Sirius XM Show or Tell - A Rebuttal 84 comments
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I recently wrote an article in which I stated a SiriusXm (SIRI) share repurchase program might be in order. It was met with some skepticism to say the least so I thought I’d go into more detail and present a case.
Let me begin by making it clear that I in no way believe that Sirius should go into the open market on Monday and spend 100 million dollars on its own stock. Stock buy-backs do not work that way. They are usually stated by a company that from time to time, and at its own choosing, may buy back shares when it feels the stock is undervalued.
An immediate benefit would come psychologically from the mere announcement of a buyback program. A repurchase program immediately signals to the market that the company feels its stock is undervalued. Last month, for example, Eastman Kodak (EK) announced a stock buy-back program and its stock shot up on that news.
The first thing that happens is that shorts run for the hills. The company is declaring war on short sellers by telling them that the downside is limited. Sirius would be signaling to the shorts that their profit-making days at shareholder expense are over. With limited downside potential remaining, most naked shorts would cover.
Overall growth is important, yet not as important as growth per share. As shares are removed from the market, earnings grow per share, whether or not revenue does. Each outstanding share becomes more valuable because EPS is increased right away. Think of this as another way of offsetting slow auto sales and retail growth.
A stock buyback program is a lot more shareholder friendly than a reverse split. There are value investors who look to invest in companies that are actively seeking to buy back their own shares.
As for the cash flow argument made by my esteemed colleague, I disagree. Sirius does not have a cash flow problem. Granted the profit is not there yet, but the cash is there and it comes in each and every month in the form of subscriber revenue to the tune of billions of dollars annually. Sirius common stock remains one of the most heavily traded stocks and as such, the asset remains very liquid. That to me is the key. At any time in the future should the company need to raise cash for such things as capital expenditures, it could very easily convert those shares back to cash, without increasing the float or taking on new debt. The shares are still logged as a cash asset on the books.
Position: Long Siri
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163888: How could you miss that dip yesterday?? I grabbed up more @ 1.32 just before it hit bottom. That's it for me. SIRI already has over 25% of my investment capital, and any more would cause me to question my own sanity, although I must admit it's tempting to throw half my eggs in this basket, if you know what I mean!
Brandon Matthews posted another article this morning under Tyler's account, calling for some of the other execs to follow Mel's lead and buy up some shares, too, and I agree. Between that and the conference call Thursday morning, I think we're in for an interesting week, indeed!
Besides, you know the difference between a Harley and a Hoover? The position of the dirtbag.
My favorite is he said this after I told people why he is a dolt because of what he said:
"The Vicar
of Value
Aug 04 11:46 AM163888 your post is a bitter and vindictive (and poorly executed) attempt to discredit me with blinding inaccuracies and wishful thinking. A poor attempt for you to save face in light of your failure. But then again, your prognostications on Satrad have been wrong too -- your performance speaks for itself."
Then he says this after I confirm what he just said.
"163888 the fact that you actually went back to Barrons' website to cut and paste my earlier posts (in a pathetic and failed attempt to discredit me) speaks directly to your desperation. You're applying selective perception to draw attention away from the fact that you made a money-losing call on XM/SIRI. Just be a man and admit it. Readers of this board may actually respect you again."
He was the one that required me to pull up what he said, by what he said in the first statement.
Killerkaul, he is not only a dolt with no common sense. He just doesn't know when to quit. He keeps jamming his foot deeper and deeper inside his mouth. I gave him just enough rope to hang himselve with. In the prior article "Sirius XM Long Road", I waited for him to come back with a comment like he did, before I responded. I wanted to use his own words against him again in this articles comment section. Only a retard would not have seen that coming we were carring on arguements on both articles at the same time.
And oh, there is one more thing: The question does not require a philosophic response; a simple yes or no will suffice.
Scot's Slant