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Stephen Faulkner  

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  • Sirius XM's $1.325 Billion Short Position Must Be Repaid [View article]
    I think it was a bit of misunderstanding, although I think there will be similar issues with this one. It's a matter of wording, titles, etc. If anyone has questions on that or needs anything clarified I am happy to answer :)
    Mar 19, 2013. 08:01 AM | 1 Like Like |Link to Comment
  • Sirius XM's $1.325 Billion Short Position Must Be Repaid [View article]
    Rarely, although I may start covering a few more (just not sure when).
    Mar 19, 2013. 08:00 AM | Likes Like |Link to Comment
  • Sirius XM's $1.325 Billion Short Position Must Be Repaid [View article]
    It's not a matter of being screwed, really. If the short is a naked position then they are exposed to more risk than one which is hedged. Someone hedged like the bonds merely loses out on gains they would have had if they had not initiated the short, but they don't "have" to cover because they are covered by the shares tied up in the bonds.

    Malone should want what is best for SIRI right now and that really isn't to run the price with a very rapid buyback. Once the buyback was exhausted in that case shorts may pile on even more as the share price would possibly overrun valuation to extremes. SIRI would have bought back too high in that case.
    Mar 19, 2013. 07:59 AM | 1 Like Like |Link to Comment
  • Sirius XM: Take Rates In Connected Cars 'Higher' [View article]
    I wouldn't want to speculate on any benefit there. Really not what I get into but I appreciate the information :)
    Mar 18, 2013. 03:50 PM | Likes Like |Link to Comment
  • Should You Care About Short Interest? [View article]
    "Like I said, I'm lazy. "

    Haha you are NOT lazy ;)
    Mar 17, 2013. 04:24 PM | Likes Like |Link to Comment
  • Pandora Radio: Stuck In The Mud Until 2015's Catalyst [View article]
    Andrew is spot on :)
    Mar 17, 2013. 12:44 PM | 1 Like Like |Link to Comment
  • Pandora Radio: Stuck In The Mud Until 2015's Catalyst [View article]
    It is very likely. In my opinion P's base is younger, and may be comprised of a good portion of individuals who enjoy the "free" nature of the service. If P charged a subscription similar to Spotify, Sirius XM, etc., then users may either choose a more flexible IP delivered service like Spotify provides, or a service which provides a much greater variety in content and delivery such as Sirius XM provides.

    Obviously I can't say for sure if they did X then Y will leave, but I can say for sure that if Pandora charged for the material which they currently give away for free then they would not have the issue of paying a high percent of income in royalties. There is no getting around the basic fact that if you pay for something, and then give it away for free, you will lose money. This does not make the situation "unfair" as Pandora claims, as other services such as Sirius XM require users to pay, and institutes a music royalty fee to cover the costs.

    Pandora "charging" for the service would, in my opinion, knock users down to less than 10 million, but it would massively reduce their content costs in the process and make them extremely profitable. There is little overhead cost to Pandora other than royalties, and the CRB has provided them with a very simple, and LOW, rate to work with so that Pandora, if it charged for what it gives away for free, would make a considerable amount of money. Enough to justify a $14 per share price so that insiders can cash in? Probably not... ;) (and I insert a big WINK here because I think that point is very important when you consider what insiders are doing with their holdings.)

    Pandora has continued to fail to deliver on its promises of securing enough advertising to offset costs. I see two reasons for this... they are walking a fine line here so there is ammunition they can use with the CRB to get lower rates locked in for 5, 10 years? after which they will flesh out advertising properly... OR the advertising based model and giving the music away for free is just not working. Either presents a problem for investors, because the stock enjoys a VERY hefty valuation based upon expectations that the CRB will lower rates or that Pandora will be able to monetize so many users...

    If Pandora cuts the user base by charging everyone and slams current growth, (which only free can provide), the stock will suffer regardless of profitability because grand ideas of 100 million users and "maybe...." gets removed. If Pandora continues with the advertising model and is not successful with the CRB (and I doubt they will be) the stock will suffer, albeit more slowly, as people slowly catch on that hey... this just isn't working.

    My opinion? CRB isn't gonna change tune. Joe is leaving. His millions of shares will be sold into the market as will other insiders who have been slowly divesting themselves of their holdings (it's a sea of red...) and P will continue to bounce up and down until reality sinks in and retail is left holding the bag wondering what in the world just happened?

    Maybe I'm wrong. I don't have a position here either way and I am not hoping for P to succeed or fail. But it's something I follow and have some opinions on. I think investors would do well to avoid the stock and enjoy the service P provides until P proves that it can handle its business.
    Mar 17, 2013. 12:42 PM | 1 Like Like |Link to Comment
  • Should You Care About Short Interest? [View article]
    "While Stephen may acknowledge that as much as 70% of the Notes may be shorted (about 191 million shares), his titles say that ALL those shorts are wrong, bad ideas and fooling themselves."

    I didn't say 70% of the notes. I clearly state :

    "I expect that this underlies more than half of the short position, and possibly up to about 70%"

    Short position. And it's a rough estimate based on the possibility that 100% of the notes being shorted. Rough. (before we get into "well there's not enough to make it 70%, only 68%... " or whatever the exact number is.

    But you KNOW that I meant short position!!!! Shortly after you stated the following!!!

    "Well, if the Note hedgers are making a lot more money than the longs, than 50-70% of the shorts are smarter in my view."

    What the heck? Why above, do you say Stephen may acknowledge 70% of the NOTES may be shorted and then right below it state that 70% of the SHORTS may be smarter?

    I do not contradict myself on this subject. Anywhere. I understand that I say when there are X number of shorts at price Y then there is a need to purchase X*Y in dollar value. I use real world numbers in my articles and moments of time because this isn't some kind of math class. I'm delivering a concept and trying to communicate something in relatively easy to read and process fashion.

    I am abundantly clear if you consider the ENTIRE article(s) that the short position has a composition which is likely made up of various pieces and they are not ALL naked shorts. You can acknowledge that and then pull out a sentence or paragraph here or there and say I am contradicting but you are eliminating the rest of the article in that case.

    A short being covered most CERTAINLY is buying pressure. Buy from the float? Maybe not. But I provide for this within the articles, repeatedly. If it's hedged vs. the bonds? Consider 1 share. The short still gets covered and the end result is elimination of a debt of 1 share. The entire short position regardless of hedges or any other factor is a debt that must be repaid in some way, shape, or form. There is no arguing against this except in very specific and what I feel are unlikely cases such as Sirius XM going to $0 per share.

    It's guaranteed buying pressure. Clear, to the point, not misleading at all. I don't need to CONTINUE to mention that the position may not be entirely made up of naked shorts. Readers are or should be smart enough and perceptive enough to "tie it all together" and realize when I say something like :

    "And as more and more shorts pile into the cart, the risk of the cart tipping over becomes much greater. That's 406 million shares, or $1.25 billion worth, which need to be purchased at some point. If there is a rush to cover, it could send Sirius XM up rapidly."

    ....that it considers EVERYTHING I have discussed in the article and within articles linked. If you dislike how I write and feel that I should mention all of the little complex points AGAIN and AGAIN and AGAIN then you are going to be absolutely disappointed, and you will absolutely continue to dislike how I write. I make assumptions that the reader is intelligent enough and perceptive enough to consider the entire article and not cherry pick sentences or paragraphs while ignoring everything else. IF they CHOOSE to cherry pick and ignore that is THEIR problem.

    Don't like the titles? That's fine. Write an article about how you don't like the titles then. I'm portrayed here as not understanding the different facets of the short position and my titles are used, and the body of my articles completely ignored.

    The exchange between henrietta and I is misrepresented or at least misunderstood. My response is one I typically throw out when people point to the size of a position and suggest due to the size that it is unlikely that that position is wrong. Generally this is used with shorts, generally this is coupled with shorts being "smarter" and generally this completely ignores that the other side is larger, by multiples and often double digit multiples. The argument that X is unlikely to be wrong because there are so many, is counterbalanced on the other end (and pounded into the sand) by how many positions there are which expect the complete opposite. My response to henrietta was brief but it didn't need a whole long explanation tied to it.

    My repeated asking of "is this a joke?" is a rhetorical question. I know it is not a joke, but I'm disappointed here (and no that is not to suggest that I expect anything should be done to please me... anyone is free to disappoint!) I tried to make a nice enough response when I made my first in this article and not make a big deal out of it.
    Mar 17, 2013. 12:06 PM | 2 Likes Like |Link to Comment
  • Should You Care About Short Interest? [View article]
    lol not about the short position :)
    Mar 16, 2013. 09:39 PM | Likes Like |Link to Comment
  • Should You Care About Short Interest? [View article]
    rich... not sure how the serenity prayer is applicable to anything I have said here about shorting. Not looking to change anything regarding shorting... or all shorting...?
    Mar 16, 2013. 09:21 PM | Likes Like |Link to Comment
  • Should You Care About Short Interest? [View article]
    "Your titles call ALL the shorting a bad idea."

    Title issue? If that's the case then mention that.

    I maintain that ALL the shorting is a bad idea for reasons I have now beat to death every single time it keeps getting dug up.

    "They don't state 200 million (or whatever portion may be naked) bad ideas or 200 million shorts are only fooling themselves."

    Fit that in a title. Come on... really? Are you serious?

    " You consistently refer to the entire short interest position as a bad idea."

    It is. Being short, or placing a position that loses value as SIRI appreciates, is a bad idea.

    " It's a blanket dismissal of ALL of the shorts, even if they have made more money than the longs via a hedged strategy. "

    Of course it is. Because the hedged strategy is not the point.

    "I thought I had explained why some 260 million wound up with a big gain from the Note strategy."

    But I did not say anything about the note strategy.

    " From the standpoint of their net $100,000 investment, they came out far ahead of someone investing the same $100k in SIRI."

    Ok but this was not what my referenced articles talked about.

    " Instead, why not explain to me why the Note holders going short in my example above were wrong or fooling themselves? "

    I did not say the note holders were wrong or fooling themselves, so there is absolutely no reason to explain this as it has absolutely nothing to do with the point of my referenced articles. The short position is wrong. The strategy may be correct. It's possible and even probable that the short is wrong and the position holder, overall, is "right" in their strategy. I provide for this within the body of my articles.

    "Obviously, since we are both long, we both believe that some of the shorts are likely to get burned."


    " (Then again, so will some of the longs who time things poorly, but that's a separate issue.)"

    Yes! IT IS!! :)

    "I just can't accept that many of the 400+ million haven't done much better than many of the longs and therefore were not "wrong" or "fooling themselves". "

    Then don't accept it? As I continue to state I provide within the articles that there are many other things behind the scenes which make up this short number. I do not expect that the majority of the position is naked. I expect that much of the position is hedged. Because I do not wish to get into the gory details of each and every possible nook and cranny of who might be short each and every possible share and why, and if this and then that and what happens when this or that goes this way or that way and if Joe did X when share price was Y but the short position was Z and K + Z^3 =3425.2222 and oh man what's the last number of pi???....

    I simply choose to focus on the number, the fact that it MUST be covered at some point unless the company goes to zero (in GENERAL... I know thre are extenuating circumstances here but they are not the point), the fact that I believe SIRI is due to APPRECIATE, and thus this short position carries with it future buying potentital, and that it may contribute to certain movements in the share price.

    Hell, I don't care if it's hedged vs. the bonds! That's great!! WONDERFUL. For the love of God maybe we'll get outta the notion that the bond holders are gonna redeem for shares and then dump those shares and tank out the stock price. Sweep that monster out from under the bed and beat it to DEATH then bury it. I'd LOVE for them ALL to be hedged! And I provided for this in my most recent article too! Perhaps the selling has already been done!!!

    "Is it splitting hairs? I don't think so."

    It is.

    " I believe it's important for folks to understand that many of those 400+ million shorts are doing just fine, aren't going to get burned and won't be fueling a short cover rally. "

    And I provide for this within my articles.

    I mean really. Go here. Most recent article on this that I wrote this past week.

    And read :

    "So why do these shorts keep piling on? Or kicking the can down the road, as Apple puts it? It's a question that is likely not easily answered, but can become a bit more clear when one understands that this position is made up of different types of shorts.

    The largest type, in my opinion, is one, which is hedged to the outstanding convertible notes. These notes are convertible into shares and because of this, a note holder can and usually will short the underlying stock to get his or her capital back. After this they are free to collect the interest, and the cash is free to be used elsewhere. Once they've shorted, they can't lose anything except future gains because the notes provide a hedge against the short.

    I expect that this underlies more than half of the short position, and possibly up to about 70%


    "On top of this if the shorts are hedged against the bonds, that is likewise a very good thing. Why? Because on conversion the shares from the bonds simply cover the short. That's it. If the holders are not short as they take possession of hundreds of millions of shares they may sell into the market and cause a drastic drop in share price. As a long, you will want a considerable short position pointing to the fact that those bonds are likely hedged."


    I mean really. What the heck ? Like I said above, is this a joke? Am I being screwed with here? April fools day coming early? My articles COVER PARTS OF THE COMPOSITION of that short number!

    The article above and ensuing comments paint me as not understanding any of this... like I need some sort of education on the matter. And it DOESN'T link my articles directly so that readers can check for themselves easily.

    Arrrrggggggghhhhhh! *%*%*!!! :) lol
    Mar 16, 2013. 08:10 PM | 3 Likes Like |Link to Comment
  • Should You Care About Short Interest? [View article]
    "I don't want to be insulting"


    "but not recognizing the point makes your articles suggesting all shorts are "wrong" irrelevant, or rather meaningless"

    Are you kidding me? :) No. You not recognizing the point does not make my articles irrelevant or meaningless. It's simply you not recognizing the point.

    "Unless you recognize the nuances of trading"

    I do.

    "writing about trading is shallow, which presumably you aspire to do"

    I am writing about the short position in the stock in this reference, not trading. I do not "aspire" to write. I write.

    "CN's article above actually lays out many of the nuances, and does offer the type of commentary that provides insight to the short positions."

    Annnnnd I've covered those. I've brought them up, discussed the fact that there may be MANY underlying strategies or issues which may result in a player being short the stock. I do not focus on it, and I do not spend a lot of time on it because it is not important to my point, and that is that being SHORT SIRI, is, in my opinion, the wrong side to be on.

    "Bottom line, the level of short interest in Sirius should neither be a cause of serious concern, or glee."

    Bottom line,I never said it should "be a cause of serious concern, or glee." I don't even think I have used the word "glee" ever in my writing.

    "No results found for +"stephen faulkner" +glee"
    Mar 16, 2013. 07:16 PM | 3 Likes Like |Link to Comment
  • Should You Care About Short Interest? [View article]
    Thank you for the link Frankie. :P

    I shall put my fighting energy into best wishes for you dad instead of continuing the back and forth here! :)
    Mar 16, 2013. 06:08 PM | 1 Like Like |Link to Comment
  • Should You Care About Short Interest? [View article]
    "Your point is understood, Stephen. As I said, I think this is one of those cases where the language is probably being parsed too granularly. Your intent is clear. No worries."

    Thank you. Honestly I am not sure why I am so annoyed by all of this but I think it has a lot to do with my intent with my articles, which is to keep things fairly simple, or at least explain things in simple terms. I'm frustrated as I don't think the point of my articles is accurately portrayed. I tried to clear it up yet each time I do I feel like the tornado of complexity chases after me trying to suck me up in it... I don't want that for me. I don't want that for my readers.

    Apparently what I say in my short articles is being misconstrued or misunderstood as to my point (by some). That's fine, and understandable. I'll write something up when I get a chance, and try, hopefully, to communicate my position with crystal clarity.
    Mar 16, 2013. 05:50 PM | 1 Like Like |Link to Comment
  • Should You Care About Short Interest? [View article]

    I get that you want to talk about bonds and strategy. I get it. Really I do. And I understand the bonds. And I understand the strategy.

    "As I pointed out with the hedging strategy used by the CBH. If you can't do the short, you don't do the bond."

    Doesn't matter to my point in my articles.

    "There is no separating the too pieces of the strategy. Every trade is a "strategy". Some are simple longs, some simple shorts, some involve multiple postions, long and short."

    Doesn't matter to my point in my articles.

    "If you simply say one part of the strategy makes money while the other loses money, that's OK, but to call one "right" and one "wrong", misses the point that one isn't done without the other for many hedges"

    Missed YOUR point but YOUR point has absolutely nothing to do with MY point which has nothing to do with complex bond strategies.

    "A CBH isn't wrong about his short; its the only reason he is long the bond, and making money on the strategy.

    Doesn't matter to the pont of my articles.

    "Besides that, the CBH isn't actually losing money on the short as the stock goees up from here, because he'll do the conversion at the set rate no matter how much the stock goes up from here; its not wrong, and its not a loss either."

    It's wrong as to my point. The short "part" is wrong REGARDLESS of whether or not it is required for the "strategy." The short, if covered higher or covered with shares delivered by the redemption of the bond while the stock is a higher price than the short was entered into results in a LOSS on the trade based on price discrepancy between the SHORT and the value at COVER.

    "I know you want to say "but he would have made even more if he didn't short the stock"."

    I don't "want to say it" I have said it repeatedly.

    "That's where you miss - once again for the last time - If he couldn't short the stock, he would not have taken the risk buying the bond."

    No. I don't "miss" it. At all. I understand this just fine, thanks. And the reason I don't get into it is because it I don't need to, as it is completely irrelevant to the point of my articles.
    Mar 16, 2013. 05:41 PM | Likes Like |Link to Comment