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Thread: Sirius is trading below its book value

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  1. #1
    Brandon Matthews is offline
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    Sirius is trading below its book value

    This recently released combined balnce sheet of the merged company has glided under the radar. It is quite an eye-opener.


    http://www.sec.gov/Archives/edgar/da...279exv99w1.htm

  2. #2
    zcurzan is offline
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    Where the sell pressure coming from? And when do you see it reversing?

  3. #3
    Brandon Matthews is offline
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    Where the sell pressure coming from? And when do you see it reversing?
    That what is so crazy about this. If satellite radio ended tomorrow, investors in its common stock would get more than the current share price. In a growing company with so much going for it, this is utterly ridiculous.

    Ironically there is more risk in not owning or shorting the stock than owning it outright. Reversing? Who knows? None of this makes sense!

  4. #4
    john is offline
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    Brandon Matthews, I agree that it is under valued. I think homer also showed this several days ago. He said something about it being the first time ever it was actually under valued. I know trying to put a price tag on what the spectrum is worth is hard, but I think that alone makes it under valued. Of course the spectrum alone is not worth that much without the infrastructure and subscribers to go with it. What is your opinion on that.

  5. #5
    deewcom is offline
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    High Value of XM License

    Is it for sale? Who are potential buyers for XM's FCC license?

  6. #6
    James is offline
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    I thoroughly enjoy your articles and am also bullish on Sirius as a long term investment.

    But.....

    The consolidated balance sheet is smoke and mirrors with a large asset entry of pro forma adjustments made up largely of Goodwill (which is intangible) for the value of XM. The Goodwill figure was arrived at by taking the cost of buying XM based on the Sirius share price and subtracting the tangible assets Sirius received in the purchase.

    Quote from SEC filing:
    The pro forma combined balance sheet has been adjusted to reflect the preliminary allocation of the purchase price to identifiable net assets acquired and the excess purchase price to goodwill. The purchase price allocation included within these unaudited pro forma condensed combined financial statements is based upon a purchase price of approximately $5.7 billion

    While Goodwill is a GAAP (Generally Accepted Accounting Principles) acceptable asset, it is often abused. Furthermore GAAP book value cannot be determined using pro forma numbers The (GAAP) book value for Sirius and XM was negative. It will likely be negative after GAAP Goodwill is added. We will find out after 10/31.

  7. Ad Fairy Senior Member

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