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Thread: Stabilization After the Arbitrage

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  1. #1
    zcurzan is offline
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    Stabilization After the Arbitrage

    Tyler and Brandon have shed a lot of light on the reaction of the stock price in the last two days.

    With all this selling pressure that is "transactional" (for lack of a better word), and not based on investor sentiment. Do you guys see the price stabilizing in the near term down here at $1.50, or do you see it rebounding.

    I know evaluation of the combined company is still hazy because of the uncertain prospects and growth, but I tend to think it will come back to the low $2.00 range near term after all is said and done. I think that will price in disappointed retail holders bailing, but down at $1.50 it seems so artificially low.

    And you guys are right, the reporting of the media on this whole transaction has been horrendous. I wish Mel would release a PR explaining the offering like you guys have so it would hit major headlines. Instead of just spouting off corporate BS like we are world class radio and expect to achieve syngeries. Thanks Mel, we know. How about you explain to the world the mechanics (in laymans terms) of the debt restructuring so that your shareholders don't bail on you and drive you down more.
    Last edited by zcurzan; 07-29-2008 at 01:36 PM.

  2. #2
    SteveSirius is offline
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    Hi! I think we need to keep in mind the fact that the average investor does not read forums like this one. They are scared by the overall market and economic environment. I personally know people who have a lot more money than I have saying that they are cautious how they spend money now on everyday things because of the economic environment. Instead of adding more money to their retirement funds when the market is down, even though they know the market eventually goes up, they panic. If bananas suddenly went down to 29 cents a pound, they would buy extra, but that logic goes out the window with their own investments.

    Regarding current information on Sirius XM, the news on Sirius XM the public is currently being fed by most of the mainline press is either a word-for-word copy of Reuters or Associated Press stories. Or, the drama of the day is "they are not out of the woods yet" type stories that popped up just as the merger was signed off on by the FCC. Then comes the news of this large issuance of stock by Sirius, with the complete lack of mention that it is being given as collateral, and that it will not be dilutive. And, the 4.6 shares of Sirius stock for every 1 share of XM (people don't think that XM stock no longer exists, by default creating more demand for Sirius stock as there is no longer a choice). Add to all of that the fatigue that most Sirius and XM stockholders currently feel (including those of us who are bullish on the future of Sirius XM), and you have a desire for painkillers by the average investor. In this case, that painkiller is "sell my stock."

    I am not selling. In fact, I wish I had a lot of money to buy more! I think that as the days/weeks progress, we will see more calm and more optimism regarding Sirius XM, as a stock, by the general investing public. I think that Mel Karmazin walks a fine line now in getting out in front of the public and touting the wonderfullness of Sirius XM. If he doesn't say "enough," many shareholders will complain that he is not supporting the stock. While the public is being fed incomplete information and pessimistic stuff by the press, if Mel gets out there and blows his horn too loudly and too often, the public may suspect he is trying to cover up something. I think he knows this, and I am sure he has is carefully choosing what he will say and when he will say it to be both believable by the general investing public and to give the optimum effect to any statements both to make investors happy and to lure new subscribers.

    The stock has gone up 8 cents since I started writing this. I think we will be just fine - more than fine. It doesn't matter if we have "lost" money on paper; none of us has lost anything unless we sell at these depressed prices. The question each individual has to ask themselves is "Would I buy this stock at this price?" If the answer is yes, make yourself a cup of coffee or tea, and relax.

  3. #3
    zcurzan is offline
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    Good points. I'm kind of pissed that I don't have money on hand now to do just that. I put the last of it into XMSR @ $8 on the Wienkes blood bath, which is $1.73 SIRI. I guess that's not too bad.

    But you got to admit, its frusterating to think that you could have waiting to get it at this point and been in something else for the past couple of years. But I suppose "so it goes" all the way down. Unless you call the bottom, theres always someone in below you.

    Who knew bananas were going to go on sale next week?

  4. #4
    SteveSirius is offline
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    Hi zcurzan! Hope all is well with you. I agree that I would love for Mel to come out and say that the new stock offering is not going to be dilutive. But, I think if he does, he will be opening up a can of worms. I think most people would then say "Yeah, but what about the 4.6 shares of Sirius stock you are now offering for every 1 share of XM?" I don't think he can risk the backlash, and leave himself, and the company, so vulnerable.

    As to the dilution as a result of the 4.6/1 exchange of Sirius for XM stock, it's not as if Sirius were issuing more stock in a vacuum. XM stock is going away, so in effect its the stock of each company being combined. If an investor has $1,000 to invest in an industry, they can buy 50% of company A and 50% of company B. Now that company B is going away as a standalone company, that investor has to put all $1,000 into company A. Obviously, once company A is perceived to be a good investment (assuming it will be), demand for its stock should increase.

    Also, I wouldn't be surprised to see Mel and/or others in the company making a public point of buying company stock for their own accounts. Also, I would hope that at some time they will do a reverse split on the stock, hopefully increasing demand from funds which, by their bylaws, cannot invest in "penny" stocks. As we all know, at some point it would be helpful for the company, when it makes sense economically, to do a stock buyback.

    Thank goodness the "muzzle" can now come off of Mel and others at Sirius XM, now that the deal is DONE!!!!!!!!!!!!

  5. #5
    john is offline
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    Did somebody say bananas are on sale, where at I want some.

  6. #6
    voogru is offline
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    I'm keeping my bananas!

  7. #7
    SteveSirius is offline
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    Quick! The peaches are on sale in aisle 3!

  8. #8
    zcurzan is offline
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    "My God! The Dukes are going to corner the entire banana market!"

  9. #9
    jimmy66 is offline
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    Howard Stern was giddy today and says Mel will be on the show tomorrow to talk about the merger and answer any questions. Hopefully that will clear up alot of the confusion.
    I personally believe in the possibilities for sirius xm and will be a long term investor. I had however hoped to make some money on a portion of my position short term!!

  10. #10
    seraphim77 is offline
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    What time is Mel going to on Howard's show?

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