is ticking down to disaster.

SIRI Mel’s answer to the NasDq will include the alarming words “REVERSE SPLIT”. The words “REVERSE SPLIT” are going to ring alarms of disaster to all who currently hold SIRI stock.

SIRI Mel now has a duty to inform stock holders of the NasDq letter and the SIRI response with intention to reverse split. The market will be informed regardless of how much money Mel has panned out to suppress this news.

Sep 12 08:16 PM

[R A F:]

THE SKY IS FALLING .... THE SKY IS FALLING!

Sep 12 09:56 PM

[R A F:]

THE SKY IS FALLING .... THE SKY IS FALLING!
CHICKEN LITTLE = SIRI DOOM

Sep 12 10:01 PM

[SIRI-Doom:]

I don't know anything about the sky falling.

But when the news hits about the delisting and Mels answer to the NasDq with intent to rev-splt, SIRI STOCK IS GOING TO FALL...

You can bash me, and even censure my comments on this news. But, you can not stop the disaster of this news when it hits the street.

Too bad this board is so censored for bad news on the stocks preferred by Seeking Alpha. This board may never be more than a propaganda site. Just another insignificant useless entertainment web page for wishful thinkers...


On Sep 12 10:01 PM R A F wrote:

> THE SKY IS FALLING .... THE SKY IS FALLING!
> CHICKEN LITTLE = SIRI DOOM

Sep 13 04:58 AM

[Hawk180:]

SIRI-Doom, Where is this letter? Do you have a written copy of it you can produce? Is it publically available? Does it even exist?

I want proof. I want references. Cite your sources. Otherwise, you will continue to get failing grades on your blogs.

I was always taught in college and continue to teach my students that if you make a statement of fact, give your references so that they may me verified.

I have seen many statements from you in the past, always about the same subject, but you have yet to give any verifiable references.

Either validate your facts or get off the bolgs.

Sep 14 04:18 PM