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

[JohnnyIrishXM]

I think we're on the same page with the current SI and it's effect at keeping the price where it is... I try not to write to much of what I think but, can't prove.... When volume is low these guys holding the lent shares make good money on .02 drops while they wait for positive News to cover, stay long, sell the up leg, and short the stock after it peaks again....

A little history helps to figure out how to play this stock in the future. When the BK was announced "off the table" the stock went from .065 -.25, a nice 385% relief gain. Shorts covered and longs clamored for more shares. When news of the deal details and the 2nd phase was hanging out there, the Shorts sold back and took it down to .145-.165. A nice .42% gain for the shorts and ugly take down for the longs. We stayed stagnant then, as we are now, waiting for some news, and then the Malone 2nd phase closes and within two days the 10K comes out early, and its off to the races to a solid .425 with shorts covering and longs racing to get back in. Using .155 as a start point and .425 as the end point, we have another nice gain of 275% on that one. We then watched for no movement for a day or two, digested the 10K, and with no significant guidance, and a promise of no subscriber guidance in the future, The Shorts jumped back in and over a couple of days managed to spike us down do a .25 intraday and close of .30. The Shorts got another nice 29% gain on that 12.5 cent take down and the longs lanquished not knowing what hit them... We now have floated up from .30 to a pretty solid range of .33 - .36 where the Shorts, on low volume are biding their time and making money with their Lent shares... IMHO..

What this little historic review should tell us is that, as John has said, there will be no short squeez but, we will see those lent share positions cover for profit, stay long through a leg up, take their profit and when everything settles at a new peak SP, take the stock down again... As the SP goes higher, the percentage gain numbers will decrease with every leg up and down, and with all of the shares in the float, will make taking out % stop loss sells harder for shorts to activate with their manipulation in a take down...

I also agree with John that at least the first lot of lent shares, the 187M shares, are Note holders who want the company to succeed and are just using the short positions to protect the invested note positions. They will take these shares long eventually. IMO

It will be at these levels, like relmor has outlined, that buying puts for Longs, will be the protection needed and available at realistic prices... These are the times that the retail investor can stop worrying as much about the Lent Shares and their impact on manipulating this stock down. With good FCF expectations the 2nd lot of shares, the 76M, are the ones left and held by traders and will have less of an impact moving forward.

Combine a higher SP with better marketing, a step up in OEM #'s, an iPhone App, a better Internet presence, a newer and more innovative product line for Fathers Day, and the shorts will prefer to be long during this period of time.....

Yes cos,you explained it much better than me and agree that is exactly what is probably going on,tho like you said,tough to prove..It makes perfect financial sense for hedgers to do this,provide shares for sale on upswing and then on pullback...but u.ntil news comes out and creates more buyers it will stay like this,slow 2 penny's up 3 down,4 penny's up etc....

John,No one here on this thread suggested anything about a short squeeze in the practical sense,just trying to figure out the reported higher short total is all,I for one do not or can not see one happening with his stock,too many shares and willing sellers...Hence the reason they will do a R/S,hopefully after it approaches $1.00sp..

[relmor2003]

Yes cos,you explained it much better than me and agree that is exactly what is probably going on,tho like you said,tough to prove..It makes perfect financial sense for hedgers to do this,provide shares for sale on upswing and then on pullback...but u.ntil news comes out and creates more buyers it will stay like this,slow 2 penny's up 3 down,4 penny's up etc....

John,No one here on this thread suggested anything about a short squeeze in the practical sense,just trying to figure out the reported higher short total is all,I for one do not or can not see one happening with his stock,too many shares and willing sellers...Hence the reason they will do a R/S,hopefully after it approaches $1.00sp..

Wonderful post cos1000. You solved a few questions I had about what those shares can actually do. I knew they could all go long, but I wasnt sure if they could all go short. They cant. But they can short and cover continuesly. Thanks.
Makes the short interest a little better to deal with. I wish retail investors out their realize that what you described is going on here. And we know who is controlling those shares, its an individual, or one hedge fund over seas controlling those shares short. Doing this to the price, and KITE may have backed off for now.

[cos1000]

Wonderful post cos1000. You solved a few questions I had about what those shares can actually do. I knew they could all go long, but I wasnt sure if they could all go short. They cant. But they can short and cover continuesly. Thanks.
Makes the short interest a little better to deal with. I wish retail investors out their realize that what you described is going on here. And we know who is controlling those shares, its an individual, or one hedge fund over seas controlling those shares short. Doing this to the price, and KITE may have backed off for now.

yeah relmor, it does take a lot of the mystery out of the manipulation... It also makes it easier to see how at this low SP level the lent shares have more control... At higher levels, more institutional ownership buying larger blocks of shares to take long, these shares will have less effect with diverging and competing goals by their owners, make their impact much easier for the SP to absorb... thanks for opening this topic up... it helps to put it all down into words and hash out the realities.

Maybe we can open a thread next week on options, puts / calls, and how to best apply them to this stock.... I know we have a lot of readers and posters who have a wealth of info on the subject. If we could get them to open up a bit with some examples and hash out some strategies here, I know it would be helpful to most, including me....

[cos1000]

I expect this to happen on every sharp leg up, which is why I will play the "Pops and Drops" with them... JMVHO...
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Amen Cos. Thanks for the great thread!

Anytime.... hope things are going well and your making some money....

[homer985]

Homer.... You may have noticed the short interest in SiriusXM. Due to its high float, percentage wise, its not that bad.

The short interest is only about 181MM shares, out of 3.86BB -- which comes to about 4.7% of the outstanding shares... that's not that much. Furthermore, when you include the Liberty equity, it drops to under 3%.

What part, if any, of those shares are lent shares? I say zero. Is this correct? So its actually higher.

The majority of those listed are the lent shares. Regardless if the company lent out the shares - they would still be counted as shorted shares.

Sirius lent out 183MM shares to be shorted at the end of July (and another 78MM at a later date, but there has been no indication that those were shorted yet).

So putting two and two together, you can see why the majority of the short interest is likely these lent out shares. Frankly, with most retail unable to short Sirius -- the funds that were able to do it, likely did so and covered while Sirius was in the teens... they would have been fools not to do this. For example, if you're a fund and you shorted $10MM Sirius at $1, why would you not cover at $0.15 and walk away with your $8.5MM profit???

Funds shorting at the current $0.35 level? Makes no sense. There is much more upside risk, than downside gain. For example, shorting 10MM shares at $0.35 and (maybe) covering at $0.15 would only yield a profit of $2MM... but the upside risk could wipe out the investmen in a heartbeat.

IMHO, the pro's aren't screwing around with shorting at this level. I believe that 99.9% of the current 181MM short interest are hedged positions - with the majority of it being the current lent shares from last August. Although, there is a number of convertible debt with both companies (Sirius and XM) so it could be a mix of holders of all of that debt.

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?

Nahh, again I believe that 99.9% of the short interest are hedging positions. You have to look at the risk/reward you can get with a stock that is at $0.35. No professional is stupid enough to take "bet against them" position. The true pros will have covered when the stock was in the teens. You short, you bad mouth, then take the money and run - regardless of what the company actually does. The odds are more against you if you continue to hold. What more can you possibly gain by continuing to hold? Again, going back to the $10MM example of someone shorting 10MM shares... at $0.15, you're sitting on a profit of $8.5MM... why risk that profit in order to squeeze out another $1.5MM, when the odds are against it from happening? Take the money and run.

The majority of retail and non-hedged short positions have covered. But watch out if/when this stock ever reaches over $1 again... because with the amount of equity out there - it will become ripe for the shorting again. There will be a lot of downside room for them to manipulate the stock back down for another short-side profit run. IMHO, this will continue for as long as there are BILLIONS of shares outstanding, with a company with such a high Beta.

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.

Sure. As the price goes up, the downside becomes more and more profitable because the short side can manipulate it down fairly easily, with the amount of equity out there - and the stocks high liquidity. So the higher the stock goes, the higher the short interest will grow.


The rest of your post is moot - since the lent out shares are counted into the short interest total.



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[homer985]

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..

cos, that's how I read it...

All I will add is that the prospectus that was filed on 4/7, was just an amended prospectus - a second amended one at that - first going back to the amendment in October then going back to the original filing last July. I believe all they were amending was the information of who currently holds the Notes and has right to sell shares, for if/when they are exchanged into shares.

Regardless I agree, it is impossible to know who owns what Notes and who is likely short the name... but what we do know is that the short interest now is mostly hedged positions - most of which came from this debt issue. And they do not need to cover and return the shares until the Notes mature and/or are repurchased by Sirius.


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[relmor2003]

cos, that's how I read it...

All I will add is that the prospectus that was filed on 4/7, was just an amended prospectus - a second amended one at that - first going back to the amendment in October then going back to the original filing last July. I believe all they were amending was the information of who currently holds the Notes and has right to sell shares, for if/when they are exchanged into shares.

Regardless I agree, it is impossible to know who owns what Notes and who is likely short the name... but what we do know is that the short interest now is mostly hedged positions - most of which came from this debt issue. And they do not need to cover and return the shares until the Notes mature and/or are repurchased by Sirius.


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Thanks Homer. That pretty much answers all my questions, and clarified some things I was a bit fuzzy on. Thanks cos1000. I agree that the amount of short interest is not a worry, due to high float, and are mostly a hedged position. I also agree retail shorts are ALL covered, and so were "bets" against SiriusXM at higher levels by hedge funds and institutions. The ISEG bs will not stop it appears until the 2014 debt is repaid, or they are told to stop by the SEC, in which I hope we here can all help on that. I dont care how they are allowed to use those lent shares, HOW they are useing them in the context of manipulation laws is not legal. You cannot do what ISEG is doing legally.
Knowing that the hedged positions and lent shares are part of the SI, I am no longer worried about that report. It is interesting to see however, those shorts turn to longs, as various times, dropping the SI considerably, very bullish. Seems even the hedges are bullish when it appears good news is out, or they can no longer take the price lower. They know there is buying interest out there.

Homer, do you feel most large institutions are already "in" at these levels now? Or do you feel some or most are still waiting for Q1?

[homer985]

As I said before these shares will be with us until 2014 or ALL Notes are paid off. The shares do not come back as some of the notes are paid. They only come back to the company after All the Notes are paid off. These shares are available to dealer brokers, who represent customers who own the notes, or own the notes themselves for SP manipulation especially when the SP spikes quickly up as we have recently seen.. SP goes to .42 and we retrace quickly down to mid .20's and now stagnant at .34-.36. I expect this to happen on every sharp leg up, which is why I will play the "Pops and Drops" with them... JMVHO...

cos, that is a very astute observation... I agree completely. It explains the sharp movement of pps -- which will continue for as long as there is so much equity outstanding and the stock has such a high beta.

The sooner that we get into better economic times and Sirius is able to refinance these notes -- the better.



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[homer985]

Sorry guys, if I repeated a lot of what was discussed on this thread - I have a tendancy to start a thread at the beginning - and just start commenting. Not realizing that many of the questions were answered, as cos1000 did.

I've had a very busy couple of days and this is the first time in nearly a week that I've had time to sit down to read what was going on... but cos covered everything perfectly. More so in some cases than I would have done.



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[homer985]

do you feel most large institutions are already "in" at these levels now? Or do you feel some or most are still waiting for Q1?

The "very large" institutions will not touch Sirius until it is over $5. The larger ones will certainly not touch it while it is under $1. The only institutions that will buy it now are those looking for high risk on high beta stocks -- which is very limited. And they play BOTH sides.

You want to see what can happen to a stock when it goes up over $5 -- look at what happened to XM in 2003/4 when it went over $5 and some of the more "real" institutions were sold on it -- it took off. And from discussions that I had with a sell-side guy on Wall St.... the majority of the real large institutions still refused to even look at XM back then because it was unprofitable.

I said it is key to get this stock over $5 for a reason -- most have no idea on the amount of upside potential from institutions (with very deep pockets) that would be able to buy a stock that goes over $5, which is profitable and growing. That is where the "real" buying comes in.

IMHO.



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