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Stephen Faulkner

 
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  • Liberty Media Will Not Damage Sirius XM [View article]
    Looks like you may be right! Glad I didn't try to trade it I would have lost big time here :)
    Nov 1 10:09 AM | 1 Like Like |Link to Comment
  • Sirius XM Reports Q3 Results - 2013 Guidance Not Included [View article]
    I agree with you there Apple. :P I took the morning off for that snooze fest? lol... Oh well, the report was good enough. It does seem they're gearing up for a blockbuster Q4 and full year report.

    Wondering if Mel will deliver that one before the end of January?
    Nov 1 09:22 AM | 3 Likes Like |Link to Comment
  • Liberty Media Will Not Damage Sirius XM [View article]
    Yeah I'm wondering why I didn't just go into work instead of taking the morning off :)

    Earnings call was as expected. Wouldn't worry about the miss on EPS... as had they not taken the debt charge it would have been a slight beat over estimates.

    No idea if the stock will react favorably or consolidate down towards the 50 EMA in the mid $2.60's. All depends on what people were looking for. I'm holding. Not going to try to trade this.
    Nov 1 09:19 AM | 1 Like Like |Link to Comment
  • AMD: The Turnaround Story Begins [View article]
    Don't mind that nino guy, Ashraf. We've had to deal with him in the SIRI camp for awhile now. He just jumped into AMD so expect a lot of postings from him that are off the wall and don't really make much sense. You'll get plenty of parenthesis, plenty of speculation of why the share price moved 2 pennies yesterday and 3 pennies today, and tons of metaphor.

    And none of it will be useful except for entertainment value :)
    Oct 31 10:18 PM | Likes Like |Link to Comment
  • Liberty Media Will Not Damage Sirius XM [View article]
    Well I think my to the moon comment is being taken wrong. I merely said it because the share price can go way up, and Liberty can get its bait back by selling back less shares if it does. If the share price is $1.5 billion per share... they can sell back one share and get the bait, for instance :P

    I'm not saying LMCA will take the share price to the moon :P but their actions SHOULD move the share price considerably higher yes :)
    Oct 31 10:00 PM | Likes Like |Link to Comment
  • Liberty Media Will Not Damage Sirius XM [View article]
    Thanks indianajoe :)
    Oct 31 09:54 PM | Likes Like |Link to Comment
  • Liberty Media Will Not Damage Sirius XM [View article]
    Jack,

    Really nice comment and I appreciate you taking the time to type this all out in great detail. Unfortunately I'm squeezed on time though so my reply may be more piecemeal and brief! Sorry! :)

    "However, since then, based on Maffei comments about high basis stock, it sure seems they want all those shares repurchased by Sirius, and $1.5 billion was just the minimum they wanted back."

    I figure they will sell back as much as possible of the high basis, yes, but I think they will stop short if they feel it will damage SIRI or overextend SIRI.

    "Why doesn’t Liberty just borrow another $1.5 billion if they want more cash for acquisitions, as they’ve suggested is the reason for the cash, rather than selling their Sirius stock?"

    Because they don't wish to spin high basis. RMT saves taxes on gains. If they spin high basis all that cash goes to shareholders and leaves LMCA. The resulting LMCA after the spin then is in a position which is not as strong. I am not sure if I am explaining this well so perhaps I can clarify later or someone else can pick up the slack here. Basically they borrowed / used a bunch of cash from LMCA and want the bait back into LMCA and not spun out with SIRI. It goes back to the balancing act... the more they can get back the better, but NOT at the expense of SIRI (large percent of LMCA).

    "I don’t see how anyone can believe Sirius will be in a better position with the higher leverage than they would be with lower leverage, even with a slightly lower share count and float, when the next downturn hits ( try to guess when that happens). "

    If done right it makes sense and it's fine. Leverage is ok if used for buybacks... or reinvested into the company (assuming SIRI does not grossly overpay for the stock, again, go back to the "not at the expense of SIRI" concept). If I am paying 5% to borrow cash and the cash is reinvested (in myself or something else) and where it is reinvested appreciates at 10% per year, it makes sense to take the loan. I do not expect they will over leverage.

    "If people don’t believe Sirius can correct after a fantastic run, they are foolish."

    Agree. Was $1.80 sensible in May ? Not really. The stock can and will fly up and likewise fly down. It's part of the inherent risks in buying stocks :P I do think the downside has some cushion, though, while a share buyback is looming or in place, as the company *should* jump on lower pricing and thus protect the downside. Exactly as you say.... here...

    "And that brings me back to the Sirius buyback plan. If done wisely, it will be done to support the share price on pull backs, to avoid the deep sell offs that Sirius has seen in the past – that will be in the best interest of shareholders that see the long term value in Sirius as it will allow them to buy back shares at lower prices and buy back more shares with their cash flow and borrowed funds. If the buyback is done aggressively pushing the price to $4 (or to the moon), they will end up over paying, pushing the price to unrealistic levels and once the buyback is over, the share price will suffer greatly, because of the overleverage, RMT, etc."

    I agree. I don't think SIRI buying at $4 is overpaying, though, if the end price is at a fair value of $4. So long as SIRI pays on average a price which, when interest is taken into account, is equal to or less than fair value at the end, SIRI has added value with the buybacks. I expect this will be done carefully... again, SIRI is a large portion of LMCA, and LMCA will handle buybacks to their greatest benefit, which GENERALLY means to the greatest benefit of SIRI. Yes I know the opposite is POSSIBLE but again I do not feel it is PROBABLE :)

    "So bottom line for me is that a slow supportive share buyback program done with slight increase in leverage over time makes me want to stay long and wait for a gradual increase in share price and some comfort that Sirius will be there to support the price when it gets too cheap. An aggressive buyback that seems to designed to return money to Liberty as soon as possible, leaving Sirius more vulnerable to the next downturn with excessive debt will be my signal to sell into that buyback"

    Exactly, so the details of the plan will be important and good for investors to follow as it goes along.

    "Of course we still don’t know yet what Liberty’s plans are. "

    It's a waiting game :) will be interesting to see what they are.
    Oct 31 09:49 PM | Likes Like |Link to Comment
  • Liberty Media Will Not Damage Sirius XM [View article]
    I really can't answer that as I haven't entertained thoughts of the RMT in detail yet. I just don't see it as close enough to worry about... I figure it is at LEAST 18 months away. I'll poke around in it as it gets closer though :)
    Oct 31 09:27 PM | Likes Like |Link to Comment
  • Liberty Media Will Not Damage Sirius XM [View article]
    I don't see a dividend happening. Dividend to LMCA would result in instant taxes (CN mentioned this in his article). Buyback is really the only way UNTIL an RMT. Afterwards... maybe a dividend would be seen but not before.

    As a share holder I would much prefer a buyback over a dividend anyways.
    Oct 31 09:26 PM | Likes Like |Link to Comment
  • Liberty Media Will Not Damage Sirius XM [View article]
    CN,

    "That is not the case. LMCA is "undervalued" on a sum of the components basis. So, SIRI is less than 73%."

    That's why I didn't get into the exact numbers as they are not really important. 73% is easy enough for most to obtain and see, but reality is that yes, it's rounded and approximated. The argument stands, though, whether SIRI is actually 73% of LMCA, 83%, 63%, etc. SIRI is still greater than 50% of LMCA (I'd be extremely surprised if all the numbers added up to SIRI being less than 50% of LMCA).

    "Check out the $1.8 billion dividend from STARZ to Liberty? Do you think that is "good" for the new Starz?"

    I really haven't had time to look into the Starz transaction.

    "but I think it's naive to think that he cares anywhere near as much about about SIRI as he does about LMCA"

    Never claimed that he did. I claim that he cares about LMCA. And I claim that because SIRI makes up 73% (or whatever amount ) of LMCA, that the health of LMCA is greatly based on the health of SIRI. Because SIRI being spun in an RMT is not being "sold off" but rather "spun out" and remains in the Liberty holder's hands, the health of the company will be protected to the extent that its health is directly proportional to LMCA's health, and the resulting spun company is spun to LMCA holders... Malone himself, with control of LMCA and thus control of SIRI (eventually) may pull that oft talked about premium for himself on control transfer (and rightfully so) but I don't expect that to make much of a dent... no more than the standard pops and dips that the stock makes over the course of the week.

    I remain of the belief SIRI will post greater gains vs. LMCA before the RMT. As the RMT comes closer I can reassess, but there's a significant amount of time from now until then. I'd say at least 18 to 24 months.

    I ignored the 7% notes as they are really not material to the argument. If they force liberty to buy more, it's fine... it erases the debt, liberty buys half of them, and they sell it back to SIRI. Saves some interest cost, gets paid in shares, etc... a lot of moving parts with them but they don't really change the argument and would thus have added overcomplications to everything.

    "Anyway, as I previously stated, having a level of debt that is higher than S&P would like does not make Sirius an "unhealthy" company. Just a very highly leveraged one with a fairly predictable revenue stream."

    Though a credit rating downgrade makes it "less healthy." I don't think LMCA will push to the extent that there will be a downgrade. Possible? Yes. Probable? No, I don't think so. They have some room on this and should be able to get that bait cash back (and yes, likely more) without endangering that credit rating.
    Oct 31 09:21 PM | 2 Likes Like |Link to Comment
  • Liberty Media Will Not Damage Sirius XM [View article]
    "When they add up their accounts pre and post RMT they are not going to be real happy if the totals are not at least close."

    Agree, which is why I believe Malone's "premium" in an RMT will be reasonable.

    LMCA holders don't want to be spun a company that everyone will be in a rush to dump.... that doesn't help LMCA holders. It's no good if you extract 10% per share value in cash to LMCA only to have SIRI drop 50% once spun out in an RMT due to bailing.

    It's a delicate balancing game, and I expect it will be done carefully so that SIRI is spun near fair value for the company at the time.
    Oct 31 09:08 PM | Likes Like |Link to Comment
  • Liberty Media Will Not Damage Sirius XM [View article]
    Oh get ready for it! ;)
    Oct 31 09:03 PM | Likes Like |Link to Comment
  • Liberty Media Will Not Damage Sirius XM [View article]
    5 for 1 reverse split? I am just not understanding the thought process behind a reverse split adding value or how it allows SIRI to keep any more capital....
    Oct 31 11:11 AM | 2 Likes Like |Link to Comment
  • Liberty Media Will Not Damage Sirius XM [View article]
    I guess... but I don't see this as much different than Liberty buying them from common then flipping them back at SIRI on the buyback. Just cuts the middleman... Yeah there would be a slight difference but nothing major so it's not something I'd be likely to put too much thought into.
    Oct 31 10:43 AM | Likes Like |Link to Comment
  • Liberty Media Will Not Damage Sirius XM [View article]
    I'm not sure LMCA will yield better or equal returns to straight SIRI, at least until the RMT is done. In my opinion SIRI is the better play until this point. Then again if the other 27% of LMCA outperforms the SIRI portion, LMCA should do better.
    Oct 31 10:08 AM | 2 Likes Like |Link to Comment
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