SF You wrote: "and institutions were unlikely to unload in great quantities. That left the retail float as the provider of the lion's share of, well ... shares, for Sirius XM's buyback plan. "
That's actually not what happened in the 1st Q. Institutions were net sellers of 145 million shares in the 1st Q; essentially the same as Sirius purchases. It was retail that held on.
But I do believe Sirius purchases are supporting the price in the 1st Q as now. I have little doubt about that. Probably even pushing up the price to a new high at 3.59. In the first Q, with an average purchase price of $3.15, they almost certainly bought shares at prices higher than the average, and since they probably were able to buy some at 3.10 or lower, they probably were buying pushing the highs in the 1st Q as well, while institutions were selling.
As long as they can keep buying at the same pace, that works well for those holding on. But as it goes higher, its seems institutions will be even more likely to sell than they did in the 1st Q. If insitutions did 145 millions net sells in the 1st Q with the Sirius average buy at $3.15, it would seem that 40 cents higher would bring even more selling from institutions, but we'll have to wait almost 3 months to find out.
Big Money Shuffles Sirius XM, Pandora, Apple And Google [View article]
LA,
Once again I caution you to be careful what you wish for. Depends on what Sirius might offer in the way of Telematics', but margins are unlikely as high as those of satellite radio. GM's OnStar lost over $1 billion before it broke even.
Big Money Shuffles Sirius XM, Pandora, Apple And Google [View article]
LA,
Institutions were huge net sellers of Sirius in the 1st Q. Institutional owners come and go each Q. But as of this morning's reporting thru 3/31, 320 million shares were bought, and 465 million shares were sold, a net reduction of 145 million shares.
That just about matches what Sirius bought in the 1st Q - Sirius effectively bought from institutions, while retail held on. Without Sirius buyback program, Sirius stock would have no doubt been under considerable selling pressure in the 1st Q.
Sirius buyback is very aggressive and was the only thing supporting the price in the 1st Q. If they are continuing at the same pace, it probably accounts for a large part of the 40 cent increase in share price since then. No reason to believe institutions are buying more aggressively this Q than last just because Sirius is - there was really nothing fundamental learned in the 1st Q CC that would make institutions more likely to buy. More likely they will be net sellers once again at higher prices as retail continue to chase it.
But what happens in July if Liberty starts selling into the buyback program, thus reducing the amount of shares being bought from the public domain by one half?
Has The Sirius XM Used Car Opportunity Been Over-Hyped? [View article]
CN,
I'm not sure that Sirius and or others over-hype the story of used cars on Sirius's growth prospects, but its become the whole story and the least understood story of what to expect for growth in subs.
Growth in subs from the new car industry has reached a steady-state level - there is very little net growth coming from new cars. An industry of 15.5 million, at a 67% installation rate and a 44% take rate, only produces about 4.57 million net additions a year. That is completely offset by churn. At 1.9% on a base of 19.9 million churn will be about 4.54 million.
So Sirius growth from here on is dependent on used cars activations, so when Sirius says they will get 1.5 million "adds" from used cars, that probably is pretty close to the same forecast as their total net additions of 1.6 million.
Another point. Although SAC per gross additions is going down, if we look at cost per net paying-sub additions, its virtually unchanged from last year. $116.1 million divided by 304000 subs this year vs. the same amount divided by 299,000 subs a year ago. That's $382 vs $388. So while there is an improvement it will still take over 2 years to pay back the cost of each net paying sub addition.
It would be nice to get some metrics from Sirius that would enable analysts to model subs additions from used cars, but until that is produced, we'll just have to rely on Sirius saying they will get 1.5 million subs from used cars, whatever that means, whether conservative or optimistic. Not the best way to make judgments on a companies future prospects.
At the minimum it would good to get a forecast of gross activations from used cars, to go with the forecast of gross additions, if that is what the 1.5 million represents. With new cars we essentially get that - 67% of the industry, and the take rate of 44%.
Liberty's Plans For Sirius XM Take Another Step Forward [View article]
CN,
Sirius does usually guide conservatively, but if their paying sub guidance is consistent with their revenue and CF guidance, then taking down ARPU to hit subs, will impact revenue and CF. But then again maybe they've given guidance that's not internally consistent. I'm just surprised at the continued emphasis on total net subs, when even Sirius started to push the "paying subs" guidance earlier in the year, only to hardly talk about it this time.
Liberty's Plans For Sirius XM Take Another Step Forward [View article]
CN,
By the way - different subject. I didn't see any SA comments on Sirius only adding 309,000 self paid subs last Q. They've guided to 1.6 million, which means they need 430,000 per Q each of the next 3 Qs. What's you thoughts on their ability to hit that guidance?
Liberty's Plans For Sirius XM Take Another Step Forward [View article]
CN,
I believe SA contributors are making too much of the $1 billion in debt raised by Sirius last week, with respect to a near term increase in the buyback program. They merely took advantage of a significant drop in interest rates (led by the 10-year Treasury) to lock in a very favorable interest rate long term. That long term debt simply replaces the anticipated use of the $1.2 billion revolver over the next several months.
As for the leverage that Sirius seeks, we should rely on the comments from Meyer and Frear that they sought a leverage of 3.5. Frear even said they expected to get their later this year; turned out it was within a couple of days. But whether that leverage came from the revolver or long term debt, it shouldn't change the expectation of them not exceeding the 3.5, at least not substantial, and if they do, only temporarily. And with Maffei being the Chairman of the Board, you can bet that leverage of 3.5 was agreed to by him, and not just coming from the CEO and CFO.
Besides I don't know anyone that thought that Sirius would end the buyback with the $2 billion announced last year. There's been an expectation that it would be increase once the existing program was expended.
An increase in the buyback is likely to be driven more by an increase in CF/EBITDA than new borrowings. Each $100 million increase in EBITDA(or CF, if that's the criteria) in theory allows them to increase the borrowing by $350 million, and the overall buyback by $450 million. So while they may tap into the revolver from time to time later this year, its likely to be some time before they use the entire $1.2 billion.
April Auto Sales And Impact On Sirius XM [View article]
Spencer,
With Sirius's recent addition of self-pay subs as part of their guidance, I'm surprised none of the SA analysts have commented on the self pay additions in the 1st Q. They were only 309,000 and Sirius has a projection of getting 1.6 million self pay subs for the year. The self pay should not be influenced significantly like the total net additions will be by the GM change.
Anyway the 1st Q pace seems a little light - to get to 1.6 million Sirius will need to hit 430,000 a Q on average for the next 3 Qs.
Am I missing something? Maybe CN could comment if he's reading this.
Sirius XM: Hold On, $3.50 Is In Sight [View article]
SF,
You write "With $1 billion about to flow into the company in cash from the bond offering, and $150 million of that used to repay the revolver, that leaves $850 million available plus the full $1.25 billion revolver for Sirius XM to draw upon for buybacks. That's $2.1 billion"
While its true that $2.1 billion is "available" the reality is that the longer term debt replaced the revolver. Sirius was able to take advantage of the recent drop in interest rates and lock in a great rate for several years, which is great.
But that new debt takes the leverage up to near 3.5 - which is where Meyer (and Frear) said they wanted to be in the CC and previously, so they are unlikely to use the revolver for some time, at least not more than some nominal amount (maybe a couple hundred million more), temporarily, until increasing EBITDA allows them to borrow more and keep that 3.5 leverage.
In theory every $100 million increase in EBITDA allows they another $350 million in leverage, but that comes over time, not just because they have a $1.25 B revolver they are paying .30% annually to maintain.
I really doubt it changes anything with Sirius buyback plans. They always were likely (at least most analysts were predicting) to increase the buyback after they finished the $2 billion, which they are on pace to do in October if they keep spending around $650 every three months, which is the current pace. But they are bumping up against that 3.5 leverage, so beyond that they will need to rely more on cash flow.
So you may want to look at the new $1 billion in debt as opportunistic financing because of a recent drop in rates, rather than any change of buyback plans.
Sirius XM To Increase Share Buyback Program? [View article]
Spence,
What do you think about car sales coming in under a 15 million SAAR in April, and missing expectations? Implications to Sirius?
As for the buyback, I believe Meyer said they had about $1.3 billion left, which is consistent with buying 209 million shares through last Friday. But that also means they are spending about $650 million every 3 months (since they didn't start until Feb). At that pace they will have finished the $2 billion program by Oct. No wonder they are borrowing another $500 million.
Its a pretty aggressive pace and clearly providing support for the share price. It will be interesting to see if Liberty does start selling into the buyback and how that plays out with the share price
Sirius XM Rockets Up To $3.25: This Time It's Different [View article]
WW,
Someone else that actually reads the 10Q. Also, it doesn't appear they tapped into the revolver last Q, but with cash down to just over $200 million, they probably have or will soon start borrowing to continue the buyback program this Q.
Might explain why it appears the buyback slowed down a little in April, at least through last Friday, although they may have made it up yesterday, given the higher overall volume. Seems like someone has been providing support. Looked like they were doing it after the Feb cc also, then seemed to allow it to drift a little lower, especially in April.
Why Has The Price Of Sirius XM Stagnated? [View article]
CN,
I don't believe the RMT will be good for Sirius shareholders, at least during the period immediately before and after - and I don't know if its a six month or one year window, or more. Before the RMT there will be arbitraging which will result in shorting Sirius and buying LMCA to bring their perceived values closer together. Also there could be some shorting of Sirius pre-RMT by LMCA owners that don't want to own Sirius afterwards. Afterwards, with double the number of shares in the float, and twice the number of "new" owners (some that have shorted), many may decide to sell. Of course there is also the possibility of an effective reverse split to reduce the number of shares and raise the price, which many induce Citi reverse split - like selling.
Why Has The Price Of Sirius XM Stagnated? [View article]
CN,
Tanking does often happen after the 1st Q report - I said "so far". Longs should be happy, but cautious here. Near a breakout, or a breakdown? Probably one of those. Doubt if we spend the next 3 months at $3-3.10, but wouldn't be disappointed if we did.
Volume has been very low, but generally higher on sell off days. Up days have been weaker, generally. I suspect SIRI would be lower today without the buyback. But its had more than a year of "unusual" buying, first with Liberty in the 1st Q 2012, then backing off in the 2nd Q, then resuming buying in the 3rd Q thru year end. Now they buyback or at least those anticipating the buyback. Who knows what the unaided price would be, but probably lower. Lots of shares taken off the market, for awhile anyway.
Sirius XM's $2 Billion Buyback Raises Floors And Busts Ceilings [View article]
You wrote:
"and institutions were unlikely to unload in great quantities. That left the retail float as the provider of the lion's share of, well ... shares, for Sirius XM's buyback plan. "
That's actually not what happened in the 1st Q. Institutions were net sellers of 145 million shares in the 1st Q; essentially the same as Sirius purchases. It was retail that held on.
But I do believe Sirius purchases are supporting the price in the 1st Q as now. I have little doubt about that. Probably even pushing up the price to a new high at 3.59. In the first Q, with an average purchase price of $3.15, they almost certainly bought shares at prices higher than the average, and since they probably were able to buy some at 3.10 or lower, they probably were buying pushing the highs in the 1st Q as well, while institutions were selling.
As long as they can keep buying at the same pace, that works well for those holding on. But as it goes higher, its seems institutions will be even more likely to sell than they did in the 1st Q. If insitutions did 145 millions net sells in the 1st Q with the Sirius average buy at $3.15, it would seem that 40 cents higher would bring even more selling from institutions, but we'll have to wait almost 3 months to find out.
Big Money Shuffles Sirius XM, Pandora, Apple And Google [View article]
Once again I caution you to be careful what you wish for. Depends on what Sirius might offer in the way of Telematics', but margins are unlikely as high as those of satellite radio. GM's OnStar lost over $1 billion before it broke even.
Big Money Shuffles Sirius XM, Pandora, Apple And Google [View article]
Institutions were huge net sellers of Sirius in the 1st Q. Institutional owners come and go each Q. But as of this morning's reporting thru 3/31, 320 million shares were bought, and 465 million shares were sold, a net reduction of 145 million shares.
That just about matches what Sirius bought in the 1st Q - Sirius effectively bought from institutions, while retail held on. Without Sirius buyback program, Sirius stock would have no doubt been under considerable selling pressure in the 1st Q.
Sirius buyback is very aggressive and was the only thing supporting the price in the 1st Q. If they are continuing at the same pace, it probably accounts for a large part of the 40 cent increase in share price since then. No reason to believe institutions are buying more aggressively this Q than last just because Sirius is - there was really nothing fundamental learned in the 1st Q CC that would make institutions more likely to buy. More likely they will be net sellers once again at higher prices as retail continue to chase it.
But what happens in July if Liberty starts selling into the buyback program, thus reducing the amount of shares being bought from the public domain by one half?
Has The Sirius XM Used Car Opportunity Been Over-Hyped? [View article]
I understand, but without used cars, Sirius's self paying sub net additions would be near zero.
Has The Sirius XM Used Car Opportunity Been Over-Hyped? [View article]
I'm not sure that Sirius and or others over-hype the story of used cars on Sirius's growth prospects, but its become the whole story and the least understood story of what to expect for growth in subs.
Growth in subs from the new car industry has reached a steady-state level - there is very little net growth coming from new cars. An industry of 15.5 million, at a 67% installation rate and a 44% take rate, only produces about 4.57 million net additions a year. That is completely offset by churn. At 1.9% on a base of 19.9 million churn will be about 4.54 million.
So Sirius growth from here on is dependent on used cars activations, so when Sirius says they will get 1.5 million "adds" from used cars, that probably is pretty close to the same forecast as their total net additions of 1.6 million.
Another point. Although SAC per gross additions is going down, if we look at cost per net paying-sub additions, its virtually unchanged from last year. $116.1 million divided by 304000 subs this year vs. the same amount divided by 299,000 subs a year ago. That's $382 vs $388. So while there is an improvement it will still take over 2 years to pay back the cost of each net paying sub addition.
It would be nice to get some metrics from Sirius that would enable analysts to model subs additions from used cars, but until that is produced, we'll just have to rely on Sirius saying they will get 1.5 million subs from used cars, whatever that means, whether conservative or optimistic. Not the best way to make judgments on a companies future prospects.
At the minimum it would good to get a forecast of gross activations from used cars, to go with the forecast of gross additions, if that is what the 1.5 million represents. With new cars we essentially get that - 67% of the industry, and the take rate of 44%.
Liberty's Plans For Sirius XM Take Another Step Forward [View article]
Sirius does usually guide conservatively, but if their paying sub guidance is consistent with their revenue and CF guidance, then taking down ARPU to hit subs, will impact revenue and CF. But then again maybe they've given guidance that's not internally consistent. I'm just surprised at the continued emphasis on total net subs, when even Sirius started to push the "paying subs" guidance earlier in the year, only to hardly talk about it this time.
Liberty's Plans For Sirius XM Take Another Step Forward [View article]
By the way - different subject. I didn't see any SA comments on Sirius only adding 309,000 self paid subs last Q. They've guided to 1.6 million, which means they need 430,000 per Q each of the next 3 Qs. What's you thoughts on their ability to hit that guidance?
Liberty's Plans For Sirius XM Take Another Step Forward [View article]
I believe SA contributors are making too much of the $1 billion in debt raised by Sirius last week, with respect to a near term increase in the buyback program. They merely took advantage of a significant drop in interest rates (led by the 10-year Treasury) to lock in a very favorable interest rate long term. That long term debt simply replaces the anticipated use of the $1.2 billion revolver over the next several months.
As for the leverage that Sirius seeks, we should rely on the comments from Meyer and Frear that they sought a leverage of 3.5. Frear even said they expected to get their later this year; turned out it was within a couple of days. But whether that leverage came from the revolver or long term debt, it shouldn't change the expectation of them not exceeding the 3.5, at least not substantial, and if they do, only temporarily. And with Maffei being the Chairman of the Board, you can bet that leverage of 3.5 was agreed to by him, and not just coming from the CEO and CFO.
Besides I don't know anyone that thought that Sirius would end the buyback with the $2 billion announced last year. There's been an expectation that it would be increase once the existing program was expended.
An increase in the buyback is likely to be driven more by an increase in CF/EBITDA than new borrowings. Each $100 million increase in EBITDA(or CF, if that's the criteria) in theory allows them to increase the borrowing by $350 million, and the overall buyback by $450 million. So while they may tap into the revolver from time to time later this year, its likely to be some time before they use the entire $1.2 billion.
April Auto Sales And Impact On Sirius XM [View article]
With Sirius's recent addition of self-pay subs as part of their guidance, I'm surprised none of the SA analysts have commented on the self pay additions in the 1st Q. They were only 309,000 and Sirius has a projection of getting 1.6 million self pay subs for the year. The self pay should not be influenced significantly like the total net additions will be by the GM change.
Anyway the 1st Q pace seems a little light - to get to 1.6 million Sirius will need to hit 430,000 a Q on average for the next 3 Qs.
Am I missing something? Maybe CN could comment if he's reading this.
Sirius XM: Hold On, $3.50 Is In Sight [View article]
You write "With $1 billion about to flow into the company in cash from the bond offering, and $150 million of that used to repay the revolver, that leaves $850 million available plus the full $1.25 billion revolver for Sirius XM to draw upon for buybacks. That's $2.1 billion"
While its true that $2.1 billion is "available" the reality is that the longer term debt replaced the revolver. Sirius was able to take advantage of the recent drop in interest rates and lock in a great rate for several years, which is great.
But that new debt takes the leverage up to near 3.5 - which is where Meyer (and Frear) said they wanted to be in the CC and previously, so they are unlikely to use the revolver for some time, at least not more than some nominal amount (maybe a couple hundred million more), temporarily, until increasing EBITDA allows them to borrow more and keep that 3.5 leverage.
In theory every $100 million increase in EBITDA allows they another $350 million in leverage, but that comes over time, not just because they have a $1.25 B revolver they are paying .30% annually to maintain.
I really doubt it changes anything with Sirius buyback plans. They always were likely (at least most analysts were predicting) to increase the buyback after they finished the $2 billion, which they are on pace to do in October if they keep spending around $650 every three months, which is the current pace. But they are bumping up against that 3.5 leverage, so beyond that they will need to rely more on cash flow.
So you may want to look at the new $1 billion in debt as opportunistic financing because of a recent drop in rates, rather than any change of buyback plans.
Sirius XM To Increase Share Buyback Program? [View article]
What do you think about car sales coming in under a 15 million SAAR in April, and missing expectations? Implications to Sirius?
As for the buyback, I believe Meyer said they had about $1.3 billion left, which is consistent with buying 209 million shares through last Friday. But that also means they are spending about $650 million every 3 months (since they didn't start until Feb). At that pace they will have finished the $2 billion program by Oct. No wonder they are borrowing another $500 million.
Its a pretty aggressive pace and clearly providing support for the share price. It will be interesting to see if Liberty does start selling into the buyback and how that plays out with the share price
Sirius XM Rockets Up To $3.25: This Time It's Different [View article]
Someone else that actually reads the 10Q. Also, it doesn't appear they tapped into the revolver last Q, but with cash down to just over $200 million, they probably have or will soon start borrowing to continue the buyback program this Q.
Might explain why it appears the buyback slowed down a little in April, at least through last Friday, although they may have made it up yesterday, given the higher overall volume. Seems like someone has been providing support. Looked like they were doing it after the Feb cc also, then seemed to allow it to drift a little lower, especially in April.
Why Has The Price Of Sirius XM Stagnated? [View article]
I don't believe the RMT will be good for Sirius shareholders, at least during the period immediately before and after - and I don't know if its a six month or one year window, or more. Before the RMT there will be arbitraging which will result in shorting Sirius and buying LMCA to bring their perceived values closer together. Also there could be some shorting of Sirius pre-RMT by LMCA owners that don't want to own Sirius afterwards. Afterwards, with double the number of shares in the float, and twice the number of "new" owners (some that have shorted), many may decide to sell. Of course there is also the possibility of an effective reverse split to reduce the number of shares and raise the price, which many induce Citi reverse split - like selling.
So delaying it probably is a good thing for now.
Why Has The Price Of Sirius XM Stagnated? [View article]
I agree with that comment. But it may have delayed the RMT because of Liberty's desire to get its money back first.
Why Has The Price Of Sirius XM Stagnated? [View article]
Tanking does often happen after the 1st Q report - I said "so far". Longs should be happy, but cautious here. Near a breakout, or a breakdown? Probably one of those. Doubt if we spend the next 3 months at $3-3.10, but wouldn't be disappointed if we did.
Volume has been very low, but generally higher on sell off days. Up days have been weaker, generally. I suspect SIRI would be lower today without the buyback. But its had more than a year of "unusual" buying, first with Liberty in the 1st Q 2012, then backing off in the 2nd Q, then resuming buying in the 3rd Q thru year end. Now they buyback or at least those anticipating the buyback. Who knows what the unaided price would be, but probably lower. Lots of shares taken off the market, for awhile anyway.