Seeking Alpha
Long only, research analyst, portfolio strategy, media
Profile| Send Message|
( followers)  

As I pondered how to approach this piece about SiriusXM (SIRI) from a creative angle, it dawned on me.

All my life I have been asked "Are you related to the author?" when people hear my last name. Of course, these people are referring to the author named William Faulkner, who is rather famous in the literary world for his collection of short stories. "The Bear" I find to be most often mentioned of these.

How fitting that I, as a SiriusXM bull, am now writing and seeking to metaphorically kill the SiriusXM bear myself almost as Isaac takes up the challenge of hunting the bear in Faulkner's short story.

From Wikipedia on "The Bear" :

As Isaac grows older, he becomes an expert hunter and woodsman, and continues going with the hunting parties every year. The group becomes increasingly preoccupied with hunting Old Ben, a monstrous, almost immortal bear that wreaks havoc throughout the forest. Old Ben's foot was maimed in a trap, and he seems impervious to bullets.

Picture yourself, if you will, the bear as a huge lumbering beast. The bear is stomping and thrashing about indiscriminately, unconscious of and uncaring of the things which it destroys. The bear cares not about you. The bear cares only for itself. Attempts to defeat it thus far have had little to no effect. With a bump here and a scratch there, the bear keeps on going. But, as in the story, the bear is not invincible. The bear cannot survive against that which it fears. This is bullish sentiment, bullish reasoning, and bullish activity. The bear is mortal.

The last several days of trading of SiriusXM has given proof to this. The SiriusXM bear is losing, and the SiriusXM bear will fall.

Consider when I first began writing last week. SiriusXM was trading near $2.10, and the bear seemed strong. The bear was trying to confuse the bull with cries of 1.3 million subscriber guidance, 305 million in short data, increased churn, and insider sales. These cries were loud and incessant.

But the bear's roar has died down and significantly so in the past several days. Now the big bad hunter, the SiriusXM bear, becomes the hunted.

The bull understands that 1.3 million subscriber increase guidance stated by Mel Karmazin is conservative and done on purpose. The bull understands that increased churn is guided, again, as a conservative hedge for safety on a "wait and see" approach. The bull understands that 305 million in short data is *OLD* news, and completely unreliable due to how it is reported. The bull will understand that insider sales may portend instead of a positive future for SiriusXM shareholders in the short term. This is not a negative as many bears will suggest.

The bear is on the run, and the bull is fast on its heels:

click to enlarge

Hold on, hold on. Do you wish me to go back over that part about insider sales? Of course I will. It's my favorite part of the story.

As many who are invested in SiriusXM know, SiriusXM is 40% owned by Liberty (LMCA). On March 6th, the cuffs come off of Liberty's wrists, and they are allowed to go forward as they see fit in acquiring more of SiriusXM up to the point of a controlling stake of 51% or more.

Word has been passed around recently about a flurry of insider sales at SiriusXM. Most notably is the reported sale of half his stake by Mel Karmazin, CEO. Spencer Osborne wrote a fine opinion piece here detailing the sale and his very balanced opinion on this activity. But the bear is not so balanced as Mr. Osborne. The bear has been seen sensationalizing this information of insider sales trying to scare the bull. But the bull knows better.

The bull understands that these insider sales make perfect sense. With the looming March 6th date upon us, and the high probability of a major move by Liberty just around the corner, the insiders are playing it safe. They are ensuring that they are not stuck in the event of a Liberty acquisition. They do not want restricted shares with time limitations. It is my opinion that some insiders are selling in 2012 to avoid increases in taxes that should come in 2013. These sales do not portend gloom and doom at all. This scares the bear and empowers the bull.

The bull now knows that even with all these sales the share price has stayed strong and gained in strength. The expectations of a major move by Liberty are there from all camps, especially among those closest to being in the know.

Our story of SiriusXM is reaching a climax. Hopefully you, the reader, can feel with excitement what is about to happen. The SiriusXM bull will kill the SiriusXM bear. We know this. We can smell the bear's fear, and if you want to win, I'd consider being on the side of the bulls, or standing back and watching.

Source: SiriusXM And The Killing Of The Bear

Additional disclosure: I am long SIRI March $2 calls. I have no position in LMCA.