Liberty Media (LMCA) continued its purchases of Sirius XM (SIRI) according to a Form 4 recently posted on both Liberty's and Sirius XM's web sites. The Form shows Liberty acquired a total of 40,460,803 shares in multiple purchases on August 24th, 27th and 28th at prices ranging from $2.50-$2.53.
Number of Shares
Average Price Paid/Share
The latest purchases bring the total number of Sirius XM common shares beneficially owned by Liberty to 497,327,872. This total does not include Liberty's second forward contract covering 41,087,753 common shares, Liberty's preferred shares representing 2,586,976,761 common shares, or the 5,866,666 common shares underlying its Sirius XM convertible bonds.
The total of all these shares would be 3,131,259,052 common share equivalents, and following the methodology used by Liberty to calculate its Sirius XM ownership percentage in its most recent 13D/A on August 17th, its percentage ownership will have increased to 48.73%. This is based on 3,833,253,534 Sirius XM common shares outstanding reported by the company in its August 10Q.
The August 17th filing discussed Liberty's withdrawal of its application for de facto control of Sirius XM, and Liberty's new filing seeking consent of the FCC to go to de jure, or majority, control of Sirius XM. These recent purchases bring Liberty that much closer to majority ownership.
Liberty continues to buy shares and inch towards majority ownership of Sirius XM, clearly indicating that it expects to receive the consent of the FCC to proceed. These recent purchases, along with Liberty's second forward contract, bring Liberty's purchases to more than half a billion shares since the beginning of the year. The purchases have essentially removed these shares from the float, at least temporarily, and could have helped move the share price higher.
An old Wall Street adage is, "The market hates uncertainty." Some investors look at the actions by Liberty as adding uncertainty to the market for Sirius XM stock, and believe that once the FCC renders a decision, the uncertainty will be removed and the stock will be free to rise in price. Another question that investors may wish to consider is, "What happens when Liberty stops buying?"
Additional disclosure: I have $3 January 2013 covered calls against most of my Sirius position, as well as some $2 and $2.50 January 2013 covered calls. I may initiate (or close) a buy stock/sell option position in Sirius, at any time. I have no positions, or any plans to open positions in the next 72 hours, in any of the other companies mentioned in this article.