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Thread: Calling Homer.... Homer? I have a question...

  1. #1
    relmor2003 is offline
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    Calling Homer.... Homer? I have a question...

    Homer.... You may have noticed the short interest in SiriusXM. Due to its high float, percentage wise, its not that bad. I ask for Homers opinion here, but its open to anyone who can help, OF COURSE. What part, if any, of those shares are lent shares? I say zero. Is this correct? So its actually higher. Since retailers are not allowed to short this stock, we can assume its from ONE or TWO hedge funds. Is it possible these hedge funds initiated the short position, are working 100 percent outside the request from some big money to keep the short going until all major puchases at these low levels have been completed. Then they will unwind their position. Or do you feel that its a big institution or mutual fund who actually is betting against SiriusXM legitmitably? With such little downside? Seems unbelievable. Its acutally gone up as the price has gone up, as if some big money knows something(been wrong so far since Feb.) or is expecting something bad to be announced. Since percentage wise , its still not a huge amount, would you say.... expect to see them on this list if there were only 300 million shares? Of course they wouldnt be. But would the percentage of short interest drop? What concerns me here is the huge time to cover. Means the short is working, no reason to cover yet. I had expected the SI to drop in March. Im a bit confused by this. Maybe thats why it went up, simply to confuse retail investors away from this stock.

    Homer and John, cos1000, brandon, newman, demian.... Whoever....
    At what price would you purchase a put on this stock? .60 cents? .80 cents? When it crosses a $1? Im looking to hedge my position at some point. Rather than sell on the way up. Considering a strategy change.
    Last edited by relmor2003; 04-10-2009 at 11:31 AM.

  2. #2
    LT LT LT is offline
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    stock price is to low to play puts.

  3. #3
    asm610 is offline
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    Those debt notes are starting to intrigue me.

  4. #4
    relmor2003 is offline
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    Quote Originally Posted by LT LT LT View Post
    stock price is to low to play puts.
    Not over .60 or .70 cents their not. Look at the put price action. It moves on significant drops. Only way to hedge for retailers. I didnt buy puts on the way down before because I thought the same thing you did. I was wrong, as you are wrong now.

  5. #5
    relmor2003 is offline
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    Quote Originally Posted by asm610 View Post
    Those debt notes are starting to intrigue me.
    I refuse to lock money up long term on debt notes. With hyperinflation a day, week, month, or year away as a possibility, Im not touching bonds. I need something more solvent.

  6. #6
    Hopeful is offline
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    Relmor,

    I highy respect your opinion and your advice for SIRI! Clearly you are a more intelligent investor than I!

    I still remain very skeptical to the idea of hyperinflation and "the sky is falling theory". Check out this guys rebuttal to this article. I also show resistance to the idea because I do not want to believe that I could be poor and starving in a few years due to so called hyperinflation!

    http://seekingalpha.com/article/9672...inflation-have


    The sky is falling! The sky is falling! I didn't even get past the first paragraph. Let's just assume all of your numbers are correct, though I'm skeptical.

    "With the Federal government just having added $5.2 trillion in Fannie/Freddie liabilities of which about $600 billion will likely default..."

    Leaving $4.6 trillion in performing assets for which the government will be paid guaranty premiums of how much? At 28 basis points, it's $13B/year. Of course, the other $600B will add $1.5B per year until they default. Let's assume they default -- oh I don't know -- now. Of that $600 billion, the government then holds underlying assets worth what - $300 billion? $400 billion?

    Taking my neighborhood as exemplary, the government's immediate losses are then $200B. Think of that as the cost of the investment. Think of the $13B per year from the guaranty fees on the performing assets as the return on the investment - 6.5%. Not too bad of a risk-adjusted tax-free return. Certainly not as bad as you seem to want to think.

    "...the Federal Reserve having now polluted its balance sheet by some $700 billion worth of toxic mortgage bonds with a 41.6% default rate ($291 billion in likely defaults)..."

    Again, assuming your numbers are correct, this causes a loss of less than $100B IF the borrowing entities default. They won't. See the Treasury plan below.

    "...an $85 billion bailout for AIG..."

    The best investment I've seen anybody make in a long time. The government gets paid LIBOR+8.5% for two years on the unpaid balance, providing a huge incentive for the company to liquidate assets, plus warrants to own a vast majority of the company. The terms of this are incredibly onerous, but the company had absolutely no choice - it was either this or outright bankruptcy. Do you actually think the government will LOSE money on this one?

    "...and, now, the Administration asking for some $700 billion more to bail out financial firms..."

    Do you realize you're double-counting here? The bad collateral you say the Fed now holds is part of this. But let's not worry about facts. This is the part where the government is most likely to lose money; that's why there is still so much up in the air, and why the political debates are ongoing.

    So counting it up you appear to have one valid cost to the government. Which leads you to...

    "...it seems clear that the winds of hyperinflation are upon us."

    I tell you what - I'll lend you $100,000 at 25% interest. You can should jump at the offer, right? You can take those dollars, put them in gold, or euros, or whatever, and in a year or two, after your supposed hyperinflation takes over, you can convert a fraction back to dollars to repay me with.

    Hyperinflation. Stop being ridiculous.
    Last edited by Hopeful; 04-10-2009 at 01:16 PM.

  7. #7
    relmor2003 is offline
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    Hopeful. The only thing globally keeping it under wraps is the fact we are still the global reserve currency. Im not saying hyperinflation happens overnight. But that bond money isnt going to sit in bonds at 1% interest forever. Its SITTING there, not cemented there. It will flow into dollar backed assets eventually. If the dollar losses reserve status, all dollars will find a home at that point, causing hyperinflation. Tons of overseas dollars that will come home. When they arrive, it will be too many dollars chasing an ever decreasing supply of goods. Inflation. Hyperinflation comes when things like this happen...
    1. No one but your own FED buys your treasuries.
    2. Interest rates stay low for a long period of time.
    3. Government goes into huge spending deficits.
    4. You have a trade inbalance.
    5. Your currency losses "sentimental favor" to other currencies, or asset backed classes in other currencies, for instance a new gold exchange where you cash out in Euros, or a global currency, etc...
    6. You lose reserve currency status.
    7. You keep adding credit to the system. Constantly.
    8. You grow M3.(fake money on a computer screen leveraged with real assets(remember most real assets are rebounding again.)
    FED balance sheet 10 years ago was made up of mostly short medium term treasuries. Now its filled with unsellable assets, purchased for a lot more than a private investor is willing to pay. When the private investor is willing to pay more, then begins a CHANCE to begin decreasing the money supply. The FED buys assets to incease the money supply(look at the FED balance sheet the last two years), and sells them to decrease the money supply. Problem is, when the FED buys something, no one else wants it.
    Last edited by relmor2003; 04-10-2009 at 01:52 PM.

  8. #8
    relmor2003 is offline
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    Deflation is a myth. Deflation in our fiat based fractional banking system is impossible. You cant pay principal plus interest with just principal, now throw in a trade imbalance(money constantly leaving the system here), and you see the mathematical problem with our countrymen ever having a chance to repay credit. There will always be losers. Not enough money POSSIBLE for all loans to be repaid. So in a effect, our system isnt even designed to work. It could never work. Unless you keep adding more money to the system, and more and more and more. Now you see why our debt keeps growing and growing and growing. And in a recession, or a depression, it makes it go from DOW 14000 to DOW 6000. Theres your math. That money was NEVER there.
    You need cheap new money to pay of old debts. Which devalues your currency. We have lot 95% of the dollars purchasing power due simply because of the system we use. Nothing more. Nothing less. You need constantly new cheaper money. It only ends, when your creditors say it does. Why saving money long term is a losing proposition. Ask your grandma to live on what she saved. SHe might brag I saved 40000 dollars in 30 years from 1950 to 1980. A lot of money then.. Nothing now.
    Last edited by relmor2003; 04-10-2009 at 01:59 PM.

  9. #9
    cos1000 is offline
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    Quote Originally Posted by relmor2003 View Post
    Homer.... You may have noticed the short interest in SiriusXM. Due to its high float, percentage wise, its not that bad. I ask for Homers opinion here, but its open to anyone who can help, OF COURSE. What part, if any, of those shares are lent shares? I say zero. Is this correct? So its actually higher. Since retailers are not allowed to short this stock, we can assume its from ONE or TWO hedge funds. Is it possible these hedge funds initiated the short position, are working 100 percent outside the request from some big money to keep the short going until all major puchases at these low levels have been completed. Then they will unwind their position. Or do you feel that its a big institution or mutual fund who actually is betting against SiriusXM legitmitably? With such little downside? Seems unbelievable. Its acutally gone up as the price has gone up, as if some big money knows something(been wrong so far since Feb.) or is expecting something bad to be announced. Since percentage wise , its still not a huge amount, would you say.... expect to see them on this list if there were only 300 million shares? Of course they wouldnt be. But would the percentage of short interest drop? What concerns me here is the huge time to cover. Means the short is working, no reason to cover yet. I had expected the SI to drop in March. Im a bit confused by this. Maybe thats why it went up, simply to confuse retail investors away from this stock.

    Homer and John, cos1000, brandon, newman, demian.... Whoever....
    At what price would you purchase a put on this stock? .60 cents? .80 cents? When it crosses a $1? Im looking to hedge my position at some point. Rather than sell on the way up. Considering a strategy change.
    relmor, the 263M lent shares are always in the Short Interest mix until they are returned to the company when the Notes mature in 2014 or all Notes are paid in full at an earlier date....

    Recently a update to the 424B7 Prospectus Filing on April 8th reported some transfer of Notes and Shares that go along with the hedge on those notes... There were around 26M shares involved. It is impossible to say in any given 2 week period, which is about what the Short Interest reporting schedule is, what shares are owned by who at this point, and whether they are directly tied to the Notes as Lent Shares now being shorted as a part of the Arbitrage play when buying the notes.

    We do know that the Notes are being bought and sold on the market to "qualified financial Institutions". What we can also be sure of... is that Sirius Xm has 3.85B shares issued currently, 263M as lent shares are part of those issued and in the Float, and in on any given Short Interest reporting period those lent shares will be a percentage of those shares Short. This will continue until the Notes mature and are paid in full in 2014, or sooner if the company desires, and the 263M shares lent are returned to SXM and taken off of the market..
    Last edited by cos1000; 04-10-2009 at 11:42 PM.

  10. #10
    cos1000 is offline
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    In addition, to answer your question as to when would I buy a put? I would buy a put or short the stock when I purchased the 2014, 7% Notes, as a qualified buyer, who would now also be in possession of a commensurate amount of lent shares for the purpose of shorting or executing a derivative action reflecting the same (a put).

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