Sirius XM Shorts Scrambling to Cover 44 comments
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Like a thief in the night, holders of Sirius XM (SIRI) short positions are scrambling to cover. According to Satwaves.com, Sirius XM short interest has fallen 32.69% from 310,672,182 shares to 209,124,306 in only a 2 week period; a decrease of 101,547,876 shares.
A check of the NASDAQ market site verifies this information, which brings the number of Sirius XM shares short to nearly the levels of the pre-merged stand-alone company. It would seem that the shorts are taking advantage of a suppressed stock price to cover, as the “upside” potential of a short position in Sirius XM has seemingly diminished.
With the knowledge of the recent loan of 168 million shares to short against the convertibles, it would seem that few true shorts remain. A recent Reuters report on overall short interest indicates “that investors may think the worst of the market downturn may be over.”
With over 200 million short shares remaining, those that continue to hold positions short may find themselves at the losing end of any good news reports going forward, as very few others will be there to support their positions and risk fighting renewed strength from the buy side of the ledger.
Position: Long SIRI
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This article has 44 comments:
Thanks for your needless rant. No apology required or neccessary.
I'm Long some days , I swing trade and leave shorting to shorts- I'm way to heavy in SIRI ,,but see at as a good investment--thanks to ML for there Failure and making me open my eyes to STOCKS--
The numbers add up... the increase at the end of July was the new shares being loaned out for shorting by the hedge funds, then the decrease after July are the Arb players exiting their positions.
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Long SIRI and Steelers
Then when the Arb players began closing their positions on 7/29 and later, this was reflected in the mid August report. This is because any and all short trades made from 7/29 through 8/12 would impact that report. Thus, it dropped by 101 million. These being the Arb players that went long XM over the last year or so, while shorting Sirius.
I don't believe that the hedged positions have closed out yet -- they wont close out until the debt is converted, many years down the line.
Right now, the 210 million short interest is made up mostly of the hedged shares sold at $1.50 (between 150~180 million). There is then another 30-60 million "other" shorts still in the mix. I suspect the end of August short interest will continue to show a drop.
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In any event I can see that the 100 mil reduction came from shares available to the public from previously Long XM investors. The 150-180 mil "Short" shares are not available to the public but are part of the 7 % Exchangeable Senior Note Offering Arb. play or Hedge to those note purchasers. So these shares will be included in "Short Interest" calculations but will not be included in company metrics such as, EPS.
My understanding also is that the institutions conducting the note sale and borrowing the lent shares must purchase a Long position, virtual or otherwise, for each share shorted by the note purchaser. It would seem that all of this being true, exaggerates the effect of "Short Interest" and recent volatility in this metric.
Nope I am not at all bitter about selling Siri. In fact very happy I sold all stock!
In the last two years I bought & sold over & over again making $$$ and putting it away in the bank account. This go around I only lost $800 , but still on money I made on Siri before. So I didn't loose any of my own hard earn cash.
Just wondering why you all are still hanging in for dear life & still dumping more cash into it.
If you are all so long on Siri & think this company will be profitable, why look at the results everyday?
Why not just forget about the stock for a few years & check back later?
It's fine that all of you need to blow air up each others skirts.
You also need people like me to balance out the false hope.
It's great that I can get you bent out of shape with ONE word.
Exposing Idiots had to write an entire book to do that!
It could have been worse. I was going to use the "JIM JONES" example!
Everyone on the bus !!!!
Good luck in Loosing all your money suckers!
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The shares loaned to the hedge funds are very much out in the public at this point. There were 183 million of them sold for $1.50 on 7/29/08. Those shares are now outstanding being traded around -- however Sirius/XM themselves will not count them in their calculation of various earnings metrics. If the hedge funds close their position by selling the convertible notes then they will be required to buy them back on the market and deliver them to UBS or Morgan Stanley (whoever loaned them to them); and then UBS/Morgan Stanley must deliver them back to Sirius. Regardless, they're now out their in the Float.
Regarding UBS and Morgan Stanley buying offsetting long positions -- this is partially true. They are not "required" to do it and they only agreed to do it against the "supplemental" shares sold short. Recall that the hedge funds shorting was in two parts... the first as one offering at $1.50... UBS/Morgan Stanley is not buying long positions against that; but rather, they agreed (at their discretion) to take a long position (or equivolent) against any "supplemental" shares sold short by the hedge funds. The supplemental shares would be what remains of the shares borrowed that were not sold in the original placement on 7/29/08.
Got that? There'll be a quiz later...
Really, the whole thing can be complicated. I still find tidbits I didn't realize every time I read it.
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The private component to the Shares Lent and the 7% Exchangeable Senior Notes is between UBS/Morgan Stanley, the share borrowers, and the buyers of the notes. Once purchased the owners can short Siri "publicly" knowing that they have "located and can deliver upon closing their short position" using the shares borrowed by UBS/Morgan Stanley in their 11th hour deal with Sirius.
I didn't realize the agreement on taking the "Long" position only applied to the remaining lent shares, say 74 Mil, that UBS/Morgan Stanly will offer out from "time to time".
I think I got it, and thanks so much for taking the time to bring this unsophisticated investor along with your explanations. The Devil is always in the details.
Hang in their, dont sell, and watch another 100 million shorts cover next month. Actually between Aug. 15th and now, they probably already have. Why they delayed the guidance for so long. Trust me, they have had it for over a week im sure. Maybe even months ago.
Professional? Yeah, my work gives me a lot of leeway because I put in more than my fair share of hours at the office, as well as time at home. Just because you don't like it, doesn't make it wrong... if I'm still at the office after 1PM, I'm on my time -- and my work knows it.
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The name calling and the very "worried" tone to their words express not concern for us, but hatred. We are hated because we are smart and didnt leverage. We are only guilty of "bad timing" in our purchase. Had we known that Mel was going to throw us under the bus, we would have sold and repurchased. Ok, its a temporary loss. Its ok. I was all cash purchase. I have to stare at a big red number for a while, who cares.
I find it funny that everyone on here talks and debates over why the stock price is this, or why it did that. Its all very simple. Its manipulation, 100 percent, from at least 6 months ago when I began my analysis of the level 2 streaming quotes. Did everyone see a 920 purchase appear over and over on a good day, when the stock seemed to be going pretty good that day, so in the 2.70-2.90 range, around april on? That was a constant and steady short, obviously. I would almost guess when I would see it again. They beat that stock down on every jump with perfectly timed terrible downgrades, reiterations, and bogus article bashing the stock. Cramer wouldnt take about after June. At that point my warning light should have gone off, but I thought he was just trying to mistime our entry, not ruin peoples lives, utterly.
You want to know why this is the people stock? Because people are smart, and they see a good product and a bright future. Its obvious to us, its obvious to the NAB, and its obvious the the uninsured bond holders of the debt, whos only collateral is STOCK!!!. Thats right, they took stock as collateral. Sounds like a loser to me. But of course the average man is not allowed to make money on a stock, thats for the big money, not you and I. So they tore the shares from the weak, and given them to people who know the end game of this stock price. Mel is a classic stock pumper. Hes in it to make money, and if it takes making Sirius to do it, then there you go.