Reverse Split

Yes, Yes. I know they dirty words to most people but I never really understood why. After reading Brandon's article today I can't help but agree with him 100%.

http://siriusbuzz.com/lessons-in-sto....php#more-3310


It seems to me that the only downside is that people look upon a reverse-split stock as damaged goods; it would never be in that position if the company was worth anything. Once you get past the negative connotation, there is no good reason not to do it. It is just perception.

Sirius has been dumped-on for years for the massive number of shares outstanding, not being able to make a profit, massive debt, the list goes on. I think the time may be coming to do the split. There are many companies right now that do not meet listing requirements and may not in the future. I think the likelyhood of a lot of them doing a R/S is high. Are they waiting for someone to take the first leap and will follow if the result is not bad?

Can anyone think of another reason not to R/S?

I look at a company like JAVA who did a reverse split and it's right back to where it was before the split. That's enough reason for me not to want it to happen.

Assuming the SEC is going to start doing its job and also assuming that the uptick rule is reinstated, I think a reverse split would be a positive for us.
With 3.8 billion shares, and possibly soon to be 6 billion shares if Malone gets his 40% we will never be able to get out of penny jail. It's just too easy to manipulate. If Mel announces a reverse split along with some kind of positive refinancing news I think we'd get some momentum.
With shares in the 5 dollar range we'd attract more new investors... the stock would be marginable, and the options would come back into play.

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Originally Posted by winagain35

Assuming the SEC is going to start doing its job and also assuming that the uptick rule is reinstated, I think a reverse split would be a positive for us.
With 3.8 billion shares, and possibly soon to be 6 billion shares if Malone gets his 40% we will never be able to get out of penny jail. It's just too easy to manipulate. If Mel announces a reverse split along with some kind of positive refinancing news I think we'd get some momentum.
With shares in the 5 dollar range we'd attract more new investors... the stock would be marginable, and the options would come back into play.

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Yea I should have added that. If the SEC ever starts doing it's job, then I would have no problem with a reverse split.

Ok, lets take SunMicrosystems (JAVA), which split 6 times on a runup from 1988 to 2000 (tech bubble) finally settling around $18.00/share for years until they did a 1:4 reverse split last November. Why did they do it? What was their rationale?

Priceline did it and was a success story. Does it depend on the company?

Yes, If.....

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Originally Posted by Hughes

If the SEC ever starts doing it's job

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Hughes, First of all JAVAs CEO was supposed to have new policies that ether did not work or were not done. As a result the catalist that whould have taken care of the split and taken it high did not happen.

A reverse split would make it harder for the shorts to get shares (there would be less out) it would make it easyer for the SEC to follow the naked shorting, once again because less shares out. The most important part about making a reverse split work is that is has some kind of catalist to go with it. I am sure there is noone that would think that there is not at least 2 or 3 catalist.

With 6.3BB fully diluted shares outstanding, they have no choice but to do a reverse split -- at some point after their 2009 restructuring is completed. That will be a positive catalyst that should move this thing above its current bankrupcty pricing (which it still is priced for).

bananaz, when you say a reverse split makes it look like it's "damaged goods" -- think of it this way... this stock is ALREADY priced and looks like damaged goods. The stock is priced for bankruptcy. The Market Value is under $500MM... for a company with nearly $3BB in annual revenue. There is no making it look like -- because it already is.

Sirius should just go ahead and do it when they have their 2009 restructuring completed. Furthermore, for thost that claim Sirius will drop more -- realize this... the market value is already at $500MM (priced at a value equivolent to a bankrupt company of its size). So you think that if they finish restructuring their 2009 debt, then do a reverse split -- that the Market Value will drop MORE?

Sorry, I disagree. Companies that drop after a RS were overvalued to begin with. A company that is lucky enough to stave off bankruptcy -- and is priced for that BK -- is likely NOT overvalued. IMHO.



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Homer

I could not agree more. Too many people continue to believe that this stock could go to 5.00 or more and see this as their path to fortune. The stock had a value of about 3.75 prior to the merger. It was subsequently diluted to heck.

A reverse split could result in future, and I mean years kind of future, of regular stock splits, as was the case for many successful companies over the last century. This is where the potential for wealth accumulation lies.

Reverse splits DO work. Too many are done for the wrong reasons. One of the wrong reasons is to maintain listing requirements. Reducing the number of outstanding shares is a good reason, which will benefit the shareholders.

Do they have to announce the RS before they do it???

Do you guys see the RS as an inevitable event?

http://moneycentral.msn.com/content/P32972.asp 11/6/2002

Though the intentions seem sound, its better to look at a reverse split as a flashing red light warning that you may need to kick a stock out of your portfolio. As many as 75% of all stocks wind up trading lower after a reverse split.

Investors who failed to sell shares in several reverse splits in just the past few months have seen their holdings get hit by 60% or more in no time, despite the overall market strength.




frigginregan says:
March 3, 2009 at 12:08 am

Both Nicholas and Shawn are spot on. A reverse split right now…in THIS economic environment….and BEFORE any good news would be a nightmare for current shareholders. Not only would they have their dedication to the company repaid with a FRACTION of their original shares…but they’d then see those reduced shares value be immediately cut down to unrecoverable levels by the shorts.

I believe Shawn is right when he says new investors will only come when there is “real” positive news. But I’ll go one step further and say “sustained and real” positive news.

We need good news YES. But we also need sustained good news over several quarters. Again and again. Only this will shut up the naysayers once and for all. If Sirius can do this on top of refinancing ALL of the 2009 debt….THEN Wall Street will have to sit up and take notice. REAL money will start flowing into the stock again.

It won’t matter what the outstanding share count is. The stock will rise. A RS now would be absurd IMHO. It is in no way at risk of being delisted.

Give the equity a chance first for crying out loud. This is the FIRST real quarterly report coming up to show real synergies from the merger. It maybe slightly less spectacular then it could have been if the economy wasn’t so bad, but who knows…it just may surprise wall street.

We’ve suffered thru SO MUCH with this equity. Lets give it a few more quarters before we start calling for a RS just to artificially raise the stock price. Wouldn’t you rather see it rise on it’s own merits. To see the shorts and bashers lose their power after being at their mercy for so long. YES, right now we still are at the mercy of the manipulators. But if Sirius can show sustained growth and become free cash flow positive while erasing ALL the 2009 debt….then Wall Street AND the media will have to change their tune.

The analysts will begin to upgrade. The institutions will begin to buy. The tide will turn. And all this talk about a RS will be a distant silly memory. People will start talking about share buybacks instead.

Um…ok…perhaps I’m on too much of a roll here. But you catch my drift.

I much rather give Sirius some time to show and prove what it can do. Of course I am biased against a RS because I’m holding shares….but I TRULY believe we don’t need it. Not only because there is NO DANGER of Sirius being “delisted” for a long time…but because I TRULY believe they can rise without a RS.

So lets just wait and see what happens.

Cheers.

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Originally Posted by Hopeful

Investors who failed to sell shares in several reverse splits in just the past few months have seen their holdings get hit by 60% or more in no time, despite the overall market strength.

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Again, what is getting ignored here is the fact that Sirius is already priced for bankrupcty and looked upon as damaged goods. Does anyone really believe that the Market will value Sirius for LESS than its current BK price AFTER they restructure remaining 2009 debt? If so, then you really shouldn't be in this issue.

While I'm not guaranteeing it won't drop -- I understand valuations and see this priced for bankruptcy. If you remove that prospect, then this stock is undervalued. It would be insane for the market to drop the value to even lower levels at that point -- and I could all but guarantee that someone will buy it up.

That quote from above where they talk about a 60% drop??? Sirius is worth $500MM... a 60% would put it at $200MM. Really???? Think about that for a moment...


Yes, I think a RS is inevitable and needed - the timing is the key. I now believe the best time is after the 2009 maturities have been completely restructured. 6.3BB shares is too many for a company with $3BB in revenue. At most, the price could maybe touch $2 someday -- and that is under the most ideal of conditions and changes in economy, IMHO. Plus with the large amounts of outstanding shares -- it makes the stock even easier to be manipulated. I believe that there is such a thing as too much liquidity in outstanding shares. You reduce the supply, the demand is going to increase.


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Thanks for your insight Homer.

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Originally Posted by homer985

Again, what is getting ignored here is the fact that Sirius is already priced for bankrupcty and looked upon as damaged goods. Does anyone really believe that the Market will value Sirius for LESS than its current BK price AFTER they restructure remaining 2009 debt? If so, then you really shouldn't be in this issue.

While I'm not guaranteeing it won't drop -- I understand valuations and see this priced for bankruptcy. If you remove that prospect, then this stock is undervalued. It would be insane for the market to drop the value to even lower levels at that point -- and I could all but guarantee that someone will buy it up.

That quote from above where they talk about a 60% drop??? Sirius is worth $500MM... a 60% would put it at $200MM. Really???? Think about that for a moment...


Yes, I think a RS is inevitable and needed - the timing is the key. I now believe the best time is after the 2009 maturities have been completely restructured. 6.3BB shares is too many for a company with $3BB in revenue. At most, the price could maybe touch $2 someday -- and that is under the most ideal of conditions and changes in economy, IMHO. Plus with the large amounts of outstanding shares -- it makes the stock even easier to be manipulated. I believe that there is such a thing as too much liquidity in outstanding shares. You reduce the supply, the demand is going to increase.


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Homer,

Do you or anyone on here know for sure the rule of insider buying?

I am wondering why we have not seen anyone in the company buying shares in such a long while.

There's no rules for an insider buying shares of his own company in the open market.

There is only one reason insiders will buy shares of his own company in the open market: They think the price will rise.

So, what do you think now ?

BTW, the lack of insider buying may be telling us that there is still some downside.

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Originally Posted by Siriusowner

There's no rules for an insider buying shares of his own company in the open market.

There is only one reason insiders will buy shares of his own company in the open market: They think the price will rise.

So, what do you think now ?

BTW, the lack of insider buying may be telling us that there is still some downside.

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Both Sirius and XM had their own policies (given to them by their lawyers) which established windows that they can purchase and/or sell stock and options. These windows are typically up to a few weeks before and shortly after earnings announcements -- as well as other announcements that certain management may be privy to. Karmazin has discussed being locked out of purchases in the past (after the fact) due to the fact that they were in silence period.

There is no way to know if management is in such a blackout period -- except that they are 2 weeks away from earnings now.

Besides, I don't think anyone in their right mind would put money into this stock market... I don't care what the stock is. This just isn't a time to be buying stocks.


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There maybe specific rules to the company but what I meant was that there are no SEC rules to insiders buying in the open market. Only if there's abuse of course...

Why would they have those policies ? Seems to me that they work against the best interests of the company, specially if those policies are not SEC enforced. I can't find an explanation in my book.

Restrictive trading periods are more common than most realize... here's an example at Sun Micro:

"In addition, all Sun Vice Presidents and employees who have or may have access to or involvement in compiling Sun's financial results are prohibited from trading during a quarterly restricted trading period running from the first day of the last month of each fiscal quarter until the second trading day after Sun's public disclosure of results for that quarter. An employee's failure to comply with Sun's Stock Trading and Market Communications Policy may be grounds for disciplinary action, including termination of employment."
http://www.sun.com/company/cgov/stocktrading.jsp


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Originally Posted by homer985

Sorry, I disagree. Companies that drop after a RS were overvalued to begin with. A company that is lucky enough to stave off bankruptcy -- and is priced for that BK -- is likely NOT overvalued. IMHO.
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Good Morning Campers!!

Homer, I have seen the phrase "priced for that BK" more than a few times through the threads but ..... ok, this may be a dumb question, but ..... is it just an assumption that it is priced with BK in mind? How do we know that it is "priced for BK" ???? Believe me .... I HOPE this is the reason it is so low because I feel like Siri is making progress but not out of the shitter yet!

Still learning!!

Welcome to the newer members!!!:)

ok - just re-read my post - it sounds really stupid! Of course the market is concerned about BK but with the $$$ injection I would have thought that the sp would have risen more than it has considering the BK is less likely. So, shouldn't the BK consideration be putting less pressure on the sp???

Homer, I think the R/S would be a good thing if timed right and should be done. I think that the bulk of the opponents to a R/S believe it is bad because it is looked upon as a desperation move to prop up a plunging share price.

There are alot of opponents to the R/S, especially on the Seeking Alpha boards and I started this thread hoping to start a rational discussion as there seems to be alot of emotional opposition to it.

You, Brandon , John and others have all given a lot good information for all of us. Thank you!

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Originally Posted by homer985

bananaz, when you say a reverse split makes it look like it's "damaged goods" -----------

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Originally Posted by homer985

Restrictive trading periods are more common than most realize... here's an example at Sun Micro:

"In addition, all Sun Vice Presidents and employees who have or may have access to or involvement in compiling Sun's financial results are prohibited from trading during a quarterly restricted trading period running from the first day of the last month of each fiscal quarter until the second trading day after Sun's public disclosure of results for that quarter. An employee's failure to comply with Sun's Stock Trading and Market Communications Policy may be grounds for disciplinary action, including termination of employment."
http://www.sun.com/company/cgov/stocktrading.jsp


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Thanks Homer and SO.......Good info.