One does not need to be an investor in Sirius XM (NASDAQ:SIRI) stock to make some profits while this stock and company is in transition. I realize I am touching the third rail by even suggesting that Sirius is not a sound long term investment, but there ARE reasons for my opinion.
I still believe the following:
- Liberty Media (NASDAQ:LMCA) wants complete control of Sirius XM and has capped the share price at $2.15. It is my OPINION that the share price will not go much higher than that, and that ultimately Liberty will gain complete control.
- Mel Karmazin seems as though he is cashing out even though some of his stock sales have been planned, others could follow and it is my opinion that he sees the handwriting on the wall, and his actions are that of an investor who is taking the money and more than likely heading for the hills, in MY opinion.
To his credit, Mel has made what Sirius XM is today. He delivered on content, and put satellite radio on the map. The problem is, he has not been able to return shareholder value to any significant extent, especially to the early stock buyers when the share price was $5, $6, $7/share and higher.
Many people have lost money - big money. Some folks have made a ton of money and kudos to them for sticking with it and continuing to buy and trade around the edges when the share price was at historical lows.
Unfortunately, many folks did not have that tenacity. Many shareholders to this day are significantly underwater with their investment and it is my opinion that anyone holding shares now will not see an appreciable rise in the share price ever again, simply because of the $2.15/share cap that has been planted on the stock by Liberty Media.
Nobody knows what will happen but from my past experience in business and investing, the big dog (Liberty Media in this case) will take care of its own before anything else. It remains to be seen what will happen to the little dog (Sirius XM shareholders in this case) but it usually is not the promised land.
I hope I am completely wrong and all of the shareholders will become amazingly wealthy or at the very least, break even - time will tell.
I would like to make clear that I do not believe that Sirius XM will go bankrupt. I do believe it will no longer exist the way it does today. I also believe that if you continue to hold Sirius XM shares you can make some money.
Squeezing Out Some Sirius Profits
It is my humble opinion that the only way to make money with this stock right now is to trade it. Buy low sell high, use a short term trading strategy that will allow you to make some money by trading the range.
The range of Sirius XM appears to be $1.75-2.15/share based on their most recent track record;
In this one year price chart you can see that $2.40 was the top, and $1.60 was the bottom. Using that metric alone, you can still eek out some profits by trading in the "channel". Forget about trying to hit the bottom or the top and just trade in between. I think by using placing a buy at $1.75 and a sell at $2.15 you might be able to squeeze this lemon.
If you hold shares, sell calls monthly to pinch out a few more bucks while you hold the shares and hope for the best. Use the relative strength index (RSI) as your main TA tool to keep it simple. When the RSI goes below 40, think of buying and when it goes over 80 think of selling.
Sirius XM is no longer a momentum trade, nor a long term investment in my opinion, but EVERY stock can be a trading stock, and for now, SIRI can be a channel trading stock.
Just be careful out there. Nothing is ever guaranteed.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.