Sirius XM Radio Vs. Apple Vs. S&P 500: SIRI Investors Have No Reason For Disappointment

| About: Sirius XM (SIRI)
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No matter what financial site you visit, there seems to always be one major complaint about Sirius XM Radio (NASDAQ:SIRI): Why has the stock stalled. You see it in articles, and in comments to articles. Lots of investors are complaining, both the shorts who are exploiting it and the longs who are impatient. But I am having trouble with this. First of all the stock has completely out-performed the S&P over the last 3 years:

SIRI vs. S&P 500

And maybe this is why some Sirius investors that got onboard back in 2009 are having these feelings. For those that invested then, they at one point this year were 1700% over the S&P. Pretty incredible. Many years ago, I heard Warren Buffett remark that to triple your return is a "once in a lifetime" event. Now compare these results with "America's Darling" Apple (NASDAQ:AAPL) over the last 3 years:

AAPL vs. S&P 500

As you can see, Apple is only up a little over 300% above the S&P. Not too bad, but Sirius has gone up six times that. And then if you compare Apple to the S&P this year:

AAPL vs. S&P 500

It has only been up as high as 30% over the S&P this year. Now if you compare Sirius XM to the S&P this year:

SIRI vs. S&P 500

Sirius XM has been as much as 65% higher this year, and is up 25% right now, beating Apple which is up 20% over the S&P. So why are these Sirius investors complaining? When NBC announced that one of Sirius XM's top stars, Howard Stern, of the Howard Stern Show would be a judge on NBC's "America's Got Talent," the shorts claimed the stock did not react in a positive way to the news. Let's see:

SIRI vs. S&P 500

When the actual formal announcement was made last Thursday morning the stock spiked 5% above the S&P, and did not crash back down, but rather ended the week 2.5% better. Now let's see what Apple did last week compared to the S&P:

AAPL vs. S&P 500

Hmm. When you look at the two graphs it is very obvious that the Sirius XM stock reacted quite favorably to the news about Howard Stern. I know that there are a lot of people that really dislike math and graphs, but for those of you who are visual these pictures are literally worth a thousand words. Something else to consider is the fact that most people will not run out right now and buy Sirius stock just because Howard Stern is going to be on the show.

Rather, they will buy the stock due to its performance because of Howard Stern being on the show. I wrote about the benefits (to Sirius XM) of Stern going to do this show in my last article. And unless you were on a cruise in Alaska you have already heard all the news reports. So I will only add that several things came out of that article in the comments. The most important is that the effects of Stern doing this are already starting. On the Sirius internet listening site there are little icon pictures of Howard Stern saying to upgrade your sub now to Premium to get his show. Just click here....only $4 a month more. I truly believe a lot of people will do just that. Not only new subs, but current ones that want to upgrade. Just the over 800 articles (about Stern going to Talent) on Google alone are worth hundreds of thousands of dollars in free advertising. And the story has been all over the entertainment shows and the news.

Something else to consider is the amount of new internet subs being generated by the new Apple App. People can now get Sirius XM 2.0 through the new App on their Apple Ipod, Touch, iphone, ipad, etc. This has so many bells and whistles. Sirius Buzz lists some of them:

  • The “START NOW” feature which will allow users to start shows from their beginning even if you have tuned into that channel after the show begins
  • “TUNE START” automatically starts the currently playing song from the beginning when you tune to a music channel. This allows you to enjoy the complete song
  • “PAUSE” allows you to pause live radio and pick up your audio feed from the point where you left off
  • “FAST FORWARD and REWIND” allow you to navigate through previously aired programming
  • “SHOW FINDER” allows users to easily find their favorite Sirius XM shows

I really think that these new subs (from Stern and the Apple App) will be showing up on the Q4 Report, and that is when the stock will go way up. This will probably not happen till then due to the time of the year.

The entire stock market is about to be on vacation. Christmas is next Sunday, and many investors are thinking about that. They are shopping, traveling, partying, etc. There are not a lot of people thinking about the stock market right now. According to a really great article by Efsinvestment, which is also a very technical article, the price of Sirius stock in December is usually the lowest for the year:

There is an interesting trend in Sirius XM. Since the merger agreement, the stock’s best performing months were the first 4 months of the year. On the contrary, the last four months of the year, including December, have been the worst months for the Sirius XM bulls.

This may be bad for some bulls, but for savvy investors this is a time to buy the stock. If you are still not convinced, consider this. Last year on December 16, 2010 Sirius XM stock closed at $1.39. Since it closed at $1.77 on the same date this year, it is currently up 27.3% for the year. I wish all of my investments had done this. And then let's look at Apple's performance for the last year. On December 16 of this year Apple closed at $381.02 up 18.6% over last December 16 when it closed at $321.25. Not too bad either, but not as good as Sirius!

Disclosure: I am long SIRI.