Jim Cramer is speaking about Sirius Satellite Radio yet again. This time, in his "Lighning Round" Cramer stated, "I want you to stay with Sirius"
Good Advice? Perhaps it is, but it is getting increasingly hard for investors to believe. Whether to stay and wait it out likely hinges on someones entry point. The proposed merger between Sirius and XM is almost one year old now, and several hints that a decision was coming, only to get silence in return have made investors somewhat gun shy. Sirius is trading at levels below the price of the equity on the day of the announcement.
Money is on the sidelines right now. Money has moved on to other equities. Investors in the SDARS sector have been dealing with the merger for quite some time now, and it is the only news that seems to matter to the sector. Clamoring for earnings reports is non existent. Subscriber numbers barely enter the conversation. The clearing of lawsuits barely registers on the radar screen. Simply stated, the merger is the news everyone is waiting on.
With analysts seeming to be unsure of whether regulatory approval will be reached, and intense lobbying political pressure happening on all sides, investors seem to be quite content staying away from the fray until an obvious winner on one side or the other comes to fruition.
Even if the Department of Justice were to announce an approval on Monday, investors would still be waiting on the FCC. The SDARS stocks are floundering in the merger debate, and at this point, perhaps those standing on the sidelines are being the smart players. Some, who feel the merger will ultimately pass are scooping up XM shares when the spread widens. Accumulating shares slowly and ensuring a decent return should the merger pass. Interestingly, Cramer, who feels the deal will ultimately pass has not been recommending the ARB play. Many may see that as a sign that even Cramer is unsure.
In the end, we still remain at the status quo. No merger news, and nothing material that seems to be able to move these stocks for any real length of time.
Position - Long Sirius, XM