Sirius XM Cramer Wars
As any Sirius investor knows, Jim Cramer has seemingly been attempting to pummel the stock lately. There seems to be a mass knee-jerk reaction to perceived negativity, with no one venturing out to look at whether or not his statements have any merit. In this case the argument stems from opposing viewpoints, yet all parties seemingly have the same facts.
Firms such as Merrill Lynch and Citigroup have set much higher price targets than Jim Cramer and Goldman Sachs. Just like Republicans and Democrats, they are looking at the same picture and arriving at opposite conclusions. It’s easy to see the reasoning behind Merrill Lynch’s Jessica Reif Cohen’s analysis of the stock as she continually provides updates and gives solid reasoning for her methodology.
In the case of Cramer, he seems to offer only opinion and that is where the problem lies. According to a recent filing from Goldman Sachs however, his opinion may be based on certain facts that I have discovered. As it turns out, Goldman Sachs owns nearly 130 million dollars worth of those February 2009 convertibles that Jim references in most of his Sirius XM “bashing sessions.” Most people understand that Jim worked for Goldman Sachs and it would stand to reason that certain “information” found its way to him from the top. I’m not saying Goldman is manipulating the stock price, I’m just saying Jim seems to be warning people that that the price may be manipulated going into Q1 of next year. That’s not what a bad guy does. A bad guy would tell people to buy despite the risks.
Everyone is blaming Jim for the merger deal getting killed initially and forcing Sirius into a corner. It is beginning to look more to me like Jim is a pawn in all of this. What appears to be Goldman padding their already beefy portfolio with Sirius XM stock is more likely to be short covering as the “bond bullies” of Goldman and Friends keep manipulating the stock by shorting and covering; over and over again just as Jim stated. (IMHO) The conflict boils down to the perceptions of traders vs. investors. The long term growth prospects of Sirius make it an appealing stock to own however short term bumps are something a trader would play rather than go long on.
Not coincidentally I’m sure, Jim has come out and stated as much without naming names or pointing fingers. When Mel did the Mad Money interview, he also gave insight into this problem. Cramer has suggested that people looking to initiate new positions wait until the refinancing deal is done in February. That’s probably a prudent thing to do if you are in his line of work. Mel stated that the company is working to get this convert issue out of the way. An investor on the other hand would use any dips to lower their cost average.
The prospects of Q4 could cause the company’s stock to reach that magical 4.00 price at which time the convertibles would execute the swap and go long. In my opinion, Cramer may actually be looking out for the little guy in this as I believe he was just as blindsided as the rest of the Sirius XM investment community, but of course he cannot admit that. It may be time to give Jim the benefit of the doubt, and begin a conversation about what to do about the convertible situation and the arbitrage that has been plaguing shareholders.
In my opinion I believe this is the first priority of Mel and Co.. I believe they are working diligently behind the scenes to get these matters in order. As an investor, I’ve certainly had ups and downs but I’m ok with that because the long term prospects of the company are sound in my opinion. Is Sirius a stock for the weak hearted? Possibly not at this time. Is Jim Cramer doing what he feels is right? Probably so based on the information he has.
Position: Long SIRI
zach401, you have a higher percentage of being right when you suggest shareholder value will take years to rebuild than someone who looks at this company’s near term difficulties and predicts value in the short term. So what?
Anybody that has been invested in this stock for years and says they are not concerned about the short-term is full of shit.
Sitting by our computers on Monday morning after merger officially approved, Sirus was at 2.80 premarket and now it’s 50% down.
The next short-term move is either to $1 or $2.
Do you care now ?
First Gino, now Brandon. I am completely baffled by this abrupt reversal regarding Cramer’s culpability in this matter. What are you guys smoking? Cramer had a price tag of $5 on the merged company just a few months ago. REMEMBER THAT? It means he believed the combined company was worth 15 billion dollars (above and beyond their outstanding debt). Now it’s worth less than five (debt excluded)???
Also, he had to have known about the company’s existing debt and their need to refinance. Still, he maintained that $5 price tag. Cramer goes on and on and on about how the FCC cost the companies a billion dollars. Yes, that’s true. BUT…the FCC had ALREADY cost the companies millions of dollars BY THE TIME Cramer rendered his $5 price tag. The $5 price FACTORED that in. The companies DID NOT lose a billion dollars in the few short months between his price quote and the merger approval date.
Either Cramer deliberately (or just flippantly) had a inflated price tag BEFORE the merger or he is shortchanging the stock now. I recall him gushing about how the combined company would be HUGE – every single car would have satellite radio, blah, blah, blah. Where has that enthusiasm gone? Now, he complains about SIRI being the most searched stock on his site? A few weeks ago he mocked it for being a $2 lottery ticket; a few days ago he downgraded it to $1 lottery ticket. WTF?
It’s one thing to say Cramer isn’t part of some elaborate conspiracy to depress the stock price and to chalk up his dramatic reversal on SIRI to flippancy…Or even to say investor’s shold do their own due diligence and not rely on Cramer’s views. But to suggest that Cramer is somehow looking out for NEW retail investors by bashing this stock is ridiculous. And the notion that all the analysts who think SIRI is undervalued have it WRONG because they don’t have access to inside information from GS, like Cramer purportedly does, is also pretty far-fetched.
Merger Supporter,
You are absolutely right….
Brandon has some ‘spaning to do…
particularly as to this point you raised:
>>>But to suggest that Cramer is somehow looking out for NEW retail investors by bashing this stock is ridiculous.<<<
“Looking out” for “new” retail investtors by destroying the two years plus worth of his viewers he got into the stock, that’s protecting retail investors?
Gino has always been a little inconsistent…
Brandon, however, has some explaining to do…
Cramer and Brandon have obviously flunked the logics course….
protecting the retail investors by destroying the retail investors makes good sense, not…
Brandon, please explain this…how did Cramer protect the retail investors by helping to bash the stock to the $1’s…
Shark…
Read ALL the comments…I believe between my comments and the article, my thoughts are quite clear on the matter.
I liked you Brandon right up to the moment you wrote this article defending Jim Cramer’s action. You ought to wake up and realize you just lost your audience, and crossed over to a place that you really do not want to be.
See what your viewership numbers are after this article as soon as you can measure them. You are going down Brandon just like Cramer.
Brandon’s just trying to get published at thestreet.com like Gino did.
Tyler for you to make liable statements towards Cramer is very risky. Cramer is just telling it like it is and you should embrace this, as he rarely gets it right. In this case he is 100% right.
As a side, who are you to lead these suckers into the black hole? You know nothing of what you speak and you are clearly a pumper of SIRI. No intelligent investors would touch the stock. You are a fool and once SIRI goes bankrupt I will be laughing at you even more.
Posted by: florida135 Date: Sunday, August 24, 2008 10:27:43 AM
In reply to: eastunder who wrote msg# 6163 Post # of 6165
Brandon Matthews, you’ve lost a lot of your creditability with many of us. In my case, I averaged down at $2.32, and again at $1.99. Both times I felt this stock wouldn’t drop much lower. Why would I or anyone else even consider averaging down anymore, when nobody knows, including you, just how many millions more shares are going to be dumped on the market every day !! It seems that neither you or the company itself really knows how many more millions of shares will continue to be sold. Everytime we get a little buying, it’s met by a wave of selling that knocks the price even lower. At this rate, we might see it drop down to the $1 range, before it ever sees $1.50 again. For those folks that are “stuck in this stock” at much higher prices, it’s become a lose -lose proposition.At this point, with so much uncertainty surrounding the continued selling of these seemingly “unlimited” number of shares, how could the company expect anyone to have enough confidence in this stock to buy more shares at “any price” ???? We seem to only have 2 choices here, wait it out and suffer, or sell it and take our bath. I’m tired of hearing that Mel “had to make” that “last minute deal”,in order to have the merger approved. We as shareholders, would be 200% better off, if the merger we all yearned for, “was rejected”. Florida
Cramer did say merger would probaly be approved by june july on approvale it would go to 5 or 6 a week before merger he called it a power house after merger he bashed it and called it a lottery ticket Brandon for you to even suggest that Cramer is looking out is beyond thought what gives dude
There is no winning side to satellite radio. If you sell you lose, if you buy you lose….
It’s entirely unpredictable. Leverage and Growth. Who wants to swim in this puddle. I have finally seen the light, after years of holding sirius. You have got to be nuts to buy this company.
This whole thing is not black and white, either/or. There is alot of grey. I see Brandon’s point. But I also agree with others here who question Cramer’s motives. Is Cramer responsible? I fall into the camp that he can’t be held responsible. BUT he can be held accountable.
I agree with MERGER SUPPORTER’s post that Cramer has changed his ENTIRE tone. And to question that is totally FAIR. I mean even if he thought the stock was iffy right now…WHERE did his FANBOY love of the product go?? You can’t be THAT much for the product and service, say that it should go to $5 after the merger, fight the FCC THAT strongly, Say that it is a screaming BUY BUY BUY and then do a complete 180 because of the debt refinancing. Yes, it was an ugly way to close the merger….BUT…
Does it warrant TOTALLY abandoning the stock? I don’t think so. I’m a long who has been burned, and I’m not one of those screaming for Cramer’s head….BUT…I do feel It is completely valid to challenge Cramer’s sudden sour tone.
Isn’t that the main reason people are pissed off? Does that debt refinancing suddenly make it a bad company? Especially after Cramer showered it with love for so long? What has changed? NOTHING. Why would Cramer love it before the merger and now hate it? The debt was there before! And regardless of the ugly deal Mel had to do…WHAT CHANGED??? The combined company has TWICE as many listeners now and will save BILLIONS down the road in synergies.
So it’s this issue that bothers me about Cramer’s change in attitude.
If you go back and listen to his rants against the FCC, of how terrestrial radio is dead and how after the merger Sirius is going to be in EVERY car.
AND THEY STILL WILL BE now that the merger is done. So why isn’t Cramer highlighting that? He isn’t. Instead he pointed to the OIL crisis and the slow down in car sales to “support” his new argument. The same way the bashers and shorts have “cherry picked” their “facts” in the past to bash the stock.
Cramer doesn’t mention the fact that OEMs are actually UP despite the slowdown. And what about the fact that OIL is dropping now?? With gas soon to follow? Cramer hasn’t mentioned this once.
Instead he(and heres where the tone comes in)…instead he SARCASTICALLY says to STOP SEARCHING for SIRIUS on his website, that it’s NOT a $2 lottery ticket anymore, it’s a $1 lottery ticket.
Say what you want about how Cramer isn’t culpable for what happened right after the merger….but his TOTAL ABANDONMENT of his positive outlook for the company and product has COMPLETELY DISAPPEARED.
When Mel came on the show and threw that rubber bear at him and pointed his finger at Cramer’s chest DEFYING him to name a stronger company in the sector with MORE promise….Cramer didn’t argue.
But thats the point. HE DIDN’T AGREE EITHER. After nearly a year of saying how great the product was and how the company if merged would CRUSH terrestrial radio…he just dropped his enthusiastic tone.
You can say the current stock will have struggles short term because of the debt or whatever….but Cramer’s ENTIRE tone is ALL about how it’s a bad stock. The way he spits out the phrase “It’s a one dollar lottery ticket” is said with such contempt, it is no mystery where Cramer is coming from.
If he LOVED the company and product as much as he said he did, he’d lament the way the deal was closed, but he’d ENDORSE the company and the stock into the future.
Sure…say it may be too volatile until February….but to BASH it the way he has?
If Cramer got a death threat….is that any reason to unleash his fury on the company he once praised? Because as he said many times before…he has gotten such threats THROUGHOUT his career for many stock calls.
So if it isn’t that…then I think its within everyone’s right to QUESTION his sudden change in tone. He’s not just going against what he said in the past, or “Warning” new shareholders to stay away now…he is BASHING the stock and company. Plain and simple.
bingo my sentaments and just about 100% of us shareholders who feel were burnt
This has been one heck of a hot topic. Apparently, some are less than pleased with my objectivity. No one has been more anti-Cramer than I have. My conscience however got the better of me when I discovered Goldmans massive convertible holding and put it together with Cramers comments.
I felt a journalistic responsiblity to inform SiriusBuzz readers. If I had with-held this information, SiriusBuzz would have lost all credibility. I have a responsibility to my readers to make any and all facts available. Contrary to popular belief, SiriusBuzz is not SiriusPump.
I had to find a way to get this news out without causing a panic. I was the one who picked up on the story of Goldman buying shares…when I realized that they were probably only covering their short position or using them for options writing, I had to set the record straight.
That line of reasoning then led me to Cramer and the story he has been repeating. Once I tied Goldman to Cramer, I felt that a story should be written to not only explain the Cramer thinking, but also put into written word why he may not be correct.
I hear ya Brandon. And I know you’ve been a harsh critic of Cramer in the past. And I commend you on releasing your findings and sharing your views about Cramer concerning those findings.
I too revised my views of Cramer after the merger. I definitely jumped on the Bashing Cramer bandwagon. After what us longs have been thru…that was understandable.
Then things got ugly, and I see how blaming Cramer made us victims. Cramer is Cramer. Hes great if he praises your stock. And an Asshole if he bashes. Hes just an entertainer.
Having said that, now that the dust has settled so to speak, I can take a more objective view. And although I don’t think he’s “responsible” for what happened. I do hold him “accountable” for what he says going forward.
I see both sides. And I know you’ll continue to shine light on both those sides like you always have.
Yes, the Goldman issue is valid. But on the same token, does it REALLY warrant Cramer’s COMPLETE change of tone about the company? I think this is a valid question. And one that should continually be asked. I know that SiriusBuzz has always been fair even with their positive view of the technology, they haven’t been just pumping the stock.
Cramer has every right to re-evaluate his stance on the stock. But the BIG issue for me is his COMPLETE abandonment in his public support of the company. I know he has to walk a fine line. But you have to admit his flip flop is pretty dramatic and jarring.
friggen his flip flop made the stock to go down 38 cents after the big bang of the day merger was announced
friggeregan, your right, to change his tone on the stock is one thing, but to completely flipflop on the company!? his big point was how they lost over 1bil. during the fcc fight etc. , well, they dident lose 1bill. between july (when he was pumping) , and now.hes lost credibility. he should be a politican.zach401, you say,if you buy ,you lose,if you sell,you lose. well i know one thing for sure, if you sell now you’ll lose. im sure gs would love to get ahold of your shares, they could sell em back to you a year from now for 6.50 , 7 maby10. my position for siri, long, my attitude, patience.
Brandon, in my humble opinion, you are reading way more into Goldman’s convertible ownership than can be REASONABLY ALLOWED. Unless you’ve suddenly become Cramer’s confidante in the matter or have discovered a heretofore hidden mind-reading talent, YOUR HYPOTHESIS, that bashing this stock into the ground is simply a necessary evil to SAVE new retailers, IS JUST THAT – ONE HYPOTHESIS.
In one of your comments you say you are being objective. I have no doubt that you WANT to be objective, but PRESENTING a hypothesis is ENTIRELY NOT SUFFICIENT to “give Jim the benefit of the doubt”. Yes, you have one sliver of evidence that suggests TO YOU that Cramer may be an unwitting pawn in all of this. Still, not nearly enough to give him the benefit of the doubt ESPECIALLY when he seemed to GO OUT OF HIS WAY to PROMOTE the stock. Here’s the link for him calling SIRI a $5 stock a mere 3 months before the merger was approved:
http://www.cnbc.com/id/1584023.....038;play=1
What I don’t understand is how GS’s EXISTING February 2009 convertible ownership turns a $5 stock into a $1.40 stock??? The analysts who have MUCH HIGHER price targets on this stock are ALSO PRIVY to that fact, aren’t they?
Able joe…you give too much credit to Cramer. Did his comments on the day of the merger have an effect? No doubt they added to the panic. But what happened would have happened regardless of what Cramer said that day.
Alot of supposed longs got scared and jumped ship.
The old stock market adage that YOU DON’T LOSE ANYTHING unless you SELL could never be truer.
Cramer has been so wrong on so many stocks that to project that kind of power onto him is giving him WAY too much credit.
Because of his show, there is such a thing as a Cramer “pop” or a Cramer “drop”….but ultimately it is a temporary thing.
I think from thi point forward, it’s important to point out Cramer’s flip flopping. Because he has totally changed his tone. I mean the debt refinancing aside, NOTHING has changed that made him LOVE this company before. NOTHING.
Unless you’re talking about how Sirius DOUBLED it’s subs virtually overnight and created BILLIONS in synergies going forward.
I know you’re angry, and I’m pissed at Cramer too. But directing all your hatred upon him just makes him more powerful…bringing more people to his website and show. He LOVES this.
Forget about it man. Cramer will be eating crow soon enough. If you believe in this company like I do, you KNOW that day is coming.
So call Cramer out. But don’t blame him. The stock has been manipulated by much bigger fish, and there are ALOT of parasites hitching a ride…Cramer being one of them. To say he helped orchestrate this is like saying Bush orchestrated 9/11…it’s giving the man WAY too much credit.
Anyway…Brandon started a second thread on this topic…so lets bring it over there shall we?
Long and strong baby. Long and strong.