Tyler Savery

Sirius Investors Face Difficult Decisions: It All Boils Down to Faith

Faith is the level of belief that an individual can put into something. If you believe that a certain outcome is likely to happen, then you are placing faith in that belief.

Some say that faith has no place in investing, the markets, or the economy. for those people, I ask, what gives value to the dollar. There is no gold standard.....only a level of confidence that a dollar will carry a certain value.

With these economic times, people have lost faith in the system. Some more than others. Individual equities are at the mercy of success of an economic system based on faith.

I was not at all suggesting that people base their investment decisions on faith, but rather that faith has become the only thing left. What I am saying is that investors (in virtually any equity) are faced with difficult decisions. Numbers that are okay do not matter. Book values seem to have gone out the window, and even good news is meet with a high degree of skepticism. whether we like it or not.....whether it is prudent or not.....whether it is scientific or not, we are all faced with having to question our level of faith in the system that exists. Perhaps that concept is too deep for some to grasp, but peel away the layers, and you get down to your level of "belief" or "faith".

People ask me if I am for or against the reverse split. I have two choices, and neither is very appetizing. I do not like the choices offered, but have to choose one. karmazin stated that the reverse split is for the purpose of listing requirements. Given a choice of seeing the equity delisted, vs. doing a reverse split, I will take the reverse split. can the decision wait? Sure. The company can hold a special meeting in a few months, and spend a couple of million to make a decision later, in the 11th hour. How wise is that? NASDAQ rules dictate that the company must have a plan to get the equity into compliance. Part of that plan needs to include a reverse split. Come mid January, if a reverse split is not approved, the company will be out of compliance on two fronts. A stock price that is too low, and a plan that is not acceptable. That could accelerate the delisting process, and remove the companies ability to appeal delisting.

No, I am not a fan of reverse splits. i am also not a fan of pink sheets. Investors have a lot of serious issues to consider. I have run into many that have not even thought through what happens if the way they vote comes to fruition. That in and of itself is scary

Who'll Blink First: Sirius, Loral or the Banks?

relmor.....

There are many readers who can not access the analyst reports. It is one reason I do cover them. If the information seem redendant to you, I apologize. Knowing the sentiment of the street on an equity you are invested in is prudent in my opinion.

The Loral line is nothing new. However, Loral has had their own troubles of late, and I wanted to see both their report as well as Sirius'. Knowing that JP Morgan is standing behind Loral is better than not knowing it.

Sats are not launching this year, and IMO it is the ability for Sirius to draw on past payments that is the differentiating factor here. Future payments can be delayed to a certain extent. Getting cash back (agaist the credit line) on payments already made is what carries the leverage.

Auto Sales: Good News on the Horizon?

TomboM....

There was no intent to mislead you. The article is published on SiriusBuzz.com, and was about how the OEM channel (an important partner to satellite radio) could be seeing a turn around. Seekingalpa picked up the story and likely (because it mentions Ford, GM, etc.) it was under those tickers here as well.

Satellite radio aside, we are perhaps appraching the bottom in terms of sales of cars, and while the article is not specific to the auto channel, some of the numbers, data, etc. could be relevant.

The intent was not an article about the auto industry, but how it relates to satellite radio. I can see how someone not interested n satellite could be confused by the title, but please bear in mind that the original piece came from SiriusBuzz.com, which by nature of the name is a site about satellite radio.

Karmazin Video Provides Some Sirius Answers

Mel Karmazin a a very strong supporter of Autism Research and awareness, for reasons that he does not make public. He does not pat himself on the back for all that he has done in this, but is a MAJOR force in getting the information out there.

If anyone has dealt with or been involved with Autism, and did a little bit of digging, they would quickly gain a level of respect for all that Mel has done in this area.

My apologies for getting "off topic" with that, as people are talking about the stock, but his work in Autism is something that I hold a great deal of respect for.

Analysts on Sirius: Merrill, Goldman See Gloom, Barclays Sees Upside

SL62....

There were three reports issued. Sometimes it is not possible to "balance" two bad with two good. It simply was a fact of timing.

Your opinion that putting the two negatives first could be countered by someone saying that the positive report first is getting buried by two negative reports.

The headline was simply a synopsis of what the reports were.

Today, CITI issued a report. There have not been others as yet. The headline is positive, and the analyst report is positive. Certainly that will have some people saying that I am "pumping" the stock when in fact I am simply reporting the release of another report. As yet, S.A. has not picked that article up, but it is on my site. If this afternoon a negative report comes out, I will report on that as well.

Thank you for your readership, and I hope you can understand why the articles are the way they are.

Analysts on Sirius: Merrill, Goldman See Gloom, Barclays Sees Upside

I typically do not post here, but wanted to clarify a couple of things:

1. The article simply represents that some analysts have come out with opinions. When this happens, I cover it.

2. I try to outline the basics of what an analyst is saying without interjection of my own opinion. If I have a strong opinion about a report, I sometimes dig deeper into it in a separate article. I feel this allows readers to see an analysts opinion without my own opinion clouding the issue.

3. I feel it is important to see this, or any investment, from many perspectives without the rose colored, or gloomy gray glasses on.

Simply stated, articles such as this are merely to inform readers what opinions are out there. The fact that one analyst has more or less credibility than another is a matter of opinion. Even if i disagree with an analyst, or Jim Cramer for that matter, I still want to know what they are saying.

Cheers

Will Tate Approve Radio Merger with $20 Million Fine?

Merger Officially approved on July 25

Arbitrage Spread Between Sirius and XM “Abnormally High” - Stifel

163888....

LOL....After iI state that I will stop posting here in the comments section you go and ask a question. Are you tryiong to kill me? Just kidding.

Tonight is at 9:00 PM

That's it, no more comments posts for me.....LOL

Arbitrage Spread Between Sirius and XM “Abnormally High” - Stifel

163888....

Point taken. My posting and responding in the comments section here seems to take away from a healthy discussion of opinion, as it appears some people simply want to discuss subject matter that veers outside what the topic of discussion should be.

Thanks All

Arbitrage Spread Between Sirius and XM “Abnormally High” - Stifel

Moderator....

I am not being argumentative, but there is something there are a few things that need to be pointed out:

You stated, "The example of the “arb play” that you list is NOT often used. How you can make such generalizations confirms you think you know more than you do. There is no typical arb play. Each one depends on the given conditions and probabilities of the various events. Anyone who says there is a typical arb play isn’t an arb trader. Between the two of us, I’d say I know much more about arbitrage than you. Where did you get your knowledge of arb strategies?? From online posts?"

In response, this "arb play" is directly similar to that used by holders of converts. They short the stock against the converts thereby locking in a virtually guaranteed return. This is exactly what Honda did with XM stock.

You stated, "Once again, it’s very difficult for individual investors to find firms that will let you short $2 stocks. I would doubt you can get them from online brokers like E-Trade and Schwab. And if you can they sure won’t have much to hand out. Usually only the Wall Street brokers have them but you’ll find it very difficult to do even an unsolicited trade due to compliance. These are facts. Accept them."

In response, there is a documented large short position in SIRI. The REGSHO listing bears this out. Whether an individual trader is able to short is not really material. Shares are being shorted. Who is shorting them does not really matter.

You stated, "So based on your extremely risky arb example, I guess you realize you are providing justification for shorting SIRI. I wonder how all of your SIRI cheerleaders will like that."

In response, I do not have "SIRI cheerleaders", nor do I really care what they say about such a trade, nor of my own opinion. I have had many criticize my belief that the short term situation in SDARS is very challenging even with a merger approval.

You stated, "You assume that a short SIRI position will hedge a drop of both stocks. I will guarantee you that it will not. Both stocks will not drop the same amount. I will guarantee you that the strategy you list will end up losing money if both stocks go down."

In response lets run through each situation with taking that trade with SIRI at $2.00 and XM at $7.79. The arb in this situation is about 19%:

SIRI DOWN and XM DOWN

- Starting position is $0

- short 500 SIRI @ $2.00. You now have $1,000

- Buy 129 of XM @7.79. You now have $0

- SIRI drops to $1.50 and XM drops to $7.00

- deal closes. You now have 594 shares of SIRI (XM shares converted)

- Buy 500 shares of SIRI to close short position @ $1.50. You are now down $750

- Sell 594 shares of SIRI at $1.50. You gain $891. Profit is $141 or 19%

SIRI UP XM DOWN

- If SIRI went to $2.50 and XM went down to $7 you would cover the short for $1,250, and sell the shares for $1,485. Again, a 19% gain

SIRI DOWN XM UP

- If SIRI went to $1.50 and XM went to $9, you would cover your short for $750 and your sale would net $891. Again, a 19% gain.

SIRI UP XM UP

- If SIRI went to $2.50 and XM to $9.00, you would cover your short for $1,250 and sell shares for $1,485. Again a 19% gain.
That is like thinking you will be completely protected from all downside if you buy puts. These strategies only provide partial protection. As a matter of fact, XM could drop and SIRI could rise to narrow the spread. Get your head on straight.

Could you please outline your statement that you will lose money if both go down? The risk in such a trade is not the price, but whether or not the merger gets approval, as well as the time involved for the play to happen.

You stated, "The arb example you list is extremely risky because you are doubling down in terms of the amount of leverage you are using. How you can even use this example and apply it to SIRI/XM for the people that read these posts is highly irresponsible."

In response, I simply gave an example. I did not recommend the strategy, nor have I employed it myself. Such a strategy minimizes the use of your own capital, virtually locks in the spread, but relies on the companies being in business, and the merger gaining approval in a timely manner.

You stated, "Even a simple short is very risky. Unless you are a professional trader you should not be shorting..ever. It is obvious to me you have no real experience in arbitrage."

Shorting is risky. I rarely short an equity. It simply is not my style. Any investment is risky. As to experience in arbitrage, I outlined one type of trade, and gave the commonly used example of a strategy with converts. I will leave that part of the conversation alone due to what was outlined above.

You stated, "Don’t try to turn this around and make this an issue of whether the merger will pass. That is not the issue. I find your reliance on the merger as some sort of savior to be a bit funny. Even if the merger passes, these companies are going nowhere."

In response, These stocks are all about the merger right now. You were the one that stated that the arb players were betting that the merger would not pass. I disagree with your assertions, and stated that time will bear it out. Right now we simply have opinions. You feel that the companies are going nowhere. That could well be the case, but again, it is an opinion. The reasoning's behind opinions would make a good discussion.

If you want productive discussions, that is wonderful. People should see as many perspectives as possible. That is a healthy and valuable discussion. Name calling accomplishes very little, and diminishes from the value of a conversation.

Thanks for your opinion and the discussion

Arbitrage Spread Between Sirius and XM “Abnormally High” - Stifel

moderator....

Part of the arb play, and a popular trade is to go long XM and short SIRI:

1. Assume you short $1,000 worth of SIRI (500 shares, SIRI @ $2.00).

2. You take the $1,000 from the short sale and buy long on XM (129 shares) (XM @ $7.79).

3. Upon merger closure, your 129 shares will become 594 shares of XM.

4. You owe 500 shares of SIRI on your short, which you can pay off. This leaves you with 94 shares relatively free and clear..

5. If as you say the stocks both go down, you will still have locked in 94 shares on the arb play. Your investment capital into XM came from your short sale on SIRI. Regardless of moves in the stocks, you walk away with shares with virtually no capital outlay.

This example is oversimplified but details an arb play that is often used in stock transaction mergers. I am not recommending it, but clearly people are well aware of this type of trade.

Much of what I present isthe view of sector analysts without my opinion interjected. If I do interject my opinion is is quite clear.

I have no "need" to be positive for the money. I have stated many times that I sold most of my SDARS stock prior to writing about the sector. Do I still hold stock? Yes. Will it change my lifestyle if it goes up or down? No. I am much more invested in other areas. Do I want the merger to go through? Yes.

If you think I only present the positive then you have not been following what I have been writing. I covered the slumping OEM channel, the Goldman downgrades, and other reports that have been sour on satellite. I have written that I feel that people expecting a short squeeze may well be disappointed.

An investment in SDARS has risk. People who typically invest in it understand this.

Lastly, most analysts, as well as sector followers in in the camp that the merger will indeed pass. There were some who felt that the merger would never pass DOJ muster. They were quite wrong. Now, even most of those naysayers have a belief that ultimately the merger will pass. If you want to say that I am "missing" by feeling that the merger will pass, that is fine. Time will bear out whether or not I missed.

Arbitrage Spread Between Sirius and XM “Abnormally High” - Stifel

moderator.....

The opinion on the arbitrage spreads was the analysts, not mine. My own opinion does remain that the merger will gain approval, but that is not material to the article here, as I was not writing about my own opinion on the odds of the merger happening.

Your assertions about shorting Sirius as a difficult task seem at odds with what is happening with the stock. Sirius has been on and off the REGSHO list many times in the past couple of months.

The quote about Spring's being more conservative and cautious stems from his taking down several estimates on metrics and adjusting his models to reflect a more conservative stance. I feel that this is prudent, especially with all of the uncertainties that are out there.

If someone gains 25% from the arb spread and sells on merger approval, then there is no way that they lose their profits. A 25% return is a decent return, especially considering you can accomplish it without a huge cash outlay. I am not recommending this trade, but it is something people will do.

SDARS is a speculative investment, plain and simple. I think that most will echo that sentiment.

Georgetown Partners' Latest Radio Proposal Raises Many Questions

GJEL......

What you are not comprehending is that the "Long SIRI, Long XM" is a statement that I have a position in the equities. It is not a recommendation. I have had a long position in these companies since the recap of SIRI.

Someone who bought at $1.00 and someone who bought at $3.00 can both be LONG. However, their sell points or sentiment could differ dramatically.

LONG is a statement that I have shares in the equity. Nothing more, nothing less. This has been made quite clear some time ago for any of those that did not understand the differences between a statement of position and a recommendation.

A recommendation would be BUY, SELL, HOLD, etc.

The name calling accomplishes very little and does not add to the value of the conversation.

Georgetown Partners' Latest Radio Proposal Raises Many Questions

Vicar.....

You are so bent on casting aspersions that you have opened yourself up to the following criticism:

I have stated time and time again that I am not a "self appointed satellite radio expert" yet for some reason you love to give me that title. I have made it crystal clear, and stated it explicitly, I AM NOT THE EXPERT ON SATELLITE RADIO, yet somehow you still do not comprehend this. Perhaps reading comprehension is the source of some of your problems.

You are seeing something that is not there, and even when you are told point blank that it is not there, you still see it.

I do not know how much more simple this concept can be. I do not recommend buys or sells. Nowhere in my writings will you find me making such recommendations.

GJel.....

I have actually been quite neutral on these stocks for quite some time. I am bullish on SDARS as a concept and a product, but that differs from the equities.

Interestingly, someone sent me this site ( labs.daylife.com/journ... )that seems to pick up my stories and this site categorizes me as "mostly neutral" as you can see on the right hand side. I have no idea how they come to their determination, but I thought it interesting.

Georgetown Partners' Latest Radio Proposal Raises Many Questions

GJelosh197.....

I do not recommend buys or sells. Plain and simple