Is Sirius XM Stock Being Manipulated? 29 comments
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Each week, it seems, brings a new clue to the potential manipulation of Sirius XM (SIRI) stock. I had mentioned several weeks ago that Goldman Sachs (GS) was the current holder of approximately 130 million dollars' worth of 300 million dollars in Sirius convertibles, due in February of 2009.
It is the root cause cited by message board bashers who want to instill fear and manipulate the stock price, by making unfounded statements regarding Sirius XM and bankruptcy protection. Most are quick to point to an SEC filing that refers to the period ending June 30, 2008, in which the company provides a disclaimer regarding the potential inability to refinance the bonds.
The reason these message board statements are unfounded are many:
- Sirius XM CEO Mel Karmazin appeared on national television after the filing and made a public statement that it is not an option. Troubled companies do not do this.
- Second, Mel has personally been buying Sirius XM shares.
- The company is increasing revenue while decreasing costs. The balance sheet is heading in a positive direction. Failing companies do not have this luxury.
- In the company's most recent conference call, Mel outlined an extremely detailed plan for removing the convertible bond issue completely - making the issue a moot point.
Which brings me to the point of this article. A lot of attention has been placed on the company's forecasts 18 months from now as the reason for the decline of the stock price. It took an astute poster on the SiriusBuzz forums to lay out another plausible scenario, which again leads us back to the 2009 convertibles held mainly by Goldman Sachs.
The main point of contention is one particularly overlooked statement made by Mr. Karmazin at the recent call. Mel states:
“…You shouldn’t be surprised that the holders of the convert have been very anxious to talk to us about, “gee, we’d like to exchange that for another piece of convert”. That is not the interest that the company has…”
Mel told the bondholders such as Goldman that they have no interest in diluting the stock further and that the company will not be paying more interest with a new convertible offered at a lower strike price. That was certainly enough to raise an eyebrow. It also means no dilution for the “short” story.
This can’t sit well with Goldman, as I imagine anyone would want a piece of a company with multi-billions in revenue on the cusp of profitability. I’m sure they would embrace the idea of being paid to buy that company’s stock at a substantial discount. I know I would!
The question is, how far might they and others go to force such a move? With no hope of receiving a new convertible, the only way to make money with the existing one is to supress the stock price to the benefit of their own short position. Each dollar the stock rises or falls represents 130 million dollars to the bond bullies. I suggest that any reader who wishes to know more about this potential issue visit this thread at SiriusBuzz.
Positions: Long SIRI; no position GS
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This article has 29 comments:
If, as I claim, SIRI is the stock of a corporation in deep financial trouble, WHY SHOULD ANYONE BUY IT? The answer is obvious - they shouldn't.
As an underwater long, you have a vested personal interest in pumping this pig stock. That means you have no credibility.
BTW, the SEC filing that includes a SiriusXM BANKRUPTCY WARNING, is a SiriusXM 10-Q (a sworn, binding legal document) that was actually filed in August AFTER the merger occurred. I've yet to see ANYONE at SiriusXM swear to a public statement or PR. There is NO PENALTY of any kind or description that attaches to false, misleading or incomplete statements made by a corporate executive in a public statement or PR.
The bankruptcy warning issued by SiriusXM constitutes a serious risk to any investor. They didn't include that statement just for giggles.
Eventually, risking an additional 400 million to protect 400 million becomes a useless proposition. Should the stock rise, the gains realized from shorting are offset by the monies lost in an attempt to protect it..
Goldman is going to get crushed after bad commodity bets and the rest of the street is circling the waters like sharks. I smell Goldman Blood in the water. Every firm on Wall Street wants to see them get hit hard.
I am long SIRI at $1.18 average cost. Again, what is the downside from these levels to take a shot with Mel, who happens to be a genius and why Goldman invested with him in the first place.
Now in getting to the question of stock manipulation and whether it was by design or accident is another matter. But who cares? From my observation, the stock was simply jumping from low to high and back again based upon recommendations from Cramer and other analysts. And so as it was, people simply bought and sold based upon continuously changing news at the time.
Now for today, and for all the brainiacs who want to slam Karmazin and offer advice on how he should proceed to run SiriusXM, would it be stupid of me to suggest that Karmazin has a host of other principals helping him run the business of SiriusXM and I would offer the suggestion that those officers are already ten steps ahead of the knucklehead outsiders who with only limited information offer advice as to how Karmazin and the rest of his team should manage the affairs of SiriusXM.
And by the way, there is one more thing: For the brainiacs who offer nothing but negative comments on this post, I would like to see their credentials and ask why they are not commanding million dollar salaries while running Fortune 500 companies. After all, I think it would be unreasonable of me to assume that the Mr. Karmazin and the rest of his management team are incompetent as they have more at stake than the rest of us combined....
Scot's Slant
They expect to be paid on the due date. If the company cannot pay or goes bankrupt they lose their entire investment. Obviously, u are a juvenile who has no business background. GS wants siri to succeed or otherwise they will not receive anything for their investment. Moreover, u know nothing about investment banking. Siri is not considered a good risk and there is no chance that "fresh money is available" to take over GS position. Your "pie in the sky" statement is not founded on facts. The market price is the best indicator whether refinancing is available. It is not. There is no conspiracy or effort to keep the price down. The fundamentals keep the price down. Until a company is profitable lending interest will provide liquidity. U only have to look at the cash postion and u will understand why potential lenders are staying away. Grow up.
Another.day.has.passed...
This stock is going up in One day OF 2008 on debt restructuring, and up on Auto debt restructuring, and up on advance satellite systems, and up on profit in 2009, and up on New 300 channel programming, and up on the New portable devices, UP on unified car radio, and up in the plane, boats,used cars. This is The one and only Satellite radio!
or you can buy a real insurance like AIG for $80 and watch it goes to $10. Who got the future? Sirius Xm Radio. $3 billion+ revenue. New Radios with Large flip screen: with News on Subjects up to the minute, with LexisNexis and others data providers are coming, with every investor on the go will love it and needed! A lot of new concepts and directions. Cars will be the Winners!
Relax for this Stock you need perseverance !
How about deep sea oil drillers or solar energy companies? Even JDS Uniphase, dirty cheap..
For any know wish to know when it will end, it will end, when they can no longer keep the lid on it, and will have postitioned enough longs in the process.
Have a great day.
Those SEC filings have any and every warning regarding any possible negative occurance for a company. They don't mean in the slightest sence that bankruptcy WILL happen, its just a minute possibility. What's your real name? I'm sure its in the Deep Capture story.
Finally, I've posted this before...anyone who thinks Mel Karmazin is used to failing, read his bio (below). He's a proven winner and a legend in the radio biz if not the media world in general. Howard Stern was the reason the stock skyrocketed from $1 to $4 practically overnight in '04. Mel joining the organization was the reason it went from $4 to $8. People (lending institutions included) know his track record and his bankability. Everyone (including the lending institutions) knows why the stock is the price it is. It has nothing to do with SIRI being a bad company with a bad business plan or model. Btw, as I've also wrote recently, look at BAC today to see what ALWAYS happens when one company buys out another. Merrill is up on the premium and BAC is down $5 on the short--textbook. Granted SIRI is a slightly different situation but why would anyone expect their deal to be any different? Hang in there longs. (read below--Mel knows radio..)
***********
Mel Karmazin
From Wikipedia, the free encyclopedia
Melvin Alan "Mel" Karmazin (born August 24, 1943)[1] is an American business executive. He co-founded and was the president of Infinity Broadcasting and eventually became the president and chief executive officer of CBS. As of 2008, he is the CEO of Sirius XM Radio.
Born in Manhattan, New York, Karmazin was selling radio ads at the age of 17.[2] He graduated from Pace University with a bachelor's degree in business administration[1] and worked his way up from the bottom rungs of the radio ladder in New York City.
Karmazin presided over New York's WNEW-AM and WNEW for Metromedia when he was approached to run Infinity Broadcasting in 1981. Soon after he would add fellow New York stations WKTU-FM and WFAN into Infinity's stable. WFAN morning talent Don Imus often referred to Karmazin on the air, never by name, but by the nickname "The Zen Master".[3]
Karmazin ran Infinity for 15 years, then sold the company to Westinghouse, then parent of CBS. For most of his career he has been known as a "Wall Street darling" for his ability to drive up the price of his various companies' stock. "The joke about him was that he was so pushy that advertisers used to buy airtime from Mel just to get him out of their office," according to a Fortune magazine article.[2]
When Infinity merged with CBS Corporation in January 1997, Karmazin would first head CBS Radio as chairman and CEO. By May of the same year he would become Chairman and Chief Executive Officer of the CBS Station Group, overseeing the network's radio and television properties. He served as President and Chief Operating Officer of CBS Corporation from April of 1998 until January of 1999. Viacom, a media conglomerate that includes CBS, UPN, MTV, BET, Comedy Central, Paramount Pictures and Showtime, absorbed CBS Corporation as of 2000.
As an executive of an even bigger conglomerate, Karmazin and Viacom chief Sumner Redstone had many differences, leading to Karmazin's resignation in May 2004.[4] Karmazin later said he didn't get along with Redstone and found it difficult to be "No. 2" at a company, but particularly under Redstone. The two executives continued to snipe at each other through the media even a year after Karmazin left Viacom.[2]
Karmazin accepted the top job at Sirius in November 2004. He was a strong supporter of radio disc jockey Howard Stern at Viacom,[4] and Karmazin joined Sirius Radio after Stern did.
In his first year at Sirius, Fortune magazine reported in November 2005, Karmazin reached deals with Ford and BMW to include the company's radios in their new cars and helped launch Sirius's first portable music player (both initiatives were in the wake of Sirius's rival, XM Radio, pioneering those moves). He also recruited Martha Stewart to Sirius, acquired the programming rights to NASCAR, and raised $500,000,000 in debt financing.[2]
Karmazin has been inducted into the Broadcasting Hall of Fame, the Radio Hall of Fame, a recipient of the National Association of Broadcasters National Radio Award, and the IRTS Gold Medal.
I love my Sirius radio in my cars, and XM at home. Not sure of the details on the merging of service, but think SIRI is here to stay.
I can't remember, is it perception affects reality, or is it reality affecting perception.
I've been through five re-organizations in 23 years of service with my employer. In my experience, the clash of cultures at SiriusXM bewteen the two companies should just about be over. The lowered targets cited by Mel, allows the combined company a little more wiggle room on decisions and deliverables. Prime retail season starts after Holloween.... So,the witching hour is upon us. The media attack should be interesting. Right now the stock is shackled with uncertainity. The colar will come off the Blue Dog soon.
I Love Killer's phrase:
Run Blue Dog, Run!!!!!!!!!!!!!!!!!!!...
Watch and learn. You will understand what I mean when you view a non manipulated stock trade. I dont think Ive also seen more than 3000 shares at a time be traded today. Another sign of manipulation. They are jerking the stock around so you cant guess which way the markets going today because of the FED announcement soon.
Yours Truly,
Tawana Brawley
Please don't hurt me.
The truth is, no matter how much money is owed, the product works, period. The technology works ... period. The value for the money works ... period. This is a no brainer. The infrastructure is in place, and it works ... period. So the real question is not whether we will have this kind of service and technology in a week or a month ... but who will be the owners, if that changes. It will be a bargain set of technologies for anyone interested in buying a company at a low-ball price... probably even enough of a bargain that they CAN and WILL make money. I was in a Best Buy yesterday and the Tech salesman said "I wouldn't buy an XM/Sirius Radio ... it's all over the net ... they are doomed!" Now that is exactly the kind of data I want to hear if I am looking for a bargain in a high tech company... and the last thing I want to hear if I am XM/Sirius. The names may change but the technology will survive...
I just want to say that I waited and purchased 1000 @ $.07 and another 800 @ $.08 and I cant wait to pick up another 1000 as soon as I think it's right...(probably $.30 or below).