Liberty Media (LMCA) added another 30 million shares of Sirius XM (NASDAQ:SIRI) to its coffers bringing the Liberty stake to about 49.7% of the satellite radio provider. The most recent buying activity demonstrated pure brilliance on the part of Liberty Media.
After reaching a peak of $2.64 a few weeks ago it was clearly time for Sirius XM to take a breather. The company has raced up to new highs, and was testing waters that had not been tested in years. From a technical standpoint the equity was bound to correct. In fact, for active traders it was a perfect opportunity to short. All signs were pointing for a retracement to somewhat lower levels.
The shorts began to sell, and Liberty was there to scoop up every short share sold. It was an impressive move and allowed Liberty Media to acquire an impressive number of shares without moving the stock price. Lightning certainly couldn't strike twice could it?
Over the past few weeks Liberty Media has been active in buying Sirius XM. Most days saw Liberty buying modest sums when compared to some of the bigger moves the company has made. The effect was a very narrow trading range that kept active traders and shorts out of the market. All the while the moving averages tightened, the support and resistance tightened, and volume was modest. Sirius XM literally closed within a couple of cents of $2.53 for days on end.
On September 6th, Liberty Media filed a form 4 that took its stake over 49%. There were a few purchases, all modest in nature. Friday, September 7th came and went without another filing. Then Monday passed as well. It appeared that maybe Liberty was pausing in its buying activity. After all, everyone knows that they need to stop at 49.9% until the FCC grants de jure control.
With technicals still calling for a correction of sorts, it appears that shorts were ready to hop into the market once again. Guess what company was there to gladly buy up short shares as the sales began to flood the market? That's right...Liberty Media.
This company has been quite adept at buying a massive amount of shares of Sirius XM without really moving the price. Liberty seems to be a technician of the market. On September 11th, Liberty actually bought over 20 million shares, was responsible for over half of the volume, and Sirius XM actually went down.
As things stand now, Liberty Media only needs a virtual handful of shares to get to 49.9%. The burning question is what will happen when Liberty has to stop buying as it waits for FCC approval. From a technical standpoint a correction would seem to be in the cards, but there has been a lot of defense of the Sirius XM stock price lately. With Mel Karmaizin speaking on September 12th, there could be news on the horizon. Stay Tuned.
Disclosure: I am long LMCA, SIRI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.