As of midday Friday, not bad. Not bad at all.
A 5,000-share short of SIRI opened at $2.28 now sports a gain of $700. Not bad. Not bad at all. I will close out my real-life short by the end of the day.
How about the 200 SIRI January 2013 $2.50 puts with a cost basis of $0.52. They're about even right now, but give them time.
You can blame the broad market all you want for SIRI's latest swoon. Many folks will blame the evil forces of short sellers and market manipulators:
I like "Josephcjji" as a commenter (and I am sure I would like him as a person) so I will give him a nickel's worth of free advice.
If Wall Street does indeed control and manipulate - whatever you want to call it - SIRI, then why in the world would you own the stock?
It's akin to a doctor telling you that if you continue to drink, liver disease will take your life within a few months. I knew a guy who received that word. Thankfully, he quit drinking and started chewing gum and going through O' Douls like water. He did not say, "well it makes me feel good to be on the side of alcohol so even if it wipes me out, I'm going to keep chugging it."
A similar dynamic is at play with SIRI devotees.
Back in November, I attempted to warn the most ardent SIRI, Level 3 Communications (NASDAQ:LVLT) and Overstock.com (NASDAQ:OSTK) longs against falling victim to their misguided and often hysterical emotions in Holding Long Positions In 'Manipulated Stocks Out Of Spite:
To be clear, I am not claiming that stock market manipulation does not exist. I am simply saying (NYSE:A) It's not the reason why your stock flounders, the underlying company is, and (NYSE:B) If you really believe somebody is trying to keep your stock down, is it sensible to cling to a long position and "buy on the dips?"
If you think unsavory groups are manipulating a stock, why on earth would you stay long? Most answers to this query stink of emotional attachment.
Holding the position often becomes a battle between good and evil. The stockholder mistakenly equates his/her long position in the presumably manipulated stock as a show of force against the evildoers. It's really all very Bushian. The fairy tale notion that, eventually, good always triumphs over evil clouds the mind. In essence, an investor not only keeps a long position in the stock he/she thinks evil forces manipulate, but that person holds that position out of spite; in defiance or contempt of market makers, hedge funds, high-frequency traders, short sellers and other perceived economic terrorists.
I wrote that article back in November. SIRI traded for around $1.70. You enjoyed a nice run if you decided to make "do the opposite of Pendola" your favored investment strategy. SIRI longs love telling me how wrong I am even when I am right.
As an aside, OSTK is down about 22% since early November 2011. LVLT has fared better, popping 12.7%.
But, back to SIRI. If it's not manipulators, it's the broad market keeping your stock down. That's a load of emotionally-induced rationalization as well.
I proved the same point last year when SIRI took off on its post-high, summer nose dive:
Joseph had something right when he brought up "penny stocks." He just went in an unfortunate direction.
Bottom line - the penny stock dream on this stock is over. Let go of it. SIRI made a few people rich, helped more achieve some level of wealth and provided a nice return for a whole host of others. That dream is dead. In fact, it's about to turn into a nightmare as the company's most recent earnings report showed.
Following in line with the consensus that it was a great report - just look at the fundamentals - so how could the stock go down will get you hurt badly. It's all about the future and, with Mel Karmazin in charge, Sirius XM does not have a very exciting one, at least not relative to its competition.
This stock, over the last year or so, consistently underperforms the market. Calling me a name, blaming some mysterious external force or the broader market and making LONG LIVE SIRI your signature line does not and will not change this.
The sooner "investors" realize this about their favorite stock, the better.
Disclosure: I am short SIRI. Closing my "real-life" SIRI short today for a quick swing trade profit. Leaving the position open in the simulated $100,000 portfolio.