Having been in cash for awhile, and attempting to trade a bit on Sirius XM's (NASDAQ:SIRI) dips and pops, I've found it difficult to write much of anything about the company itself. The company is moving along just fine as far as the usual meeting and beating of guidance, and posting what I find to be acceptable numbers across the board. The stock has simply become detached from the company's performance, and I see two reasons for this. One is Liberty Media (NASDAQ:LMCA) and the other is the overall bear market we are in at present.
One thing going on with Sirius XM right now that is capturing virtually all of the attention is Liberty Media's moves to acquire larger (and very likely a majority) stake in the company. Take a look at Seeking Alpha's Sirius XM page. It's all there. You have plenty of articles to choose from if you are not up to speed already.
In my opinion, yes, it's fun to talk about what may or may not happen if and when Liberty Media takes control, but all I am interested in as an investor is what it means for the stock price. As Liberty Media has now petitioned again for de facto control, eyes should be on the FCC's response, as well as any activity by Liberty to purchase additional shares of Sirius XM. It's all that really matters in the short term. I believe Sirius XM could post yet another strong quarter, raise guidance, and meet or beat expectations and the stock would remain stagnant or continue the sell off that is currently underway.
And the sell off which is currently underway can find cause due to the overall market to the greatest extent, coupled with uncertainty surrounding just how everything will play out regarding Liberty Media. You may hear from some that this sell off is because Sirius XM has a high P/E, or because Sirius XM does not have the amazing true visionary wonder team from Pandora (NYSE:P) running the show. But a quick look at the overall market, and the headlines on every major financial site, will clearly show that the sentiment out there is extremely bearish. To expect Sirius XM to be immune from the overall market downturn is folly.
The good news is that for those of you who are "Long and Strong" Sirius XM, and do not have any need to sell, I believe you will be just fine as the year plays out unless the world markets enter into an absolute crisis. For those who are averaging in, these prices should be seen as a great way to average down, or keep your average down. As I said above, the stock has become detached from the company's performance, and in my opinion that creates tremendous value for investors seeking to purchase shares.
For those of you who have been following my moves, you may then ask: "If you believe the current pricing is a tremendous value, why are you currently sitting in cash?"
The answer to that is simple. I see better entry points at lower prices in the future, and I'll patiently wait for those. The overall market should help with that immensely. The 10, 20, 50 and 100 day moving averages are currently all turned down and heading south, and the 20 day should cross under the 200 day moving average this week.
History does not always repeat itself, but the last time the 20 day moving average crossed under the 200 day for Sirius XM, the stock price was roughly $1.84, where it sits today. One month later, the stock price hit an intra day low of $1.27. Ask yourself, what was wrong with the company then? The answer is "nothing."
Additional disclosure: I am long Pandora (P) put options.