SIRI Intraday Updates for the Week of 1/26/09

[Demian]

SIRI closed red @ .1137 with the market bloody red....

I really had no idea what was going to happen today.....

Looking at a 5 day chart - SIRI is still in it's uptrend...

[Siriusowner]

You're kind of missing my point. My theory is that GS and the other Bond bullies won't HAVE to cover on the open market since the shares they're getting in exchange for a portion of the debt will more than account for their hedged positions. I'd guess that most of the February hedges have probably already covered that way(for a HUGE profit)... it's the December convert holders and the 2014 convert holders that account for most of the 200mil plus short positions.
Remember Goldman doesn't necessarily WANT to see BK... they may end up owning a hefty position in the company after February. Sirius and GS could well be bedfellows soon.

You have to keep in mind, Bonds come with options. We do not know what options GS got when they bought those convertibles.

I do not think the Dec and the 2014 convert holder account for the majority of the short positions now. They will be after FEB. But then again, if they will be, what is the use of holding this issue in the long term ? no dividens and most likely no appreciation.

[trippingthespeculatingpos]

well we had a pullback which is reasonable, hopefully thats all it was and we can resume going up tommorow.

[winagain35]

You have to keep in mind, Bonds come with options. We do not know what options GS got when they bought those convertibles.

I do not think the Dec and the 2014 convert holder account for the majority of the short positions now. They will be after FEB. But then again, if they will be, what is the use of holding this issue in the long term ? no dividens and most likely no appreciation.

Umm... wrong. Some bonds are just bonds... some have warrants, which are like options and some are convertible - meaning that the bonds convert to shares at a certain strike price.

The 2.5% convertible bonds due in February have a conversion strike price of $4.51. We're not going to hit that obviously, so the bonds will have to be paid in cash... OR exchanged for equity if the holders agree to that.

The holders of convertible bonds almost always short the common stock as an arbitrage play... so considering that there are only $175 million left in February, compared to the $350 million in converts due in December and $550 million in converts due in 2014, I think it''s pretty easy to deduce where the majority of the hedgy shorts are.

[Demian]

You have to keep in mind, Bonds come with options. We do not know what options GS got when they bought those convertibles.

Siriusowner,

What are you talking about? Are you talking about the "embedded options" that are inherent in the bonds already or warrants? What are you talking about? Bonds come with embedded options...

Embedded options

A callable bond allows the issuer to buy back the bond at a predetermined price at certain time in future. The holder of such a bond has, in effect, sold a call option to the issuer. Callable bonds cannot be called for the first few years of their life. This period is known as the lock out period.

A puttable bond allows the holder to demand early redemption at a predetermined price at certain time in future. The holder of such a bond has, in effect, purchased a put option on the bond.

A convertible bond allows the holder to demand conversion of bonds into the stock of the issuer at a predetermined price at certain time period in future.

An exchangeable bond allows the holder to demand conversion of bonds into the stock of a different company, usually a public subsidiary of the issuer, at a predetermined price at certain time period in future.

[Demian]

Sirius XM Radio Inc.
Jan. 29, 2009 Market Close: $ 0.1137

After Hours Trade Reporting
After Hours
Last: $ .115
After Hours
High: $ .118
After Hours
Volume: 60,184
After Hours
Low: $ .1136
After Hours
Time (ET) After Hours
Price After Hours
Share Volume
17:32 $ .115 100
17:32 $ .1136 100
17:24 $ .1175 500
16:42 $ .1175 668
16:37 $ .1175 1,032
16:29 $ .1175 405
16:22 $ .118 500
16:08 $ .114 400
16:08 $ .114 7,100
16:07 $ .118 200
16:02 $ .115 47,479
16:02 $ .1136 1,700

[Siriusowner]

Umm... wrong. Some bonds are just bonds... some have warrants, which are like options and some are convertible - meaning that the bonds convert to shares at a certain strike price.

The 2.5% convertible bonds due in February have a conversion strike price of $4.51. We're not going to hit that obviously, so the bonds will have to be paid in cash... OR exchanged for equity if the holders agree to that.

The holders of convertible bonds almost always short the common stock as an arbitrage play... so considering that there are only $175 million left in February, compared to the $350 million in converts due in December and $550 million in converts due in 2014, I think it''s pretty easy to deduce where the majority of the hedgy shorts are.

No I am not.

To begin with, the conversion price is called the parity price not the strike price.

Often a convertible bond will carry a stipulation that it can be called if the stock appreciates significantly.

If a company is doing well and the indenture provides that the bonds are callable, you can be sure that a call will happen if the stock dividends are less than the interest payments on the bonds. DEPENDING ON THE PRICE YOU PAID FOR THE BONDS, YOU MAY SUFFER A LOSS AS WELL AS MISS AN OPPORTUNITY FOR A BIG UPSIDE.

In addition, in the event of a BK convertibles have senior status over preferred and common stock.

This is primarily an institutional market populated by funds managers and insurance companies... not by you or me.

[Siriusowner]

Siriusowner,

What are you talking about? Are you talking about the "embedded options" that are inherent in the bonds already or warrants? What are you talking about? Bonds come with embedded options...

Embedded options

A callable bond allows the issuer to buy back the bond at a predetermined price at certain time in future. The holder of such a bond has, in effect, sold a call option to the issuer. Callable bonds cannot be called for the first few years of their life. This period is known as the lock out period.

A puttable bond allows the holder to demand early redemption at a predetermined price at certain time in future. The holder of such a bond has, in effect, purchased a put option on the bond.

A convertible bond allows the holder to demand conversion of bonds into the stock of the issuer at a predetermined price at certain time period in future.

An exchangeable bond allows the holder to demand conversion of bonds into the stock of a different company, usually a public subsidiary of the issuer, at a predetermined price at certain time period in future.

None of those. Well close to the call option but not exactly. Read the post above.

[winagain35]

No I am not.

To begin with, the conversion price is called the parity price not the strike price.

Often a convertible bond will carry a stipulation that it can be called if the stock appreciates significantly.

If a company is doing well and the indenture provides that the bonds are callable, you can be sure that a call will happen if the stock dividends are less than the interest payments on the bonds. DEPENDING ON THE PRICE YOU PAID FOR THE BONDS, YOU MAY SUFFER A LOSS AS WELL AS MISS AN OPPORTUNITY FOR A BIG UPSIDE.

In addition, in the event of a BK convertibles have senior status over preferred and common stock.

This is primarily an institutional market populated by funds managers and insurance companies... not by you or me.

Siriusowner,
I know you like to argue - and some of your back and for with demian is amusing. But in this case you're still missing the point. The crux of my post was A: We DO know the conversion price for the 2.5% bonds(you said we didn't) and B: The majority of the short interest in Sirius is held by the holders of the December convertibles and the 2014 convertibles. Remember back in August, Mel loaned a bunch of shares to MS and UBS to provide a short hedge against those converts because SIRI was on the Reg Sho list and there were no more shares to short.

[Siriusowner]

Siriusowner,
I know you like to argue - and some of your back and for with demian is amusing. But in this case you're still missing the point. The crux of my post was A: We DO know the conversion price for the 2.5% bonds(you said we didn't) and B: The majority of the short interest in Sirius is held by the holders of the December convertibles and the 2014 convertibles. Remember back in August, Mel loaned a bunch of shares to MS and UBS to provide a short hedge against those converts because SIRI was on the Reg Sho list and there were no more shares to short.

This is why argue with Demian. I never said you did not know the parity (conversion or strike for you) price. Re-read the posts.

I understand MS and UBS having the advantage of hedging but GS is next in line not them. MS and UBS will short those shares IF the price starts coming up after FEB.