Is Now the Time to Buy Sirius XM Stock?
Even I must admit, that buying Sirius XM common stock at this time is a crap-shoot, or borrowing a term from our old pal Jim Cramer, akin to buying a lottery ticket. There is a case to be made for such a purchase however, if you are like myself and have lost nearly your entire investment in the stock.
Let’s assume that you purchased 1000 shares of Sirius XM stock at 3.00. Your $3,000 investment has declined in value to a mere $140.00! If you were to dollar cost average now, and purchase an additional 1,000 shares, you would be putting at risk only an additional $140.00. This means of course that the stock would only have to rise to $1.50 for such an investor to break even on his/her investment. With such a minimal amount of additional risk, it would be at the very least prudent to consult with a financial advisor regarding such a strategy.
There are also several points of interest that give this plan a higher probability of a successful outcome. There have already been reports that Sirius XM is in the final stages of debt renegotiation’s with their lenders.
Certain naysayers have forgotten that Sirius XM CEO Mel Karmazin has stated publicly on more than one occasion that the company has been looking to retire all of its 2009 debt obligations in one fell swoop rather than in pieces. These naysayers have already begun to make reference to the company’s May 2009 debt obligation, and just may be in for a real shocker if the company announces with the February debt retirement that they have successfully completed that issue as well.
To top it all off, Sirius XM stock has been trading up, despite the absolutely abysmal OEM numbers reported yesterday by the automakers. It is clear to me that Sirius XM management made the right decision months ago to begin up-selling its service to its already existing 20 million subscriber base, rather than depend on new subscriptions from the OEM sector. This should translate into increased revenue on lowered costs for the yet to be reported fourth quarter, and that revenue may bring with it a fourth quarter upside earnings surprise. Also of significance, are the facts that the Senate approved a tax break for new car purchases which will help Sirius XM as much as the auto manufacturers and for my fellow technical analysts, that SIRI closed above its 50 day moving average for the first time in over 6 months yesterday as well.
Position: Long Sirius XM
Brandon ,
I agree with avg down theory. I was holding 10k shares @ an avg of 1.16. I couldn’t resist and doubled down on another 10k shares , effectively bringing down the avg to .63 PPS. This cost me only another $1050 or so but cut my PPS in Half. I figure if they get the refinancing in order , even with the bloated float , we might see a PPS of 1.00 by the end of 09. Good luck to all the suffering longs.
Rob
Rob I agree with you.
Being an unsophisticated idiot investor, I also average down today. One last attempt to recoup whatever. I was 8000 shares @ 3.12 and now I am 14000 @ 1.84. I figure what’s another $850 since I’m already down approx. $24000? Since the share price now is priced for BK, I don’t think they will go BK. Obviously there are other ugly things that could happen but I think some of the synergies are already in place and there have been alot of efforts on Mel K’s part to re-structure finances. Maybe he is more than a one-trick pony over what he did with the ugly finances at Infinity Broadcasting? GLTA.
P.s. I’m glad I averaged down before I read your article. This is my last “half-glassed” attempt. Let’s do something for the loyal shareholders now!
Brandon,
“Final stages of negotiations” Who reported this?
Thx, Kevin
I actually sold most of my position in 2008 to lock in the losses. I have been able now to buy back what I sold and then some due to the decline in the price. I now have a basis of 12.5 cents. I did this knowing that Mel had said in December that the debt refi would be done by Mar 1 of this year. So if the stock does rally, any gains are tax free to me as I have the losses locked in to offset the gains.
So yes, I believe that Sirius will have an announcement shortly about its debt reorganization. As I saw in print, Sirius shares are held by JPMorgan Chase and Goldman Sachs, so there is no way that they want to suffer additional losses, not in the current enviorment, so Mel will get a deal done, and I believe on favorable terms to boot. My only concern is a reverse split, which would wipe out any chance of making any real money on this stock. I know it was done as a preemptive measure, and something they had to do procedureally, but the spectre of such an occurence hanging over my head does not make me a happy camper.
I also find it very interesting that the only people yelling about bankruptcy outside of the idiots on the yahoo message board is Motley Fool. Why is it that someone picks up the bashing baton? First it was Jackass Jonathon Jacoby, then it was passed to Weinke of Goldman Sachs, and now Motley Fool, though they have been bashers from the start. I am just glad that Weinke has been quiet. Goldman has tons of shares and they also hold bonds, so his beating the stock just didnt look to good, not at all.
Sirius Long and Strong, 8,050 shares strong, with more on the way.
Motley Fool only writes about SiriusXM constantly to accumulate hits to their web-site. Don’t pay any mind to their speculative blather.
Worldspace shares went up 101% in one day after they announced that they had successfully refinanced… Unfortunately, they went bankrupt shortly there after.
The Worldspace situation was actually a “deferral,” and not a “refinancing” announcement:
“Pursuant to an agreement with each of four individual holders of its amended and restated secured notes, and second amended and restated convertible notes, WorldSpace was granted approval to defer its obligation to pay $19.97 million in principal amount of the bridge loan notes until September 25th, plus accrued but unpaid interest due on the notes, which was payable on September 15th.”
I 4 1 am hooked on SiriusXM and they provide enough quality content where it has be come a part of my lifestyle. E.g. NFL season, Blog radio, Bob Dylan theme-time(good stuff) and yes, even Howard Stern( though too crude at times, still entertaining when it gets on a roll). So to me pay radio is better than anything else out there. I don’t think Worldspace had it going on.
im dying to hear dylan’s show but i always miss it.
I’m one of the “early” SIRI investors… I bought a measly 50 shares at $2.00/share a few years back…. then 50 more at $4.00/share, and another 50 at $2.00/share, only to see it hit nearly $10.00/share… but I held… only to see it fluctuate a bit for a number of years, then throw in at some higher a few times before hitting the bottom it lives in today, at the point where I’m now holding 2,000 shares. Given that it’s not even worth selling at this point, I agree with the “GOOD LUCK LONGS!!!!!” folks.
Nearly everthing right now is speculation, right?
Lets just remember that SXM is a good monopoly, has things going in the right direction (even in bad times), has debt that has to be attractive to someone, the concept of sats in the sky bring a lot of attractive media products; music, gaming, movies, TV stuff, live concerts…….dude, sats are not recorded stuff like on iPods or something. Sats are the future, because its live!!
and now the echostar news(not confirmed by sirius)