It should be well known by now to investors of Sirius XM (NASDAQ:SIRI) that CEO Mel Karmazin adopted a plan to convert and sell 60 million shares worth of his vested options from April 2012 onwards. Based upon the sales dates one can get a very good idea of the parameters of the plan, and estimate when the next set of shares are likely to be sold. In periods of low volume, this can be a boon to predicting when the stock price may drop or why a large block of shares went out in the middle of the day for what seems like no reason.
While Mr. Karmazin's sales at first seemed to panic investors, causing an avalanche of additional sales immediately following Karmazin's, the last two sets of planned sales have either been quickly absorbed or have even gone unnoticed until the SEC receives filing of the sale. Part of this may be due to the fact that the sizes of the sales have been dwindling, with the last sale coming in at 7.8 million shares, and part of this may be due to the fact that volume has been increasing, allowing the day's activity to absorb the shares more easily.
By looking at Mel's sales dates, they all fall in the middle of the month and are spread between two days. If the 15th is a trading day, the first sale will be on the 15th, and if it is not a trading day the first sale will be on the next trading day after the 15th. Since this week the 15th falls on a Wednesday, investors can expect sales to occur on Wednesday the 15th and Thursday the 16th. These are reasonable assumptions based on past data but it should be noted that they are still estimations. The exact details of the plan are not disclosed.
So what should investors expect this time? Current volumes have picked up and literally gone through the roof, and there have been huge leaps and bounds in share price that Sirius XM has exhibited running from $2.10 on up to $2.50 in matter of days last week. Because of this, two sales of what will likely be around 3.5 million shares each will hardly be noticed other than a print that the shares have been sold mixed in with the day's activity.
With Sirius XM pressing on $2.50, that price point could quite possibly be breached before Wednesday arrives. If that happens, volume may again spike high as shares find a new trading range beyond current consolidation around $2.50 per share. In this environment, while it is important for investors to be aware of Mel Karmazin's sales, it's also important to understand that this block of sales probably won't matter. If you're looking for a good buy in, and you're of the same opinion as I, that Sirius XM has great long term potential up to $5 per share and short term may even quickly run up to $2.75, then now may be the time to buy. Waiting for Mel's sales to create an entry point could leave you standing there, money in hand, as the train heads out of the station.
Disclosure: I am long SIRI.