cos1000

RBC, Barclays Weigh In on Sirius

Hey guys, an interesting discussion. OldDruid, in order to borrow shares from yourself you do have to maintain a long position in the equity that your borrowing. I found the prospect intriguing, so I ran some round numbers to highlight the effect of maintaining a long position while borrowing shares to short, closing the short position and then, either selling or maintaining those closed shares (bought) as a new long position.

Lets say you start off with 50K shares, and the current sp is .15 on your long position. To take a short position without new cash, sell half your shares in the long, 25K shares. You now have $3.75K and 25K shares long. You borrow your remaining shares to short the equity, without any cash out other than fees. Your now Long 25K shares, Short 25K shares, and have $3.75K to close your short position. In this situation, if the stock goes down you start making money on your short and losing on your long, penny for penny. When it gets to .10 cents you buy 25K shares for $2.5K and make $1.25K on your short position and are at a negative $1.25K on your long position, but holding. In actuality here you now own the same 50K Long at .125 / sh and have $1.25K in your account minus all fees.

Now this looks great in terms of using the short position to hedge against your long position when you think the equity is going down..... The problem is that if the equity goes up your hedge becomes a liability against your long position robbing you of any gains, and increasing your average cost per share in the end when you have to cover your short, wherever you wind up covering... Usually that is when the stock gets some good news forcing the shorts to cover.....

My take is that as a relatively small investor, taking one side of the trade or the other, is the best way to make money to add shares or whatever your goal may be. Borrowing shares from yourself, hedges you from losses and caps your gains, with the broker being the only one making money on transaction fees....

Now if your adding new money.... invested in the opposite direction of your initial investment.... your still hedging or capping your investment by holding both positions at the same time..... At least that is how I interpret the strategy....

Sirius: A Deeper Look at the Liberty Deal

freep,
well said and still LMAO.... thanks


On Feb 17 06:38 PM cos1000 wrote:

> By the way 163888, I am after all in this to make money, as are others
> here. I also don't think you were talking about me because I have
> not projected big pops in SP as you know. It is my strategy to play
> the ups and downs as I see the MM's do, to improve my base position
> as I have clearly stated before. The shares I sell and those that
> I buy back are all part of the dance that is the market. I may affect
> the price, but I do not control it. On a good day I try to move
> with those that do. It just a strategy for making money in the market.
> Predicting stock price is for some one else, moving in real time
> with the stocks price and momentum and making trade decisions based
> on that interpretation, is every investors prerogative. This stock
> has taught me that it is not a buy and hold equity... to many moving
> parts that can come up and bite you in the arse on any given day..

Sirius: A Deeper Look at the Liberty Deal

By the way 163888, I am after all in this to make money, as are others here. I also don't think you were talking about me because I have not projected big pops in SP as you know. It is my strategy to play the ups and downs as I see the MM's do, to improve my base position as I have clearly stated before. The shares I sell and those that I buy back are all part of the dance that is the market. I may affect the price, but I do not control it. On a good day I try to move with those that do. It just a strategy for making money in the market. Predicting stock price is for some one else, moving in real time with the stocks price and momentum and making trade decisions based on that interpretation, is every investors prerogative. This stock has taught me that it is not a buy and hold equity... to many moving parts that can come up and bite you in the arse on any given day..

Sirius: A Deeper Look at the Liberty Deal

s162,
Thanks for reminding everyone that the alternative to today was as you say, BK, pink sheets, and under 2 cents......

I made a couple of comments earlier about dilution and the preferred stock. The reason I think Malone holds on to preferred without conversion to common is this line in the agreement that gives his equity priority to the common in cases of liquidation. He can convert at anytime to common if he wants to raise cash and give up some of his 40% position, but until the company is making money this is his protection in any future BK. Prudent for him to keep those shares off the market until the company he now owns 40% of, is flourishing.

<The preferred stock will, with respect to dividend rights, rank on a parity with our common stock, and with respect to rights on liquidation, winding-up and dissolution, rank senior to our common stock. Dividends on the preferred stock are payable, on a non-cumulative basis, as and if declared on our common stock, in cash, on an as-converted basis.>

Another interesting item is that Sirius Xm can still be sold to a higher bidder and this Investment Agreement can be terminated for $7M. The cannot solicit a bid until after April 15th, but if one were to come along they can entertain it. I think this part of the agreement truly makes it a "bridge loan" if someone makes a more beneficial offer to shareholders, than this offer represents. Maybe their are other parties out their interested, but unable to bid at this time. How many shareholders would sell their shares for $2.00 - $3.00 right now??

<If, prior to April 15, 2009, we receive an alternative proposal that our Board of Directors concludes in good faith is a Superior Proposal (as defined below), our Board of Directors may terminate the Investment Agreement in order to transact the Superior Proposal. After April 15, 2009, we may terminate the Investment Agreement if our Board of Directors determines it is in our best interests to do so. In either of those events, we will pay the Purchaser a termination fee of $7 million.

“Superior Proposal” means a bona fide written alternative proposal that our Board of Directors in good faith determines, after consultation with its legal and financial advisors, would, if accepted, be reasonably capable of being consummated, taking into account legal, financial, regulatory, timing and similar aspects of the proposal and the person making the proposal, and would, if consummated, result in a transaction more favorable to our stockholders from a financial point of view than the transaction contemplated by the Investment Agreement.>

Sirius: A Deeper Look at the Liberty Deal

That is also why Tyler above described the share count in his article.... Well I got to go read the whole filing again.... later.

Sirius: A Deeper Look at the Liberty Deal

This is in the Investment Agreement that's why I thought it important. It would appear 30 days is the waiting period. The parties put it in the agreement because they though it applied.

Upon expiration of the applicable waiting period under the Hart-Scott-Rodino Act, the preferred stock will be convertible into 40% of our outstanding shares of common stock (after giving effect to such conversion). Issuance of the preferred stock is subject to the satisfaction of certain conditions, including the conditions to funding under the XM Credit Agreement described below.


On Feb 17 04:42 PM mogami_99 wrote:

> Hi, That act concerns gaining 50 % of an interest. Liberty agrees
> not to aquire more then 49% for 3 years
>
>
> On Feb 17 04:30 PM cos1000 wrote:

Sirius: A Deeper Look at the Liberty Deal

So not much movement, but yesterday I thought that not filing Bankruptcy and putting a smile on my face ,would have the stock go to .18 - .21 cents. Well it did for a little while and we got $375M shares out of the way today while everyone is trying to figure out if the deal is good for shareholders. We really need clarity on the 4thQ and confirmation that the May $250M held by the banks, lead by JPM, is pushed out, before any real movement can be had with confidence. The $100M UBS, May debt is done with the Xm loan, 2nd piece of this deal. Once we have that information and responsible analysts (that might be an oxymoron) read through the documents, realize how little additional dilution happens now, we should get solid movement upward.

When that dilution does happen, does anyone think Malone will sell those shares and loose his 40% Equity Position? I think not.... If he does I will be selling right behind him.... So even when that position is taken, it will most probably be held and not available for the open market.... He will probably continue to hold them as Preferred because the conversion is at his option, not mandatory until 2012 ,I believe. I need to read more on that to be sure. Anyone know for sure?

Meanwhile I did want to find out more about The Hart-Scott-Rodino Act, because it was mentioned with no explanation to the uninformed on these matters, like me. I put a link here for anyone else who wants to find out what that's about. You guys might have discussed this stuff already and I am just playing catch up, if so, sorry....

The Hart-Scott-Rodino Antitrust Improvements Act of 1976,
library.findlaw.com/19...

Sirius Investors Still in the Dark as Takeover Speculation Continues

Lipstick.... definitely...

Check out the afterhour push.... it always amazes me that a stock worth .07 all day long, finds new value in afterhours....

Sirius Investors Still in the Dark as Takeover Speculation Continues

What's wrong with lesbianism.....?? I've been a lesbian all my life and so aren't most of the guys I know.... :)

Sirius Investors Still in the Dark as Takeover Speculation Continues

Check out the S&P coming back from the precipice..... 830 and heading to close as the shorts take their profits... 820 has proven strong at least 3 times now.... will take another crisis to break this level down IMHO.

Sirius Investors Still in the Dark as Takeover Speculation Continues

One day and counting...... I guess this long weekend, again, will just leave us all guessing....

By the way, a question here, why do they have to take XM into bankruptcy to strike a deal for their assets? It would sound like an open market sale of satellites and repeaters / transponders for XM debt. The talk about UBS being involved with Liberty's discussions sounds like the $100M May 09, being worked out. Very interesting.

Sirius Investors Still in the Dark as Takeover Speculation Continues

relmor,
I really think big money has taken the markets down to these levels to send a message to Obama and crew and to create an urgent need for more centrist idea inclusion in the bailout package. More tax cuts and less social program funding. Once this bill goes through, the "wall street" crowd will go back to making money either by shorting to the next leg down or by putting their cash to work for the next push back up. (I know not very insightful but that's we are, on a precipice). They can't stand Geitner, saying we'll let you know what we're going to do just before we do it... and we're going to make mistakes.. Not much of a plan and not much for building confidence. I don't see any good news on the horizon to push the markets upward, but who really knows. I would watch the S&P holding above 820 or not, rather than the DOW. If it breaks or closes below 820, then things could get ugly with a lot of technical sell orders setting off another leg down...

Sirius Investors Still in the Dark as Takeover Speculation Continues

4 to 1 negative on the big board..... you might be right relmor, but not today I don't think.... market shorts will cover, buy back to lock in profits by the end of the day.....

Sirius Investors Still in the Dark as Takeover Speculation Continues

relmor, no I don't know how this info could be accessed in real time.

Sirius Investors Still in the Dark as Takeover Speculation Continues

Show me anywhere where you can find the owners of the convertible debt. This stuff trades on variable volume on a daily basis. Your just another basher looking to blame someone for your mistakes.... Tyler reports what is on the wires just like most others... take for what it's worth.


On Feb 12 09:56 AM User 330908 wrote:

> The messenger is right. Where was Tyler several months ago when EchoStar
> was purchasing these bonds from right under his nose. All we heard
> from Tyler for months was various sanarios regarding these bonds,
> converts, equity swap for debt. You would have thought any journalist
> worth his salt considering the situation would have looked a little
> deeper into the possibility of someone attempting a takeover or initiating
> a move on this beat down company but what do I know. He simply goes
> for the low hanging fruit like any rookie journalist would do.<br/>