By Relmor Demitrius

Sirius XM Radio (NASDAQ:SIRI) has had one hell of a year so far.  The sentiment on this stock from only December of 2009 to April of 2010 has changed dramatically.  On the last trading day of 2009, Sirius XM traded for 60 cents a share.  As of yesterday, the equity had doubled, hitting $1.20 a share.  That’s a 100 percent gain in a year that has seen the DOW gain 5%.  Impressive you say?  Speculation stock which payed off?  I take offense to that.  Absolutely no way is this in any way a speculation gain.  This was a pure evaluation play, in my opinion, and I have been stating this for months now.  How can a 2.7 billion dollar revenue generator, cash flow positive, 18 million subscriber service and growing company, be priced under $1?  Easy.  The media created so much misinformation and lies about this stock and took such an emotional hatred for this company and equity, it defied logic and reason.  The short play in 2009 on Sirius XM was based on pure speculation.  The recovery was only the realization of facts setting in, along with expected production from the company in regards to handling their debt load and cutting costs, without sacrificing quality of the product.  They actually cut costs and increased the value of the product in 2009 while opening the service up to many new outlets, and adding great content like MSNBC to their already packed lineup of sports, talk, music, specialty shows and channels.

Speculators in 2009 bet big on Sirius XM failing.  Of course it was the contrarian opinion, going against all odds and common sense.  The short attack was so against rational thought, one almost suspected the short interest itself along with; coincidentally a vibrant and emotional media attack against the company was to blame.  As an investor that watches for signs like this, I immediately started feeling more and more confident that the company would succeed.  Anytime the mass main stream media is emotionally attacking your company, there is probably a very good chance they are wrong or have a motive.  Journalists, analysts, and media pundits from across the media spectrum bashed this company, bet against it, and took a bearish view.  As a media contrarian, I knew this was a very good sign.  So what did the speculators that were shorting this stock go on?  Nothing.  They went against facts.  And they got burned for it too.  If they had started the short before the merger, then that might say something.  However, most of that short interest was attached to the lent shares on the merger debt, hence not a short bet at all.  I’m talking about the retail short position, and the institutional short position not attached to hedging a bond trade.  Sirius XM started 2009 around 12 cents and ended the year trading at 60 cents a share.  As short interest has once again been increasing in 2010, speculators are out again betting against Sirius XM going forward at every turn.  I will now present the facts that are surrounding Sirius XM that has caused more than a doubling in its open short interest since January of this year.  Remember, the shorts closed their positions down to around 55 million from over 230 million shares to begin 2009.  The 55 million share amount will probably be the lowest it will reach until hedged bonds are paid off.  For a float over 3.8 billion shares, this percentage of short interest is actually still rather small.  You will soon see why I am worried for these speculators.  I often warn that investing on speculation can bite you.  (more…)

By Relmor Demitrius

Sirius XM Radio (NASDAQ:SIRI) starts off the week on a high note.  Having once again broken the $1 mark and maintained it for three consecutive days now, leaving only 7 days remaining to comply with the 10 needed for NASDAQ’s minimum bid price rule requirement.  Sirius XM had been issued a letter of non compliance, and a Staff Notification of Delisting a month ago now.  They have a panel hearing on April 29th to request additional time to come into compliance.  If that panel hearing ends up being necessary, ironically it would come on day 11 of being over $1, on this attempt to hold over $1 it is currently in.  Coincidence or not, it would negate the need to ask for more time from an independent panel of business leaders and industry professionals.  If this were to occur, Sirius XM might have one of the best days of the year coming on that day 11.

Any institutions waiting to buy in for the dollar threshold would most likely be given the green light at that point.  Institutions that aren’t fortunate enough to be able to buy a stock under $2 or under $5 are going to be drooling over the lost opportunity on this one.  Of course institutions who can might decide there is no better time to attempt one last low price purchase of this equity.  If $1 is the new “low” and low point in anyone’s risk tolerance, traders might also pile in and use $1 as their benchmark price.  If this stock then gains the momentum of swing traders, and we see shorts closing their positions who bet against the odds on this company, there could be another capitalization day similar to what occurred when this stock broke over .79 this year.  It has never traded lower than that price since, hence to this date, under .80 on this equity might have been permanently capitalized. (more…)

By Relmor Demitrius

Sirius XM (NASDAQ:SIRI) issued a press release yesterday stating a return to subscriber growth from a 404,000 retail subscriber loss in the first quarter of 2009.  They had 171,000 net additions in Q1 of 2010.  They also stated a confirmation on guidance in revenue and EBITDA growth as on pace with estimates.  This means 20% growth in EBITDA and a high single digit growth in revenue is in play for this conference call coming up in May.  They must report by mid May according to their SEC filing requirements.

Based on this information S&P has reiterated its Hold rating on shares of Sirius XM.  S&P sees the 20% EBITDA growth and 7% growth in revenue as possibly conservative.  They see autos continue to rebound and this should bloster their subscriber numbers going forward.  S&P has been bullish the company since below 60 cents, yet hasn’t moved off its Hold rating. 

If you were to “Hold” on this stock any longer, it might be over $2 a share before these “market visonaries” get around to changing it to a buy. 

Janco Partners recently gave Sirius XM an upgrade to “Buy” and a price target move from 80 cents to $1.30.  This upgrade actually came before the press release from Sirius XM. 

These are the first reports and effects of the kind of quarter Sirius XM is expected to have.  Strong growth, steady revenue increases, and continued across the board cost cutting efforts are drawing a flame once again to shares.  Volume spiked strongly on the report, and shares rose from a close near 96 cents on Tuesday, to a high of 1.09 in AH late Wednesday.

Shares this morning in premarket have traded as high as 1.14 today, up over 5%.

Shares of Liberty Media’s tracking stock Liberty Capital (NASDAQ:LCAPA), which houses their 40% stake in Sirius XM was up modestly on Wednesday to $42.18.

Long SIRI

By Rick King -

Every few generations our culture finds new ways to define itself. Usually there is no stronger indicator of culture’s shifting winds than the music a generation listens to. The method in which a generation listens to its music defines it as well. Is it possible we are in the midst of exactly that? Another media revolution of transformation in the winds, from terrestrial radio and television broadcasters to satellite media?

The current population wants access to information everywhere and on demand.  Generation “Unlimited” has no concept of limitation.  They live in a world where information of every type is available at the speed of an electron in more forms than they can count.  Information and how it is channeled to a user permeates every aspect of business.  AM and FM Radio don’t work everywhere geographically so it’s fading.  Same thing for television, initially change came in the form of cable and now with continuing dominance by satellite media.

How many people still remember the world of no television?  Black and White television broadcast?  The days when AM radio was the mainstay of the American living room?  In every single instance of such change, critics denied the very possibility it could happen.  Emotions have always  run especially deep in American society when it comes to our music and how we listen to it. (more…)

By Relmor Demitrius

Sirius XM investors can argue about what happened in February of 2009 till they are blue in the face.  One investor screams about Charles Ergen while another might explain to another about the evil nature of the banking system.  Others yell for Mel Karmazin’s head (CEO of Sirius XM Radio (Nasdaq:SIRI)) and claim he botched financing options before the deal with Liberty Media (NASDAQ:LINTA), now held within Liberty in their tracking stock Liberty Capital (NASDAQ:LCAPA), was even necessary.  Some blame the FCC or the NAB entirely.  Whichever train you board on this issue, there is sure to be a passionate and heated debate among stockholders as to what really happened from July of 2008 to February of 2009.  Let’s lay some groundwork first before we tackle the title of this article.

Sirius XM completed the merger in July of 2008 after the longest delay in FCC history.  Thinking back over the near monopolies formed under the watchful eye of the FCC, one immediately might begin to wonder what was so dangerous about merging these two companies?  Exxon/Mobile merger, which directly impacted every consumer of oil in the country, didn’t take anywhere near as long.  Putting aside this startling aspect of this process for one second, let’s now look at the time frame Sirius XM was allowed to merge as well.  In July of 2008 the corporate bond market was floundering, if alive at all.  Sirius XM went to the market and asked for over 1 billion dollars to refinance debt so they could be allowed to merge into one company in possibly the worst economic conditions in 3 decades.  They got the money, but the deal was terrible.  High interest rates and lent shares simply given to allow hedging not even acquired on the open market was considered the reason for the stock tanking to under $1.  Now add in a debt tower in 2009 that would also need an additional 1 billion dollars to remove, and the company was again facing the very real possibility of once again hitting the bond market only a few months later.  Did the bond market get better?  No.  It actually got worse.

Banks were struggling and the appetite for corporate debt dried up.  Sirius XM owed money due to maturity in February, May, and December.  The February debt was able to be cleared with cash on hand easily.  They also removed some by giving away shares at fire sale prices, with some conversions happening under 20 cents a share.  For a company that was trading over $3 a share even after the merger was announced, this was a huge blow to their ability to remove this debt.  If they had planned on exchanging debt for shares, their plan was derailed by a tanking stock and bond market.  Declarations of them going bankrupt and not being able to pay or refinance this debt were coming around every corner.  Apparently Sirius XM investors were going to get another “emergency” deal, and hopes of a huge post merger explosion of momentum and abilities to manage their debt load were slowly fading into gasps of panic and confusion.  Mel had promised the 2009 debt wasn’t a problem.  In fact, he went on record many times in 2008 to reassure investors that the bank debt due in May, the only part of the debt that couldn’t be exchanged for shares, regardless if Sirius XM wanted to or not, would be extended by the banks.  If they did this, the debt from February and December was now very achievable in clearing without a major injection of new money. (more…)