Sirius XM Taken Down At Close By MSCI Barra Index Reconstitution
Investors following Sirius XM Radio (SIRI) received a wake-up call as the market closed with a 67 million block trade that went off at $0.89. The stock literally tanked in the final moments of the trading session. Theories abound, and my e-mail box has been filled with confusion, concern, and various theories about what happened.
What REALLY happened? Sources close to the situation have confirmed that the MSCI Barra Index made the sale as they reconstituted their index. The timing of this event could not have been worse for Sirius XM Radio. The company is just two days away from the Russell Index taking a snapshot of SIRI to determine if the company can qualify for the Russell Re-Balance.
Events such as this can serve as a learning experience for investors. Re-balancing, or reconstitution of index funds can have an immediate impact on equities. Amn event such as this drives and immediate action. What we can also see is that the jump or drop in price can be recovered in pretty fast fashion as well. Already Sirius XM is almost back to the $1.00 target that has everyone on the edge of their seats.
Investors will see several theories about what happened, but in the end it boils down to the reconstitution of the MSCI Barra Reconstitution. It is not a buy-out, it is not the shorts, it is not speculation about the Howard Stern. The simple and REAL reason is now known.
Information 0n the MSCI Barra Reconstitution
Position – Long Sirius XM Radio
who would follow an index that would sell 100 million shares at .89 when they could have sold them for a considerable $$$ amount more? doesn’t make sense.
wouldn’t trust them with my money.
Not that I do not believe you, but how did you confirm this. The link provided relating to the reconstitution does not mention Sirius XM anywhere. Is there an easy way to see which indices hold Sirius XM?
Thanks Spence,
So… they got kicked off the index. I’ve taken a very quick look at their website and can’t figure out why. It’s certainly not black and white like with the Russell.
Any idea why? If so, I’d like to read about it. Another tool for our toolbox.
So they didn’t get removed ala Russell from last year.. they got moved up a class? wierd.. always something.. and sxminvestor, agree 100%
@Egis….
I confirmed this with sources close to the event. SiriusBuzz is a site that presents people with facts and realistic opinion. This reconstitution is a fact. If I was not 100% confident in my sources, I would not have published this piece, or would have offered it as an opinion. Some sites do more speculation, or have steered readers wrong many times in the past, so I can understand your asking the question. Please consider where you got this news (SiriusBuzz), our reputation, our credibility, and the fact that we have been covering this sector for quite some time.
Fair enough. For the record, I am no longer involved with the site you are referring to.
Is there a source for finding which indices hold Sirius XM, so it can be monitored for events like this? This caught many people off guard. Has Sirius been added to the other index yet?
@Egis….
I was not referring to one site in particular. There are several sites that tend to be sensationalistic about not just Sirius XM, but other equities as well. Misinformation about Sirius XM has confused many people over the years,. It is why i try to run this site the way I do. If I tend to offer reasonable opinion, facts, and credible information, it will build the confidence of people in this site. People need a place to get what they consider trusted information.
Trying to track indexes can be like trying to find a needle in a haystack
Thanks for the article Spence. I went out and made some sales calls and when I came back………… WTF. I’m a firm believer in cause and effect, and you have explained it. Thanks. I suppose we all can get a prospectus from the fund if we want further details.
How come this was not made public and only the crooks knew again, therefore the buildup in short interest.
Thanks Spencer
What about the timing? Do they always re-balance at the same time every year? What is it based and and why>
Thanks
vaporgold
They announced this rebalance earlier this month, and depending on the fund they do it quarterly, semi annually, or annually.
Thanks Spencer
Now aren’t u glad MSCI Barra did this before the Russell 1 month trial period beginning Friday? Relax, Mel has the plan.
So it got sold out of one index, but the other index it got included into should have bought a bunch, correct?? Where are all those buys, then?
Sounds like insider trading!
The shorts knew this should be common knowledge.
Funds should have to disclose a de-listing or Sirius should be notified and inform their investors.
Who sells two days away from making it on to the Russell?