If you have followed satellite radio for any length of time, you are likely familiar with the term potential. Potential is what investors in this sector have been betting on for quite some time. Potential is what drove these stocks for quite some time. As new deals were made, and each quarter passed, the potential associated with SDARS began to gather strength.

In late 2006, and early 2007, people began to question the value of the potential they saw in SDARS. Some questioned it altogether, while others reduced their expectations. SDARS had been gathering subscribers for years, and costs were mounting. It seemed while the companies still had potential, peoples expectations began to diminish. Then came the merger.

The merger was to be an answer. Combine the companies, cut costs, and bring forward synergies, and all of that potential had a real shot at becoming real again. Then came the merger delays.

Month after month passed with relative silence from regulators as well as the companies. Analysts were left to their own devices and assumptions as everyone waited on merger news that just never seemed to materialize. The stocks got caught in a trading channel, and became a favorite hunting ground for traders and shorts. With no real news, and delay after delay, even the most faithful fans of the sector saw their confidence wain. Subscribers still came, and potential still existed, but the wait was straining everyone. With a bad economy, and poor auto sales, it became difficult to bet on potential when the outcome of the merger was still up in the air. Then the merger was announced.

The day had finally come. The merger of Sirius and XM was complete. It was time for a merged satellite radio company to be born, and for all of those that believed in the potential to see their reward. The problem was that betting on potential had become tiresome in the satellite radio sector for many. Now the comfort level of the street has shifted. People still see the potential, but now investors want more. They want to see some realized potential.

Realized potential is when a company reaches the points that early investors thought were possible. It is getting to the metrics and position that people thought it would. Right now Sirius XM Radio is in the transition between potential and realized potential. It is in that uncomfortable spot where people want to invest, but also want a little bit more than the company can deliver at this point in time.

When Sirius XM's CEO Mel Karmazin scooped up 2,000,000 shares on August fourth, it was a vote of confidence by him in the company. It was the little spark that can get the ball rolling. It is an indication to the street that realized potential is around the corner.

Investors who have followed the career of, or become educated on the career of Mel Karmazin should understand one thing. When Mel sets a goal, and reiterates that goal more than once, he does whatever it takes to get there. Those that have seen this in the past know that Mel's goal of $400,000,000 in synergies will be realized. His goal of 2009 Free Cash Flow Positive less the satellite launch will be realized. All activities within the company will be measured against these goals. Another characteristic of Karmazin is that he tends to under promise and over deliver.

Some investors will see Mel Karmazin's actions as potential that will materialize, and will be the early investors into the merged company. Others will be more conservative, and wait to see a quarterly report or two before jumping in.

The Sirius XM Radio Conference call is two days away. Mel will be outlining performance as well as goals, and setting out guidance. At this point investors need to determine for themselves where the potential is, and when the realized potential will materialize.

Position - Long SIRI