Liberty Media And Sirius XM: Joined At The Hip

This week-end I wrote an article about Sirius XM (SIRI), and warned investors that the stock might dip this week if CEO Mel Karmazin sells another chunk of his 'charitable' shares/options. Seeking Alpha member "ses" challenged me to investigate the ownership of Liberty Media (LMCA), which owns 46.2% of the satellite company. Are they institutions, hedge funds, or retail owners? Do some of them own both companies?

Sirius is the largest investment that Liberty has, and when its share price is down, it drags Liberty down. I decided to check it out, and I was really surprised with the results over the last five years:

To say the two are joined at the hip would be a major understatement. As I said in the other article, I do not think that Liberty is intentionally trying to drive the Sirius XM price down. This would be like literally shooting yourself in the foot.

Institutions own over 53% of the common shares of Sirius. And that number has gone up dramatically in the last month. But that is nothing compared to the institutional ownership of Liberty. According to Yahoo Financial:

Breakdown

% of Shares Held by All Insider and 5% Owners: 9% % of Shares Held by Institutional & Mutual Fund Owners: 85% % of Float Held by Institutional & Mutual Fund Owners: 93% Number of Institutions Holding Shares: 384

Is that right? Ninety-three percent of the float is owned by Institutions and mutual funds? That is a very high number, which means there are very few retail investors that own Liberty. Here are the top owners according to the most recent results:

Top Institutional Holders

Holder Shares % Out Value* Reported Horizon Kinetics LLC 5,409,621 4.82 476,858,091 Mar 30, 2012 Clearbridge Advisors, LLC 4,675,530 4.17 364,925,116 Dec 30, 2011 Capital World Investors 4,611,765 4.11 406,527,084 Mar 30, 2012 VANGUARD GROUP, INC. (THE) 3,161,144 2.82 278,654,843 Mar 30, 2012 OZ MANAGEMENT, L.L.C. 3,103,590 2.77 273,581,458 Mar 30, 2012 BERKSHIRE HATHAWAY, INC 3,000,000 2.68 264,450,000 Mar 30, 2012 BlackRock Institutional Trust Company, N.A. 2,773,955 2.47 244,524,133 Mar 30, 2012 Capital Research Global Investors 2,547,558 2.27 224,567,237 Mar 30, 2012 LONE PINE CAPITAL, LLC 2,263,262 2.02 199,506,545 Mar 30, 2012 KENSICO CAPITAL MANAGEMENT CORP 2,237,000 1.99 197,191,550 Mar 30, 2012

Top Mutual Fund Holders

Holder Shares % Out Value* Reported GROWTH FUND OF AMERICA INC 4,391,300 3.92 387,093,095 Mar 30, 2012 VANGUARD TOTAL STOCK MARKET INDEX FUND 1,295,926 1.16 101,147,024 Dec 30, 2011 Munder Mid-Cap Core Growth Fund 1,253,446 1.12 97,831,460 Dec 30, 2011 BARON SMALL CAP FUND 1,250,000 1.11 97,562,500 Dec 30, 2011 Legg Mason Clearbridge Aggressive Growth Fd 1,061,301 0.95 93,553,683 Mar 30, 2012 PRINCIPAL MID CAP BLEND FD 1,045,701 0.93 92,178,543 Mar 30, 2012 AMERICAN FDS INSURANCE SER-GROWTH FD 1,008,939 0.90 88,937,972 Mar 30, 2012 SMALLCAP WORLD FUND 938,912 0.84 82,765,092 Mar 30, 2012 VANGUARD EXTENDED MARKET INDEX FUND 899,045 0.80 70,170,462 Dec 30, 2011 FIDELITY CONTRAFUND INC 747,375 0.67 65,881,106 Mar 30, 2012

There are a couple of the funds that own both Liberty and Sirius, but most of them are different. However, this big institutional ownership could become important in the FCC battle for de facto control of Sirius. Just yesterday Sirius filed a Petition of Opposition in answer to Liberty's Petition for Reconsideration.

First of all, the Sirius legal team has made a splendid case against Liberty getting control. But more importantly, agencies such as the FCC tend to consider the public interest and the little guy ahead of the big boys. If it comes to a close decision (which I don't think it will), I think the government will side with over a million retail investors at Sirius versus all of the institutions at Liberty. And to get turned down a second time will not be good for Liberty.

Disclosure: I am long SIRI.