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I have a Master of Public Affairs degree (Political Economics with a Major in Management) from the University of Texas at Dallas (UTD). I love to write but am more logical and mathematical in my thinking. It brings to mind something that my 6th grade teacher posted on the wall by my desk - a... More
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  • Rush Limbaugh Could Bring Millions To Sirius XM: But At What Cost?
    Right now most Sirius XM (NASDAQ:SIRI) investors are thanking their lucky stars that Rush Limbaugh doesn't have a show on any of the many Sirius XM radio stations. Yet Lori Spechler, a Senior Editor at CNBC proposes that maybe satellite radio should "grab him up", the same way they did with Howard Stern. Why Rush? Because his show has no advertisers at this time willing to risk a national boycott of their products. In fact all national commercials for the show have been cancelled for the next two weeks:
    The latest wrinkle in the ongoing controversy is the cancellation of all national commercials during "The Rush Limbaugh Show" by its syndicator, Premiere Networks. This comes after nearly a hundred national advertisers and dozens more have dropped Limbaugh and other conservative commentators like a political hot potato.
    If this continues, Rush may have no where else to go. Some large radio stations might be willing to pay for the show which would take care of the problem, but will it be enough to cover his multi-million dollar contract. I doubt it. All of this was caused by Limbaugh's comments which sent shock waves to most women everywhere:
    Have you ever used a contraceptive? Then talk show host Rush Limbaugh probably thinks you're a 'slut' or a 'prostitute,' too. That's what he called Georgetown University law student Sandra Fluke because she wants the college's health insurance to cover contraceptives!
    What Rush did not realize when he made the remarks is that a lot of students use college health insurance. Many of them, especially graduate students are older and can not be covered under their parents policy. And many of them are married, but want to finish school before starting a family. Buying health insurance from a university is not a social program for the poor and underprivileged. As a matter of fact these young adults are the future leaders of our country. Thankfully I did not hear his rant, but those who did said it went on for hours:
    Rush told Sandra that he would personally pay for the "aspirin" for Georgetown University students to "hold between their knees" as contraception. He accused Sandra Fluke of having so much pre-marital sex that she was "going broke." He said that if Sandra or other female Georgetown University students want their contraceptives to be paid for by health insurance companies that they should pay us (i.e. Rush Limbaugh) back by videotaping themselves having sex and then posting the videos, so he could see them.
    Rush commented yesterday that he thinks he has won this battle and beat the "democrats". Even though he has lost all of his advertisers, and the respect of many loyal listeners, he thinks he won. He is proud of what he did and thinks its funny:
    Rush Limbaugh on Tuesday laughed at Democrats for having tried to use the radio host's now-infamous "slut" comment to their political advantage, gloating about recent polls showing President Barack Obama's approval numbers tanking while taunting, "They thought I was finished."
    Again this is a major misconception. This fight is with women, their families and loved ones, and others who have ever felt bullied by Rush. It amazes me to see people condemn young children for bullying, but when they grow up and become adults who bully it is overlooked. However now thousands of people are standing up through Twitter:
    "Rush's use of degrading language is an attempt to silence the voices of women and other marginalized groups. He's done it to individuals like Sandra Fluke and groups of people that span nearly all women, people of color, immigrants, gays, the disabled, Muslims, Jews, veterans, environmentalists, take your pick." The #BulliedByRush campaign is collecting stories and accounts from anyone who has ever felt bullied by Rush Limbaugh.
    Their goal is to get him off the air. However there are reports that his audience was 14 million before this happened, and it has now gone up to 25 million. In December, I wrote an article about Howard Stern and the boost Sirius should get from his new job as a judge on "America's Got Talent". According to Stern he has "between 5 and 6 million" listeners. This pales to Limbaugh if all of these numbers are indeed true. Bringing Rush in to Sirius might add millions of new subscribers.

    But we have to consider all of the costs. Would there be an equal number of subscribers lost due to the vile nature of his show now? I mean this is a new low in program content. And what would his contract cost Sirius? According to the New York Times (July 2008) he currently makes $50 million a year:

    The radio host will be paid about $400 million to continue serving up his daily dose of conservative patter through 2016. His $50 million a year paycheck represents a raise of about $14.4 million a year over his current contract, which was paying him $285 million over eight years and was set to expire in 2009.
    Judging by the overwhelmingly negative comments on the social networks about Rush, I think he would be a PR nightmare. Sirius XM has become a very well respected company with excellent content. But as I always say "never say never". The company took a chance on Howard Stern and it paid off big time. Sometime you have to be a little "edgy" to attract listeners. And more listeners bring more investors. In 2016 when Limbaugh's contract is up (if he makes it that long) this might be ancient history. In the meantime Sirius XM will continue onward and upward without him.

    Disclosure: I am long SIRI.

    Mar 14 8:43 PM | Link | 1 Comment
  • A Golden Cross For Sirius XM Signals A Strong Buy
    Today the 50 day simple moving average SMA of Sirius XM (NASDAQ:SIRI) stock crossed over the 200 day SMA to form a "golden cross". As far as technical signals are concerned, this is considered to be the best time to buy a stock. As Brandon Wendell explains, this is an extremely bullish signal for a stock:

    The "golden cross," or action of the 50-period moving average crossing over its 200-period counterpart, is a valuable odds enhancer for identifying and executing high-probability trades in all markets.

    Many traders often ask me what the "golden cross" is. The actual definition of a golden cross is when a shorter moving average finally crosses a longer one, thus confirming a trend is intact. The definition that most traders are concerned with is the one where institutions and funds may start to take action, and therefore, start to drive a stock further into the trend with volume.

    Consider this ten year history of Sirius XM, which shows several "golden crosses" over the last decade:

    There is a "golden cross" in 2003, which precedes a $3 gain in share price over the next year. Then a very dramatic golden crossover at the end of 2004 which sent the stock skyrocketing from $2 a share to $9 almost overnight. In 2005 another crossover was followed by a $3 a share gain. A small, short lived cross at the end of 2007 created a $1 per share gain. This was followed by the most recent one in 2009 which lasted for two years and produced a $2 per share gain. So for the last 10 years Sirius has produced substantial gains every time the 50 Day SMA has crossed above the 200 Day SMA. So how much will the gain be this time? The answer to that question lies in the 2011 earnings results and the 2012 guidance to be reported on Thursday morning on the Sirius XM conference call.


    Some analysts also look at the 50 day exponential moving average or EMA compared with the 200 day EMA. The "golden crossover" of the EMA is an indicator that the SMA is about to cross in the near future. This can be used by investors to spot a bullish trend. Then when the SMA produces a crossover it confirms the trend. As you can see on the chart above the EMA "golden cross" has always predicted the actual SMA cross. Last month the Sirius 50 day EMA crossed over the 200 day EMA on January 4, 2012. Sirius XM shot up 11% to close at $2.04 after the crossover. And it climbed all the way up to $2.19 on January 17 just 25 cents from the yearly high of $2.44. Again it did accurately predict the actual SMA "golden cross" which occurred today.

    Disclosure: I am long SIRI.

    Tags: SIRI
    Feb 08 12:32 AM | Link | 3 Comments
  • Red Flags, Gut Instincts and SiriusXM Radio Sells Out of the New Lynx 2.0 Within Hours!!!
    I think it first started when I was a store manager 40 years ago.  For some reason, I developed really good instincts about making a profit and investing. The company that I was with  had really severe shrinkage problems in the District where I worked.  They gave me the worst store in the area to manage and try to turn around. I eventually weeded out the bad guys and turned it around in a couple months. Then they hired me to train store managers to get the same results in other stores.  That is when I first started investing.  I started buying Exxon stock in my Profit Sharing account.  I was a total novice and began to teach myself about investing.

    Then I was promoted to District Auditor.  For whatever reason some of the stores continued to show large losses.  Long story short through a series of events I uncovered a group of upper level managers that were stealing from the company. At the same time, I also made a killing in my portfolio.  Throughout the years my instincts for investing and my gut instinct for knowing who to trust has served me well. And that is why when I began investigating and investing in Sirius XM (NASDAQ:SIRI) red flags started going up.

    I was looking for different stocks that were under $5.  Why? Because you are much more likely to make a higher return.  For example Sirius XM will go 10 times higher before a more expensive stock will.  In other words Sirius will hit $18 a share before Apple (Appl) hits $4000. Of course there is risk.  There is risk in any investment. But the promise of a big return outweighs the risk.  I am not picking on Apple, it just shows such a dramatic example.  Sirius will also hit $18 before Exxon (NYSE:XOM) hits $800.

    The other thing that I always look at is institutional ownership.  They will make mistakes like everyone else, but not as many.  If there are a lot of funds buying a stock it will respond to the uptick and the volume and go higher. According to Daily Finance 1.61 Billion shares or 42.9 percent of Sirius XM stock is owned by Institutions.  This is up 70 million shares over the last 4 months.

    I trade stocks daily, and read as much as I can about different companies always looking for opportunities. It is very hard to find articles about companies that are trading under $5 a share.  Most publications won't even print anything unless it is earth shattering news, such as when Howard Stern was picked to be a judge on the hit show "America's Got Talent". But as an investor of one of these stocks you continue to look anyway.  Then I found several articles each day written by members of Seeking Alpha.  But I kept seeing a lot of articles that were very negative about Sirius. 

    One article in particular was based entirely on false news.  Usually I am way to busy to research someone else's research, but for whatever reason this time I did. This was the 3rd negative article by this writer and I noticed that he was Long on Pandora (NYSE:P) - Red Flags everywhere.  The October 14  article started out:

    When I had heard that Sirius XM (SIRI) officially released the first offering in its 2.0 line to retail, I searched for stories about the development. At first I was surprised. All I could find were random articles from loyalist longs over-hyping what's known as Sirius XM Lynx. After retrieving the details, however, it's hardly shocking that the media took a pass on the "news."

    The release of "Lynx" sits somewhere south of being a non-event.


    I found the picture of the Lynx that he saw from a picture showing the Best Buy logo.  I then went to the Best Buy website and could not find a 2.0 Sirius Radio for sale anywhere. I investigated further and found out it was not true. The Lynx had not been released.  All of us make mistakes, this is human.  But when numerous people commented that the article was not based on facts, this guy ignored their comments. There was no apology from him or Seeking Alpha, and no corrections that I ever saw.  The entire article was based on complete misinformation.

    Then 2 weeks later, I saw this in an article by this same SA writer:

    Because it deals almost solely in options, I like to take this opportunity most Fridays to update the $10,000 portfolio's positions at week's end. It also makes sense to review things because these trades represent my relatively long-term sentiment on each company. As such, it might not be wise to look at Friday's performance and enter a trade on Monday.

    Option Quantity Entry Price Midpoint Price, Friday's Close Profit/Loss
    Apple (NASDAQ:AAPL) April 2012 $450 call 1 $19.18 $17.93 - $125
    Amazon.com (NASDAQ:AMZN) April 2012 $220 call 1 $30.00 $22.60 - $740
    Research in Motion (RIMM) March 2012 $20 put 30 $2.70 $2.85 + $450
    Sirius XM (SIRI) March 2012 $3 put 25 $1.58 $1.20 - $950
    PowerShares QQQ ETF Trust (NASDAQ:QQQ) March 2012 $50 call 1 $6.68 $10.00 + $332
    Netflix (NASDAQ:NFLX) June 2012 $50 put 8 $4.50 $3.90 - $480
    Pandora (P) June 2012 $15 call 9 $2.55 $2.40 - $135
    TOTAL P/L       - $1,648

    That puts the value of the $10,000 portfolio at $21,883. Still a double by a somewhat comfortable margin.


    Again, I do not have the time or the means to find every single author's portfolio and go through it to check that they are disclosing all their positions concerning a stock that they are writing about. But here it is right in front of me. A position in Sirius by the writer - a PUT.  He did disclose the Pandora Long that is in the portfolio, but not the Sirius position. Is this the reason that he is writing the negative articles about Sirius? Trying to pull the stock down to make his portfolio look better?

    At first I gave him the benefit of the doubt, and thought he took the position after he wrote the negative article about Lynx.  But no, the articles have continued. All of them cutting down the stock and anyone that would invest in it. On a couple of occasions, I have made comments on his articles trying to correct some of the information he has written about, and my comments were removed.

    At any rate, the truth about the Lynx is that it really was released this past Thursday night just as promised. On the last Sirius XM  conference call, they announced that the eagerly awaited  Android- based LYNX would be available by the end of the year. And just as promised it came out right under the wire. I won't bore you with the bells and whistles it has, there are pictures and articles all over the internet and on all the social sites.

    And if you wanted a new Lynx radio it is already sold out.  Thursday night there were rumors that Crutchfield.com had already sold out within an hour.  I called them and although they would not make an official statement, they told me that thousands and thousands of people had pre-ordered it, and the shipment did not even cover all the pre-orders.  That night I also checked the Sirius website, and it appeared that they still had some left.  However I just checked it today and they are also completely sold out.  I called to verify it, and they did confirm it, but could not tell me how many have been sold or when they will get more in. 

    Will this news finally push the price of Sirius XM over $2 a share?  My first question to myself when I saw what the Lynx could do was: Will they be able to keep up with the demand?  And now I see that this might be a red flag.  A really good red flag!!



     

     










    Disclosure: I am long SIRI.
    Tags: SIRI
    Jan 03 7:41 AM | Link | 2 Comments
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