Which Banks Are Left to Help with Sirius's Financing Needs? 157 comments
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In a shocking surprise that could only be compared to the Miami Dolphins pummeling of the New England Patriots over the weekend, Goldman Sachs (GS) and Morgan Stanley (MS) are abandoning their investment banking models.
My initial reaction prior to having my first cup of coffee was indifference. The opposite of love by the way, is indifference, not hate. That’s how much I don’t like Goldman Sachs. The fact that I was formerly employed at Morgan Stanley made little difference to me.
Having enjoyed my first cup of coffee and wiped the sleep from my eyes, the wheels in my head are beginning to spin and the first question I pose to myself is whether this means Goldman will be forced to cover their short positions in Sirius XM (SIRI). Will Goldman,s hedge fund clients such as the now infamous “Jonesie” of SiriusBuzz radio fame now cover their short positions also as a result of being left out to dry?
Near as I can tell, the answer is going to be a resounding “yes!.” Details are sketchy as the announcement is only hours old, yet the visibility and transparency required on bank holding companies will give little wiggle room for any manipulative practices.
One benefit of an investment banking business is its research capabilities, which will be dramatically affected at GS and MS going forward. Clients could be leaving in droves which could affect Sirius XM shares.
As for the financing needs of Sirius XM, I would remind others that Sirius XM seemingly had no intention of ever using the services of Goldman Sachs. It is more likely that the company would turn to UBS (UBS), Bank of America (BAC), or Merrill Lynch (MER), all of which have been extremely bullish on SIRI. Even Barclays (BCS) is about to own the investment banking division of Lehman (LEH).
The net effect is that while Goldman henchmen Mark Wienkes and Jim Cramer were busy trying to bash Sirius into non-existence, Goldman instead fell victim to its own practices. Imagine that! Mark Wienkes a bank teller! I can’t wait to see that!
Today is a good day to be a Sirius fan, and a Dolphin fan for that matter!
Disclosure: Long Sirius. No positions in any of the banks mentioned.
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This article has 157 comments:
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As I said a few days ago, the official bottom for this stock happend last week (Monday)--the lowest price for many years to come @ .68. No way it goes any lower. I would tell anyone considering trying to day trade this stock right now to not do it. The refi is at hand and you will never know what premarket or afterhours this stock will take off in. As we saw last week, when it hit 1.08/1.09 bid/ask premarket, that is when it will run like the devil amidst panic covering, euphoria and greed. Don't make the mistake of not being in EVERY NIGHT--or you will be locked out. The financing is the only thing holding this stock back from the first big run back towards normal levels. If they have the deal close at hand, they might be waiting to time in with the official RTC deal announcement this week. Congress leaves in Oct. so the RTC deal will be signed and sealed by end of week. Don't be shut out!!
When the bailout came out several days ago, somebody (was it you relmor or sl62?) said the government would MAKE money because they would hold and then sell in a better market. At the time, I said that no way would the government have the freedom to turn out those who default on their mortgages, unlike private business, so it would be a money losing enterprise. From today's AP wire:
"Frank said he and Paulson had agreed to create a congressional oversight board as part of the bailout and to mandate that the government come up with a plan to avoid foreclosures on any mortgages it acquires in the rescue. A government official with knowledge of the talks confirmed the administration backs those provisions."
That's why it's foolish to think that we can call a bottom. Today's bailout could be totally ineffective, or exacerbate the problem by causing hyper inflation.
From the Washington Post:
"The higher the prices the government pays for troubled mortgage securities held by banks, the more the rescue will bolster those banks and sustain the lending that is vital to the broader economy. But higher prices would also mean a worse deal for taxpayers.
In other words, the more effective the plan, the more expensive it will ultimately be. "
Why does .68cents have to be the bottom? It doesnt have to be, I suppose. Its just a call. It looks like the bottom. Thats all. Action would indicate it would be. 9 million share action at the end might signify that. Plus its retrace hit a nice resistance at .90 cents today. If market stays relatively neutral of slightly bearish, Sirius should retrace to 1.00 now. If not, might bottom around .80 cents and then go up. But the new test down wont come close to .68cents. I do predict further down, I sold some shares today to rebuy lower. Lets see if im right.
I did say that at one point there was a projection of a potential 30B upside when/as the market recovered and things were getting for the most part addressed (years from now)--which would essentially work out as a taxpayer savings, not a pure profit for the gov proper--and which was reported rather than my opinion. I, along with everyone, Paulson, et al, has no idea what is there or not. Also, that report (as reported on CNBC) was when the request/estimate was for 500B. Now it's 700B so probably a moot point, if it was even valid at all. As said, no one really knows what's going on (other than the individual institutions who know their books). That will be the discovery.
Personally, I'm ready to rant. Watching this testimony today, it's maddening. First, one senator brought up, why not just do this in pieces. I agree. Paulson doesn't need 700B tomorrow. Legislate an agreement to allow gov action now and create broad strokes or stages, all contingent upon review to move up into a next stage. Start out with authority to 100-200B now to steady the markets and let Paulson get started and work through October. When Congress gets back in Nov, Paulson gives a report and assesment of what he's starting to find--pure transparency with no tricks. All of this dicking around when NOTHING is exactly knowable yet is a waste--of my time, yours and theirs--everyones. You don't have to be hit in the head with a brick to understand something needs to start along the Paulson plan, and it needs to start NOW. Waiting even another day is stupid and a waste of time. What needs to happen immediately is to start the investigation and just get going. This whole process is/will be totally mutable so don't be so hung up on a random number right now.
Second. I'm sick of hearing from every senator that it's only about evil Wall Street. If anyone can be honest, the taxpayer is just as responsible for this mess as the institutions. They signed on the dotted line in euphoria, taking on too much house, participating in a loan without any down payment, no docs or proof of income knowing full well they would not be able to afford the payments long-term (unless their property values kept going up), doing one refi after another and taking cash out (funny money). I mean if someone advertised to you a way for you to jump off a cliff and kill yourself, isn't it up to you to decide if that would be good for you? Isn't your participation your call? I don't recall these institutions walking around with AK's forcng people into these deals. Or are people so hypnotized in this country that they'll just do anything that someone advertises--and probably because their buddy or neighbor just did it? Don't answer that question because the answer is sadly yes. Yep, both sdes of this equation are at fault and if it now costs the taxpayer some cash to dig out of it, so be it--they're at fault too. Where is their responsibility? So far all I hear is they are victims. I don't agree. Congress is today showing what makes them such ineffectual leaders. Fillibuster for the sake of stroking their power egos, waste time, get nothing done, waste taxpayer money with stupid, unnecessary programs for their own states, then go on vacation for a month. Pathetic. If nothing else, Congress should recognize their own failures by not ensuring the proper oversight of Fannie, Freddie et al, and just get Paulson on the case asap. Had they done their job in the first place, we wouldn't be in this mess.
1.1999 Clinton repealed the act that capped investment bank margin abilities.
2. Greenspan kept the interest rates too long, for too long.
3. Mortgage oversight went out the window, and brokers got paid MORE MONEY to write BAD loans. Subprime mortgages got the broker more money. There you go, see , it is the industries fault, and who cares what the people signed, they were hosed, had, and screwed over. As a lender, if you write a loan you know probably wont get paid back, then you sell it, thats fraud. And then you take this fraud and you borrow money against the fraud. 100 percent the governments fault and the mortgage and banking industries fault
0 percent taxpayer(unless you just assume voting democrat or republican(no difference) is their fault, then I will agree. Anyoen who votes democrat or republican in this election is a fool, and doesnt deserve the right to vote. You will get more of the same. They screw up, we pay for it. Period. Governement wanted to consolidate banking, gain more power to the FED and tank the dollar.
Mission accomplished. Good job Bush, your agenda was perfectly executed. You will go down as the most efficient productive president in history. Look at all you have accomplished for the one world government.
I'm all over that. What a disaster the GWB Admin has created in 8 short years. He will be leaving office with us "at war" which I say loosely because it's more like a huge street fight (not to disparage those boys/women fighting and dying in it--props to them for sure), our entire financial system in a freefall and near a complete meltdown, high unemployment and a completely stalled economy, still reeling from failed FEMA mgmt and N.O. still a war zone, and the list goes on. Great cred! Even he's got to know he's turning over the keys of a beater...nice job G! All in the name of the nwo apparently....
I agree with your layout on the institutional side but I don't see how you exonerate joe blow. Yes, it was fraud what was done on the other side and proper investigation can expose it and who, but c'mon, how is the person who signed the paper for the obligation not at any fault whatsoever? It's like letting an investor in the market of the hook for buying stock when they probably don't even know what their risks were. There has to be some responsibility there I say. I'm not letting the perps on the other side off the hook..let's get some jail time going..all for it. but the guy who signed on the line is not scott free either.
And it was Chuck Shumer who said do the plan in stages. In an interview on CNBC a little bit ago, Shumer said Paulson is estimating needing 30B a month to attack this. Well there it is, give him 90B now and let him get started, He's out of here in Jan '09 anyway. Let the one taking over for him keep the train moving and request more money as needed. There, problem solved and this sharade can move forward. What these dudes don't seem to get is the money helps open liquidity and lending asap--which is desperately needed. The paper's already bad--it's a foregone conclusion.
Now whats up with SIRI, or should I ask whats down with it?
If you believe W did anything to make you safer, you are blind. If any thing, the actions of this administration has created more enemies. And as far as adverting the financial crisis, that ship sailed months ago. This was so easy to see it was sickening. I watched as all this construction boomed and wondered who was buying all this stuff. I agree the person who signed the paper is equally responsible and should be held accountible.
If we arent in a world of hurt now, then what are we in? Turned a surplus into a trillion dollar deficit, 4000 dead Americans, corporate fraud, economy is in ruins, unemployment at stagering numbers. Yeah, W is a god.
Sounds like you read, and understand "The Unseen Hand".
cuddos!!
SIRI up in AA .88/.89-- last trade .89
SIRI's stellar bottoming performance last week really impressed a lot of people. Suddenly many more articles are bullish. The Fool's on board and now evil TheStreet.com...by ex pro football and baseball players...go SIRI.
www.thestreet.com/_aol...
Maybe here but nope not the ony ones. SIRI has clearly turned the tide as of last week and is starting to become the 'whisper' stock. Realistically, what a great time for anyone to pile into a great company with a tremendous upside. Downside = 0!
Let's rock and roll...
Does it strike you that's Deutsche Bank? Maybe their new benefactor? Wonder why Frear would be at that particular conference on leveraged finance? We know for sure he won't be taking everyone through the merger deal as a case history on the right way to do a leveraged deal!
Back to Mel. He nailed it. With the new bail out, new financing, the new SIRI-XM sharing coming up in early Oct., et al, even if Q3 isn't perfect, I don't think the stock will take too big a hit because sentiment on the company will be to positive by then. And his ace in the hole will be the year-end subs guidance. Mel will revise that up because he already knows it's going to be higher than the low ball he gave the Street. Mission accomplished. Very soon SIRI will be the darling of WS again and the stock everyone wants to get into...
Mel's the man.
I agree with you %100 about Mel being a genius to low ball the estimates. However, I do think that it would be in SIRI's best interest to wait to announce a refi deal until the quarterly report comes out. This way the stock will have a chance to stabilize a bit before it goes up. Otherwise I think there will just be a pop and the stock will come back down... Maybe not to these levels, but I don't think we would get the full benefit. Just my Opinion though.
I'd be cool with that. But I have a feeling they won't wait (if) the deal is close...I hope it is with Deutsche. Relmor, didn't you think it could be with them? As said, I think if they do announce, you won't see the typical drastic retrace because so many people are starting to buzz...plus the deal could be what is needed to help get past 1.00 mark and back up into the 1.25 - 1.50 range. Then new announcements can help take it up from there. Many big players are eyballing this stock right now and most likely are waiting until it builds in over 1.00 before they will then pile in with a vengeance. I think that earnings won't hurt as much as some might think and all the focus will be on the guidance--which Mel has in his back pocket already. So that will clear the way for a decent last part of '08. Top line will be in-line but they could miss by a penny on eps. A huge focus for everyone is still synergies and if they beat there (which if Mel's doing what he should be--slashing), the Street will be all over it to the upside and forgive the penny miss. My prediction: SIRI rings in the new year somewhere in 2.25 range. IMHO....
I still say down tomorrow, and then it will have a speculative rise on Thursday, and when investors are disappointed, they will go with that, and crush the price again.
1. Refinancing announcement with reasonable terms and no dilution of stock value.
2. Beating a quarter.
3. News of new revenue sources that demand guidance be changed.
ok theres another one, but its silly.
4. Auto industry making a huge turnaround.
I wont finance your new debt Sirius, but if you go into bankrupcy, and a judge is now deciding what you will pay and wont pay, then I will loan you millions of dollars. Cause bankrupt companies are much stronger than ones out of bankrupcy, every one knows that. LOL
I also would not expect any news to come out of this Deutsche Bank conference. Mel would want to make any big announcements and would not let David F. do it. That has always been the way Mel has done things and I dont expect him to change.
I didn't say it had to go up. I just want it to stabalize. (Not go from .99 to .78 then back to .89 in one day sort of thing.) Then when the refinance is announced it will be less likely to drop back down around the levels we are at now. People will know where the company is heading. That sort of thing....?
Back to Sirius talk.
GL to ALL!!!!
It might be bullshit, Or a light will shine down from the heavens and the stock will shoot to $1,000 and i will cash out $10,000,000
Thats how I think of this situation.
Gold will benefit. Sirius will benefit if they use domestic banks(and they do the deal soon, rather than later).If they use foreign capital, skys the limit(so many dollars looking for good investments, I cant see them failing to sell the company to a foreign investor. Lehman almost sold as is to the Koreans, till they baulked, and that is a failed business model in much deeper doo doo than Sirius(no leveraged bets, just straight debt).
so let me guess, you want a president that talks to rogue nations like syria and Iran? The same countries that say death to america, call for the destruction of Israel!!! You would rather have a president like Jimmy Carter who believes nations that say they don't want nuclear weapons, meanwhile were in the process of developing them. I for one don't want a president that wants to sit down with terrorists and thinks he can believe them!!
SIRI fights off late morning attempt to take it down; holds on to day-long uptick and powers higher...
Prediction
Close today at .90 after hours. Trades to .95-1.00 tomorrow, then back down to .80 cents. I will try to buy between .95 and 1.00 and sell at .85-.80 cents. Lets see what happens.
My take on the market overall. Relmor, I know you see a downturn in Oct but I have to repectfully disagree. I know you know how much money is on the sidelines right now--tons. It's a ticking time bomb. There was a good interview on CNBC today from a guy talking about how down most money managers are right now--short or long--with only 3 months left on the year--showing poor profits. The more time they waste past Oct 1, the less chance they are going to have to make their years--since they've now been sitting on the sidelines since about May protecting their arses--plus some also taking baths from the financial melts, which no one could have predicted. The reason they've been staying on the SL is mainly waiting for some resolution to the housing/credit problem. After this RTC (or whatever it will be called) is passed, I say they will have little choice but to start buying. Sooner than later they are going to have to start assuming some risk if they want to make any money/try to make up heavy losses in financials. Sidelines in cash = no profits. And the reason for long buying now rather than shorting is because any managers "brave enough" to be active, have shorted many companies into oblivion (either directly or in sympathy)--so what you've got are way more stocks beaten up right now than not. So this guy even said today, the best risk management is long. The Dow hit 10.4 intraday last week. That would be more than enough to be the bottom for now--esp. with the volitility sky high as it was. I have to ask, after the major financial meltdown, which has taken everything down with it, what's left to be taken down at this point? I say we see a decent October, November and December.
Now as far as the SP of SIRI goes, I am very much encouraged that on very low volume the stock went sideways. Not much passion in taking it down from here. I'd say GS has been taken out of the game. It may be that the Financial Crisis in the markets is taking up all the attention or if the Short pressure is really off. We may need a couple days to see if this is for real. If we hold above .85 going into the weekend I will be very much encouraged. If not look for the disinterested to become involved next week and take us to the mid to low .70's.
When the reality of the Bail Out takes effect the Toxic Assets need to be bought by the government and the real story of pricing takes place on these Real Estate assets. I actually think the Financial Sector will take off and profit from this event as these balance sheet liabilities come off of their books. The Market is looking at Capital Preservation not new investment in these unsure times. That means Money Market accounts go up as folks flee to security. Their will be few people willing to take large risks with a new administration in DC and an unknown political party taking over. I think Relmor is right and unless your in an individual stock that has its own story, like Sirius, then people will be flocking to safety. That is professional Money Managers as well as the Retail Investor. Capital Preservation will be the goal not Risky Growth.
Good points. Everything you say is valid...but I still see the big issue facing pro money managers RIGHT NOW. Few managers have made any money this year because that's all they've been doing is "flocking to safety"--or also have taken losses on the majors that have crashed and burned. We've (they've) reached a point of critical mass here. They either need to start putting money to work NOW (that will yield a decent profit), or they are going to be reporting crap numbers EOY. And when these guys don't make their numbers, they can lose body parts (lol), if not more realistically bonuses that help them afford their penthouse apartments on the Upper West Side. There is plenty of incentive to start assuming more risk. I see this market as not fitting the traditional logic this time. If these guys don't start growing a pair, taking some risks and getting in, they will be sorry come the end of the year--and they know it. With so many stocks beaten down by now, going long has much more upside on many. Of course I don't think the market just goes straight up-it never does, but the overall tone will be to the upside. Starting as soon as the RTC is final. Well see...
For the record I am a very strong an long supporter of this company more than I am of its current stock price. I have bought shares at a variety of prices, sold sum, and bought more. At these prices I think it is prudent to buy back in at the right price. Five cents is almost 6%. When do you think you'll have that opportunity again?
This company, and most of my investment in it, will do fine over the next several years. What I talk about is when to buy in and when to take a little out. It's all you can do when your waiting for the company to get traction in its stock price. Mel will do great things because his career and reputation will be measured by his success. He didn't get into this to Fail.
An example of getting in at the right price is as I have posted before. On Friday, last week I sold a small %, 3000 shares of what I hold on news of Short selling being suspended and the confusion around the details, when the stock price hit 1.06, (small pop based on emotion and hopeful expectation that the short selling would end). Those funds are now on a buy of the stock when its price hits .76, (the reality of what is coming down the road with a bad third quarter and no news from the upcoming Frear presentation), adjusting as necessary. That represents a 30% swing or some 1000 shares in my account while I wait for the company to do what we all hope it will. This stock requires smart investing not wishful hopes. The way I play it, I want as many shares for my money as possible. Watching the stock price go up and down and not doing anything is foolish.
I hope your right an the markets correct and stability takes hold, but Regulators will not look kindly on any unnecessary risks on retail investor money.
Scarey who the god is, isnt it?
O, the market fall in October will be be in retaliation for not passing the bill, if it gets held up.
killer.... , I got my Dust Off right here by my side and my trusty friend Bart, my dog to pick up the rest. Good luck with your .68 and be ready to adjust to low .70's not to miss out. At these prices .68 - .86, I want to buy in batches maybe 1/3, 1/3, & 1/3 to average in at .77. Any good news, real news, such as debt refinancing on good terms, I would just get in and maybe sell some at 1.30 - 1.50.
( Let's go BUFFALO [whoaooaoaoaa{Whoaaoao... The Bills make me wanna shout)
And you misunderstood me when I said the government was the only cause for market rallies. You thought I meant the government action caused an actual improvement, to cause a rally. NO thats, no the case. Dumb government actions are posponing a huge letdown still to come, by bailing out JPMorgan(Bear Stearns raid(illegal)), Fannie and Freddie, AIG, banning naked short selling(it was already illegal), and now outright banning shorting period on certain stocks. NOw they will GIVE money to whatever company they seem to think is "necessary" for the flow and strength of the economy. They will decide who lives and dies. Not the power I want to give to a private bank run by trillionaire elitists who dont give a crap about the "slaves" that work for them.
The tip of the iceberg is here still, we havent even begun to see the unleveraging of the worlds financial system. Ironically, the weakness of our dollar will eventually be what could bring us out of this, as we transition back to a manufacturing country, food producer, and we stop buying things we dont need.
Now take the US. We have a huge problem here, as do all trade negative countries. More dollars leave our country than come back, making us even more broke(still need those dollars to pay back interest, yet theres an ever decreasing supply). Solution? Print more money, and give it out real cheap to the banks, and repeat, increasing the debt upon the debt. Problems will occur frequently in an economy that runs on the floating fiat dollar, which is backed by nothing. Imbalances are the norm, and volitility is the standard. No gold standard, no currency stablility, period.