Seeking Alpha
View as an RSS Feed

Stephen Faulkner  

View Stephen Faulkner's Comments BY TICKER:
Latest  |  Highest rated
  • Effect Of Sirius XM's Share Buyback To Diminish [View article]

    Link to the comment in question. It was in response to a comment by an individual who said it was IMPOSSIBLE to sell at the time because of tax reasons.

    Given that it was impossible at the time but possible today then the only valid assumption is it had not shifted from ST to LT CGR yet and the maximum differential would be between 39.6% and 20% or 19.6% total on the profit on the investment which he said is 22%.

    19.6% of 22% = 4.312% of the share price = approximately 17 cents rounded up which means instead of selling and paying the tax at $4.17 he chose to hold and wait for the STCG to shift to LTCG and pay the lower tax rate. What this has resulted in is him holding the shares from OCT 2013 through now MAY 2015, or 19 months, and a reduction in value of his stake by what is currently 24 cents, or greater than the amount saved by waiting for the shift from STCG to LTCG, especially when considering the time value of the money as well.

    Never let taxes guide your decisions. They are consequential, as any and all numbers are in equations, but holding for a tax shift? not a good idea and the situation the individual is now in shows clearly why this is the case, especially when that gain is so darn small.

    Even worse would be if he is below the 39.6% ST rate.

    I guess one could argue that there is a 20% differential in the $1,800 window where the shift from 35/15 and 39.6 / 20 occurs but the chances of someone landing in that are extremely slim and the 0.4% difference is not worth digging into.
    May 22, 2015. 01:26 AM | 2 Likes Like |Link to Comment
  • Effect Of Sirius XM's Share Buyback To Diminish [View article]
    I see you cut off the rest of what I wrote on 2/13 ;) At least you put the "..." to show you did! ;)

    Bluejay Quote 5/21/2015

    "... important to understand many SA contributors are simply ordinary Joes with ... special insight. "

    Thanks for the compliment! :D
    May 21, 2015. 11:35 PM | 2 Likes Like |Link to Comment
  • Effect Of Sirius XM's Share Buyback To Diminish [View article]
    God help me I am never going to be able to read your posts and comprehend them LOL ... I am not trying to be insulting... I swear there is just something about my brain that does not let me understand a word you say! lol

    At least I understood "Absolutely." :) That's good enough :P
    May 21, 2015. 11:31 PM | 2 Likes Like |Link to Comment
  • Effect Of Sirius XM's Share Buyback To Diminish [View article]
    "The buyback mostly benefits liberty by increasing its ownership, making a merger more affordable or in some ways makes a spin-off more profitable. He grows his ownership ever so big, spins it off...pocketing billions...while the minority shareholder gets a debt-loaded company with few financial options for growth. The thing probably won't default, but Sirius is not without risks in my opinion."

    If this is your opinion then you should own LMCA.

    "That said, I plan on holding."

    Doesn't compute if you believe in the statement above.

    "Don't yet want to pay the taxes"

    Has some merit but again considering the statement above but you are LTCG correct? Do you exceed the 15% tax bracket? $37,450+ AGI. If not then you're at a 0% LTCG rate and taxes don't matter. If you're above that then let's assume you're in the 15% bracket. Say you have $10K in SIRI and all of it is profit (just keeping it simple here). $1500 taxes $8500 after tax buy LMCA so you "lost" 15%. Fast forward and what you say about LMCA is true and they reap the benefits and somehow end up with, let's say 100% appreciation in 4 years vs. SIRI 75% appreciation.

    Had you held SIRI you'd have $17,500 and on sale of SIRI pay 15% (Assuming you are still in that bracket and taxes do not go up) of that amount or $2625 and pocket $14,875 post tax.

    Had you sold SIRI and bought LMCA you would have a CB of $8500 on LMCA and an end value of $17,000 on LMCA of which you would pay $1275 tax at 15% and pocket $15,725.

    There is a break even point but it's small and honestly there's a formula that can be derived here to calculate how much more LMCA has to appreciate RELATIVE to SIRI but I'm too lazy to bother. If LMCA and SIRI appreciate in tandem then the original theory is invalidated and erroneous and so that scenario doesn't much matter but in that case you end up with $14,280 selling SIRI now and going with LMCA if they stay the exact same.

    If you hold the thought that LMCA will reap the benefits here the logical choice is LMCA. This becomes especially so the higher your current cost basis in SIRI vs. the current SP.

    This is why I constantly boggle at the investors in SIRI who are always posting that everything benefits LMCA, all will go to LMCA, LMCA this and LMCA that but they still stay in SIRI. Taxes are consequential yes, but not to the extent that they should cause one to hold a stock that they expect to LOSE vs. another to any degree higher than a few percent.
    May 21, 2015. 10:17 PM | 1 Like Like |Link to Comment
  • Effect Of Sirius XM's Share Buyback To Diminish [View article]
    Sorry went 1% the wrong way, 26% :P
    May 21, 2015. 08:22 PM | 2 Likes Like |Link to Comment
  • Effect Of Sirius XM's Share Buyback To Diminish [View article]
    Howard isn't going to go forge ahead and try to make waves elsewhere. His wave making days are done. Anyone who is familiar with him and his show will likely come to this same conclusion.

    He's old... and that's not saying it in a derogatory sense. The guy has done some wonderful things, brought laughter to tens of millions of people, and built a legacy that is unrivaled / unlikely to be rivaled in his lifetime if he stopped today.

    He doesn't complain about SIRI so much as he complains sometimes about continuing to work / do the radio show. But he also has mentioned time and again his feeling of responsibility to those he works with and I wouldn't put it past him to negotiate continuing at SIRI on a further reduced or more flexible schedule and perhaps eventually simply licensing his content library for replays.

    I'd suggest the BRAND of Howard does not carry on to someone else like, for example, The Tonight Show does with hosts. It wouldn't work. The Howard Stern show is, at its core, Howard Stern, and there is no one comparable to him that could or would replace him.

    You don't have to like the guy but it is hard to disagree that he is unique, talented, and not replaceable in kind.
    May 21, 2015. 08:20 PM | 5 Likes Like |Link to Comment
  • Effect Of Sirius XM's Share Buyback To Diminish [View article]
    Mel's options were there for LMCA to buy on its pursuit of control years down the road.

    Mel was gone at the appropriate time, got a whole boat load of options, and did his job for LMCA and was paid appropriately for it.

    My opinion.

    And just my opinion but they halted the stock from running away at the time and greatly assisted its downfall as they hit the market. LMCA grabbed them all but done correctly (and it did appear the third party handled it well) the volatility "smack" it caused gave the daily volume between hard support at the time near 1.80 and previous peak top resistance near $2.40.

    Hindsight is 20/20.

    Buncha conspiracy stuff one can go into in all that and well... you know me... hate that conspiracy! :P
    May 21, 2015. 08:10 PM | 2 Likes Like |Link to Comment
  • Effect Of Sirius XM's Share Buyback To Diminish [View article]
    Keep in mind if they gave you $1 for every share you own, every share you own would be worth $1 less, thus you would have the exact same amount of money.

    Whatever you do with that money is completely independent of the dividend and has its own set of benefits or consequences.

    You could also sell a portion of your position (at current price about 24%) to "Self pay" a dividend to the same effect although tax consequences may or may not be the same depending on the type of account.
    May 21, 2015. 08:03 PM | Likes Like |Link to Comment
  • Effect Of Sirius XM's Share Buyback To Diminish [View article]
    This has nothing at all to do with the buyback.

    Had there been no buyback and this was approved, the company would not have the reduced share count.

    Options are pretty standard and it should have been expected that the company would move forward with replenishing their availability as they came close to running out. How many companies out there allow for no options?

    Again this has nothing at all to do with the buyback, and only "diminish"es the effect when one assumes that they would not have approved the 400 million in the absence of the buyback.

    But they would have.

    Doesn't even mean 400 million are issued and out there. Just means they are available to be issued.

    And it's not "worse" that the government will not be "helping" on the interest. It is helping. The interest comes off of earnings and increases the length of time the NOLs take to be depleted, after which the government helps with the interest. The actual effect / savings is the same.

    Usually I agree with your articles and a good portion of your caution but this one ... eh... I think you're just trying too hard to prove that buybacks are some sort of evil other than in select situations.

    Had SIRI issued a dividend instead of a buyback, all things equal, then the share price would be lower by the amount of the dividend, the company would have approved the 400 million, and if holders had kept purchasing stock they would have less than they have today (assuming the stock traded in kind on a mathematical basis considering subtraction due to the dividends) with the same exact company / situation as today. Can argue this a little bit as the average purchase price of shares on the buyback has been lower than current share price thus the buyback has been successful / profitable to a small amount vs. a dividend which would not have been as it's just cash.

    Oy... going on too long here. Anyways... "boo" to this one :P
    May 21, 2015. 07:50 PM | 4 Likes Like |Link to Comment
  • Sirius XM: Explaining The 1 Cent 'Miss' In Q1 Earnings [View article]
    Everyone's ownership percentage increases at the exact same rate as Liberty Media's.

    Please take some time to understand the simple mathematics behind this.

    Or just keep posting the same "boot on neck" thing 100X over...

    The "miss" was clearly explained within the quarterly statement which every single investor should be reading, and which every single investor should take the time to understand. There are no excuses for those who sold out and it's not corruption at all. It doesn't even BORDER on corruption. It's spelled out in clear English within the quarterly.
    May 20, 2015. 05:03 PM | Likes Like |Link to Comment
  • Sirius XM: Explaining The 1 Cent 'Miss' In Q1 Earnings [View article]
    But Malone didn't do anything unless you believe he changed the tax laws, so I am confused as to why you are just saying this again?
    May 14, 2015. 05:10 PM | Likes Like |Link to Comment
  • Sirius XM: Why Now Is The Time To Buy [View article]
    Sorry my 2 year chart goes a little beyond 2 years to 4/19/13 for some reason where it was $2.97 before zipping up over the next month to what is $3.43 on 2 years ago 5/13/15

    Then again on 6/24/13 it was $3.04 intra day so all a matter of perspective.

    I did write again and again and again that my target (which I have repeated as a "sell" target) was $4.25 for 2013 and it did come to $4.18. I still think people who did not wish to ride out the period for it to grow into that valuation should have exited that area especially since my target was for 3 months later and it hit close enough early. Suggested "leave a few pennies for the other guy" and that $4.25 was an "area" with a "2-3% range"

    Investors who have added at or below the 50 day moving average over the last 2 years should be up significantly and really shouldn't be upset about anything unless they had unreasonable expectations. SIRI is within a fair range of valuation here (which everyone should calculate BEFORE investing and understand that the share price might go up and down within that range without any significant changes within the company to cause the price to deviate from the range).

    Buy back impact takes time. I did write several articles illustrating this with multi year timeframes. There's very little impact short term. Takes billions and years to pull shares out, but as time wears on and so long as price stays LOWER in the EARLY years then impact later is much greater to the upside based on the average price paid vs. the average price of the stock later on. So long as the appreciation in the stock in that time frame exceeds cost of interest (in very simplistic terms) the buyback is / was successful.

    As it stands the buyback has a lower average price than the current share price and is very slightly successful. But it hasn't been long enough... and besides ... any "investor" does not want the buyback to be successful YET... but I can see how someone who did not wish to hold SIRI anymore would have preferred the buyback quickly ramp the price so they could sell and leave someone else holding the bag of an unsuccessful buyback program.

    There is extensive reading material out there on buybacks. Stay clear of "opinion pieces" and those ones that talk about how most buybacks are NOT successful (which is true but is not applicable here so far.)

    This is stuff I have talked about again and again though. I think if people do not have a multi year horizon they are going to get bored / tired and sell. This is exactly what is needed to get everyone away from the stock.
    May 13, 2015. 06:31 PM | Likes Like |Link to Comment
  • Sirius XM: Explaining The 1 Cent 'Miss' In Q1 Earnings [View article]
    I just don't like anyone attempting to tell me what to do :) Roxie has read my articles and commented for a long time so there really is no excuse that they are not equipped with information from previous ones. They are welcome to go back and link if they wish... rather than tell me to do it.

    If anyone asks politely I'd probably be happy to go back and dig up a little old info when I have time. Generally such questions come through direct message and I'm usually happy to help :)
    May 13, 2015. 06:15 PM | 1 Like Like |Link to Comment
  • Sirius XM: Explaining The 1 Cent 'Miss' In Q1 Earnings [View article]
    Probably should sell then. If you're asking the question of whether or not the company will do anything "amazing" I think you'll find the answer to be "no."

    Best to sell before the stock starts to "look like dead money" at determined areas of resistance vs. holding it through areas of resistance for several months. This is not so much a criticism as it is an observation. If you've held the stock since it hit $4.04 there really has been no compelling reason for it to pass that point (yet) and that really was a prime area to sell that has been visited time and again over the past several months. It does not make sense to hold through there and then consider selling it at $3.80 months later.
    May 12, 2015. 10:55 PM | Likes Like |Link to Comment
  • Sirius XM: Why Now Is The Time To Buy [View article]
    "With all of the buybacks there has been no appreciation with the stock price in two years. So how has the buybacks increased shareholder value?"

    2 years ago the share price was under $3. It is currently $3.83. That's respectable appreciation over a 2 year period.

    "Well, 2015 is almost half over and Siri is still stuck in a narrow trading range"

    I did write a very clear and to the point article detailing this back in February. You'll get another chance to sell at $4 if you wish to exit.
    May 12, 2015. 06:23 PM | Likes Like |Link to Comment