New Orleans

New Orleans
Contributor since: 2012
I was wondering the same thing. Why would LMCA more or less announce it's intentions to up its stake to 50.1% or 49.9% (headybaldguy) BEFORE they start accumulating shares. It's basically costing them about 15% more (2.5-2.17/2.17) then if they had announced this after the fact. Although they would have driven the price up themselves anyways, but probably would not have been so dramatic.
I am thinking that they are just expecting taht once they gain control of SIRI they will just load SIRI up with debt to pay themselves back for the expense they just paid.
Well maybe he still will, maybe they will refinance some debt and re-pay some other until they reach the 1B mark
Or maybe you are right, either way I feel it will help out the shareholders in the near term (i.e either a stronger balance sheet or a weaker one BUT 5% less shares on the market)
It's useless yeah if you get the dated numbers, but apparently if you pay for memebership to shortsqueeze.com they somehow keep a daily figure of short interest, I would like to see they change in short interest from say 8/1 to today.
anybody have the current short interest on SIRI? I am wondering how many shorts covered since the run-up
shoulda said 'buy' some
Agreed
It's just a case of refinancing, why wouldn't they trade an old high interest rate in for a new low one?
I get that they have the cash now to pay it off, but maybe they have different plans for that cash, or maybe they like their capital structure right now. I.e. they have a stategic tax shield (http://bit.ly/O7pDZy)
It's probabably a case of longs selling some of their profits (as I myself did). It could also be that there was a short squeeze (http://bit.ly/Nhbs5d) that partially drove the price up yesterday causing there to a be a retracing of some of those gains.
Agreed, it can be a very volatile ride with SIRI, just a few months ago SIRI traded up to $2.41 and then dropped back down below $2.00.
That is why I suggested a protective put, this would help protect any profits that might get lost in the volatility in the next few weeks.
I remember when it was at $2.41 earlier in the year, I didn't think it would stop going up... I am much more cautious this time.
I explained it pretty well (i think) in my other article on SIRI here
http://seekingalpha.co...
Glad to hear youre a New Orleanean as well!
Yeah true, but the SIRI-XM merger was a much larger decision by the FCC compared to allowing Liberty to take hard control. It's going to be a slow process, but Liberty seems to have a way with the FCC, so we will see.
Not sure how it would unfold if the FCC says no, but there reasoning last time was because Liberty was not showing any actual movement towards acquiring actual hard control, which is what they are clearly doing now...
"I seems that Maffei, as ususal, has left so many options on the table its hard to really know what they will do. Might be the reason the FCC isn't going to just give them "de facto" control. Mel is resisting a share buy back to "give" them control and he is in the process of deleveraging, not leveraging up. That seems to be the major conflict between the two camps."
They are re-levering, issuing lower interest debt to pay off their high interest debt.
"But for Maffei to say that Sirius is under leveraged and would have a higher valuation if they took on more debt seems just foolish. I can only believe he wants for Sirius to take on more debt to pay off Liberty by buying back shares, before Liberty does the RMT and I don't believe that is in the best interest of Sirius shareholders longer term. No wonder Mel is resisting. "
That may be true, but regardless either SIRI or Liberty ill own that 11% over the 40%, which will help the shareholders
I mean its just a case of apple to apples. You can't compare a run up of Verizon to a run up of SIRI. They are different stocks competing in a different market, and they are going to react differently to postitive news. Also look at the total % jump up not just the cents
I've sold half my shares and 2/5 of my options. Got an incredible run off the options
I'd like to see a NPV analysis on how much they are saving over the life of these notes by calling them now vs. normal payment over the life of the notes.
Yeah I know. That's why I had to calculate it out.
I gotcha, but I did not imply dillution as your article stated. If I was talking about dillution, I would have said it. Imagine if you were a LMCA inverstor (which I don't think you are) and all of the sudden you get 1/2 a share per LMCA share you own in your Scottrade account. What are you going to do? Probably hold because you are an avid SIRI investor (as am I), but can you really say that for at least the other 8.999999% of non-insiders or non-institutional investors? It's definitely a point to talk. Some of these 'pros' may also use this stock dividend to convert to convert it to a cash dividend as well.
It's all food for thought and by no means anything crazy to think some of the 384 institutions may think this is a good exit point of the SIRI investment.
Thoughts???
I did not imply dilution, I stated that after the RMT there will be a whole swoon (maybe swoon is too strong of a word) of investors who will be able to sell there SIRI stake who never had the chance before. Maybe they never like the SIRI stake or maybe they will use it as a dividend. Whatever the case they will now have the opportunity where they didn't before. There is definitely an argument there and something to think about. Not a 'waste of tome' in my book....
Well correct me if I'm wrong, but I'm faily certain that after the RMT LMCA will no longer have control over SIRI, rather LMCA shareholders will, and since LMCA shareholders consist of individuals, insiders, and institutions, they will not be able to decide what SIRI does with its FCF.
Unless they plan to do buybacks BEFORE the RMT, then they would be able to do that after the own more than 50% of the company....
Yeah, that's true. But how much cash will Liberty have to throw around after they reach the 50% mark?
If you look at 50% of SIRI currently (bc that's what will be distributed to LMCA shareolders) you get basically a $6.6B market cap. If you say that LMCA were to buy up 10% of that, you are looking ath $660MM right there. They may need to buy up less or much more, but regarless its going to be a lot of money.
Yeah, I am going to check out the DTV and DISCA RMT more in depth
Yeah, click the 'announced' link in the article, or this link "http://bloom.bg/Mq8afE"
The spin-off is the RMT.
But as I've said, it doesn't matter really the actual number of new shares trading, rather the % increase. After the RMT there will be between 40-50.1% more 'SXMH' proportionate shares trading than of SIRI shares currently
I haven't heard Greg say that, could you provide the article?
Also even if he did, a buyback can only do so much. Who know how much cash LMCA will have to toss around after they are done buying up SIRI shares.
That's true, but those preferred shares have never been traded. That was one of the main points of the article. After the RMT those 40% preferred shares and the additional 10.1% acquired by LMCA between now and competion of the RMT will distributed to LMCA shareholders to sell or hold.
Two good responses. I agree with both of them.
J.Rock, you don't have to worry about your shares getting liquidated, only how the RMT may affect the price of the shares. The price will stay the same proportionately immediately following the RMT, but once the shares are distributed to the LMCA shareholders and they start deciding what to do with them is when the price may start to slip (in my opinion).
I don't have a short position.... I am long Siri AND I have $2.50 September calls
Haha thanks. I knew I was going to get skewered with this article, so it's no hard feelings.
As I said in an earlier comment
"This is just one analysis and is only 'food for thought'. It is just one more thing that should be taken into account when trying to decide on how you would like to handle the investment.
I still continue to believe in the business model, future growth, and the company as a whole. I may however liquidiate my position until after the whole RMT shakes out. "
I am going to research further how LMCA's two previous RMT's worked out, which could sway my decision again... stay tuned!
I don't completely follow the first paragraph.
"I could see a 10/1 after LM takes control followed by a RMT. Thus making the share count to be dumped 230 million shares as opposed to 2.3billion"
That's true, I very well could see that too. But as I said in an earlier comment, it doesn't really matter the actual number of shares, only the %increase of new shares added to the float, that were not there before.
"Plus you have to take into account who owns LMCA. 85% institutions 9% insiders leaving 6% individual investors. So 6% could cut and run quickly."
That is also a very good point. I may do some research/calculations on that to get some rough numbers as to what the implications of a 6% dump could be.
"What I could see happening is a 10/1 split bringing the float down to 600M and price up to 20$. Institutions will then be more satisfied with holding SIRI."
Again, I know that a certaion price of the stock can be a requirement to even allow institutions to invest, but I don't see a significant amount of institutions deciding to hold vs. sell based solely on the fact that its a $20 stock vs. a $2 stock.
Also a $2.50 September call is a call option (http://bit.ly/P7o7o6), which I bought for the right but not the obilgation to buy shares of SIRI at $2.50 in September (always the 3rd week of the month) regardless of the price. I did pay for this right at about $.05 per share.
So if the price shoots to $3.00/sh I can still buy the shares at $2.50 and make a $.45 ($3.00-$2.50-$.05) profit per share.
I appreciate your comments. I don't see it as being such a sharp drop to under $1.00 (or its equivalent), but I do seeing it as being significant enought to consider getting out of my position.