Why I Believe The Reverse Split Won't Work

I am thinking the R/S won't work and I would lvoe to get some comments from others:

I believe we can absolutely COUNT on this stock taking a massive nosedive once the R/S hits because SIRI is a heavy-volume highly-volatile stock and the SP often swings wide arcs on speculation alone. The price is subject to move in big percentages with no news at all. Given that reverse splits are historically notorious for getting hammered by shorts and because shorts are licking their chops waiting for this R/S to be announced (and it would be silly to assume SIRI is somehow immune to this phenomena), I just don't think SIRI is strong enough to withstand that sort of onslaught. That's one reason the reverse stock will go down.

Here's the second reason:

Quote:

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Originally Posted by frigginregan

...I'd sure like to be either out of this stock at break even...

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Friggan's sentiments is reasonable. To be fair, he did say he would also be willing to stick in there if he made enough before the split to not get anxious about any wild swings that may occur. But there are a LOT of people who have lost a lot of money so far. Given the downturn over the years, I believe many have been averaging down and will be content if they get the chance to break even. But this comment solidified my thinking that a R/S won't work. Many who manage to hold on leading up to the split will be unable to withstand the urge to protect themselves "until things settle down" - especially once the shorts kick in. So we'll have some investors selling to protect themselves prior to the split, we'll see shorts hitting this stock after the split (and we all know what impact they can have), and we'll have those who sell after the split because can't stomach watching their portfolio suffer at the hands of the shorting community.

There was one incredible psychological barrier through which SIRI must survive but if they have 3 or 4 factors working against them and they have nothing but hype to counter, I fear many are going to lose a lot of money and we'll all be back where we started.

Thoughts?

So many things can happen. Hell, if the economy starts getting better and Sirius shows a few good quarters and the car companies experience a resurgence, Sirius could really make a move again and the need for a RS will become a non issue.

There are so many variables at play. I think it's good to talk about them all...but not to get too locked into one mode of thinking. Like the Chinese saying goes..."Better to be a reed that bends in the wind then a rigid oak that snaps". In other words....be flexible.

Yes, I plan to average down some more on dips in the hopes of getting out at the next pop to avoid getting stuck should a RS happen. I know many others are thinking this too. But what if Sirius begins to show some REAL signs of life and Mel begins to really kick ass with great marketing and cost cutting? Would I continue to hold? Perhaps. I can't accurately answer that yet.

It will depend on many things. I plan to be flexible and take a wait and see approach.

One of the benefits of being in this stock so long is that I've been battered so much, that I'm kinda emotionally numb at this point. Which is good. I am beyond fear. It what enabled me to hang on thru all of last month's scare tactics about BK. I averaged down while others panic sold.

As a result, I reduced my breakeven price from $6 to about a $1.

If I didn't run out of funds, I would have been able to average down to such a low price that I could have gotten out on this last pop.

But alas that was not to be. Would I have gotten out? I dunno. It depends on how much I could have averaged down. If I had enough shares where I could sell half and break even....and let the rest ride....well, that would have been a resounding YES. If I could have only broke even by selling ALL my shares...well...then I put it at 50/50. Could have gone either way.

As it stands now, my plan is to average down on any dips into the 20s or God forbid the hi teens. If Sirius doesn't dip, I may buy some shares in the 30s. And if it takes off again, and I don't buy anymore...I'm cool with that too. Just as long as I get a chance to sell before a reverse split. :-)

Peace.

I finally get home after a long day on set and THIS argument comes up again? Geez!

Too many shares. R/S will work to reduce the float, making manipulation less likely due to the unavailability of shares.

R splits do not work when done for listing requirements.

All moot as the company has no immediate plan to implement such a strategy. I waited too long fo a merger, too long for financing and I'll be damned if you guys are going to make me wait for a R/S. If it happens, it happens.

Even on the Malone deal, the stock is up. Maybe we could try trusting Sirius?

Hey Brandon, how did your shoot go?

Can't wait to see that documentary. Very exciting.

Look, about the RS issue. It's not an argument. Not to me anyway. Like the whole BK freak out. If I truly was scared about BK or didn't have faith in Sirius, I would have panic sold like many did for a huge loss. But I didn't. I not only held, I bought all the way down to .05 cents.

Like the BK issue, I am not going to panic about the RS issue either.

I have always stated that I'd like to get my original investment back. I'm more nervous about the economy than I am about Sirius doing a RS at this point.

I'm a filmmaker, and those funds would come in handy about now.

If I can average down even more, like I stated above, I plan to let some shares ride.

We all have our own wants and needs and different circumstances. We all love Sirius. We wouldn't be longs if we didn't.

U are allowed to get exasperated when people talk about a RS. But remember, we have all been thru a lot. Cutting everyone alittle slack and letting them blow off some steam now and then is called for. After all, a few posts ago, you were pretty down about things yourself.

It is just this kind of emotion, and devotion that Sirius listeners and investors have that is going to make that documentary Shock Stock so entertaining.

Lets all remember that we are in this together. :-)

Quote:

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Originally Posted by Brandon Matthews

R splits do not work when done for listing requirements.

All moot as the company has no immediate plan to implement such a strategy

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Hi Brandon. Well if they don't get the shares over a buck soon, they better update their plans because it will be all but a necessity if they want to continue trading on NASDAQ and they can't pull a little bunny out of their butt. Companies don't trade over a dollar because they have an iPhone app or because they were able to avoid bankruptcy via selling their soul at 15% interest. Besides, distribution isn't the problem - it's declining demand.

In general, I'm not addressing the likelihood of a R/S but whether it will work or not should they pursue this as an option in the months ahead. Sure they can delay by appealing but it's only delaying the inevitable.

Quote:

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Originally Posted by Brandon Matthews

I finally get home after a long day on set and THIS argument comes up again? Geez!

Too many shares. R/S will work to reduce the float, making manipulation less likely due to the unavailability of shares.

R splits do not work when done for listing requirements.

All moot as the company has no immediate plan to implement such a strategy. I waited too long fo a merger, too long for financing and I'll be damned if you guys are going to make me wait for a R/S. If it happens, it happens.

Even on the Malone deal, the stock is up. Maybe we could try trusting Sirius?

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Brandon,

I agree with your post...however..keep in mind that as long as nothing is done about naked short selling...it doesn't matter how many shares are out there!

Friggin...

Shoot went well I suppose. It lasted 2 hours or so for the 5 minutes of me that will be in the movie. I just hope she doesn't use 5 minutes of me slurring my words, picking my nose or scratching my arse! We will find out on memorial day.

Siriusly...

If I had to guess, I would look for them to do it at around .75 to .80. The dollar wall is thick and an R/s at .80 will destroy that wall. It also minimizes the size of the R/S

asm...

we should be getting the latest short report this week. In fact, I think its late.FYI

Sounds cool Brandon. I think watching that movie will be very cathartic for us all. Looking forward to it. With or without the nose picking or ass scratching.

I think that theory of yours about if a RS will happen that the .80 cent range is a good bet.

Who knows.

But I do plan to average down to around that mark, in the coming weeks, so perhaps I will be faced with the choice then wether to sell or continue holding.

We shall see.

Peace out.

I know a man who owns Sirius
And once a day he became Delirious
He then read “Sirius Buzz” Posts
And Hoped for the Most
As he wants his Sirius stock to have Growth

Alas a Reverse Split is a new topic to Ponder
As I continue to Buy Sirius and Squander
What’s that you say?
You have an Opinion Today
You need to Sell
You need to Buy
You need to Cost Average on the Fly
12:01 a.m. (Delirious Again)


Long currently: (55000 Shares)

I find it hard to believe that so many of you think that Sirius is overvalued enough to think that it will be impacted by a RS.

The fact is, the stock has an EV of under $5BB still. And those against the RS believe that the value will dive even more after a split -- from two companies that had a combined EV of $12BB at one time, you believe it will "nosedive". The fully diluted common is not even worth $2BB, yet you think it will go down?

Sorry, I disagree. Companies that drop after a RS were overvalued in the first place. This company has already "nosedived", IMHO. They should just get it out of the way this year -- if/when the economy starts moving in the right direction and the company has some better results.

As far as breaking even? You're 40% less likely that that is going to happen now. If you think this stock is ever going to see $3 in the next couple of years (let alone $4 or $5) -- you're going to be very disappointed. I guarantee it.

And if you're breakeven is under $2 and think that a RS will make it impossible to get to your breakeven point -- then you clearly do not understand how a RS works.

Sorry if my dose of reality upsets you... its just an opinion and we all are entitled to them.


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Here I sit Broken Hearted
Should have bought at .05 but my money sharted
now I contiplate .32
have the money what should I do...

I started a thread to stand up and shout
An RS above my average wipes me out?
But someone started another thread
that got the attention of the sirius buzz's head
now the topic is about why and when
rather than how to spend.

please go here and tell me how
you'll make money on this cash cow
http://siriusbuzz.com/forum/showthread.php?t=1661

I read the deal and this is my take

1st payment 280 million--30 million right back as a fee and 15% interest

2nd part--150 million loan at 15% and purchase of 100 million of debt from market Plus 12.5 million perferred convertable into 40% of SIRI common

However, Mel has till May, 17 2009 to repay the second 250 million with a 7 million termination fee

Mel just resistered a 1 billion shelf of SIRI common to sell on the open market

If he gets 30 cents or higher he will get 300 million or more

Enough to pay Malone 250 million and 7 million fee. This would also remove 250 million of debt at 15% interest

We would incur a 1 billion dilution equaling a 17% dilution

But Remove a 40% dilution and 250 million at 15% debt and put 50 or more million into free cash flow pot

Actually quite brilliant, I hope and think this is Mels plan.

Don't forget although Malone bailed us out, he used loan shark methods such as the Mafia would.

If Mel can pull this off now, I think everbody will agree he is a genius.
w this post over on the yahoo board. sounded very interesting to me, although i can't see mel stiffing malone at this point. but it does make some sense.

thoughts?

this was not my comment. i pulled this from the yahoo board and thought it was interesting. when i cut and paste it into the my reply, my initial comments were removed. just don't want anyone pissed that I'm copying...

Quote:

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Originally Posted by mydogniles

this was not my comment. i pulled this from the yahoo board and thought it was interesting. when i cut and paste it into the my reply, my initial comments were removed. just don't want anyone pissed that I'm copying...

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F*** Malone. Hes an a**h**e. His loan proved hes no"good guy". He shotgun barreled financed Sirius liek the banks did to get the merger deal. No, this isnt going to happen. If they sell shares, it will be to simply add to their COH, and maybe pay off remaining debt for this year, lauch sats(next 2 are coming), and strengthen cash position for long term. In the future if they grow their COH, they may start paying back debt. No too much time, and effort has gone into the Malone deal, its real, its here, and its not going anywhere. If he used Malone simply to get the stock price off the ground, so he could sell shares higher, and throw off Malone it would go against everything Mel believes in, as it would be smart, clever, and a good deal for stockholders. None of these things has Mel ever portrayed as characterisitcs or goals of his. So basically I like it, its just goes against everything Mel has show in the past. Plus, based on information we dont have(future synergies with DirectTV, packaging , and future capital investments) this might be as far away from Mels true plans as humanely possible. If Mel feels Malone is simply jerking him around, or trying to take over the company sooner than later, by forcing the company to make bad decisions, then yes, he might try that.

i agree. actually in my comments that got wiped out i stated that it seemed unlikely mel would pull a move like this. not from a creativity standpoint, but more from a partnership long term. this company has a long way to go before debt is off the books and it doesn't hurt to have a partner.

thanks for your reply relmor...

It's too late... whoever wrote that didn't read the agreement very closely -- and I'm talking about the FULL agreement attached to one of Sirius' recent filings.

The agreement mentioning "May 17th" was for if they hadn't completed the 2nd phase by then... but now that the 2nd phase is completed - the two are married. They cannot and will not undo it at this point.


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EDIT: Looking through the agreement, there is no "May 17" deadline given to repay the $250MM XM loan. How and where that date came from, I don't know -- but it doesn't exist. I think they may have been thinking about the May expiration of the facilities -- however, those are now extended.

There was an April 15th non-solicit provision, which stated Sirius couldn't "shop around" for a better deal until April 15th... but the date is irrelavent now. The agreement makes it pretty clear that the termination of the agreement was only available to Sirius until the 2nd phase closed. The agreement stated that Sirius couldn't look for a better deal until after April 15 - but if one came along, they could terminate for a $7MM fee; after April 15th they could then shop around and also pay the termination fee. But this is irrelevant now because Phase 2 already closed. The point is moot.



"The Company agrees that until the earlier of the Closing Date and April 15, 2009 (the “Non-Solicitation Period”): (i) it and its executive officers and directors shall not, (ii) its Subsidiaries and its Subsidiaries’ executive officers and directors shall not, and (iii) it shall use reasonable best efforts to ensure that its and its Subsidiaries’ agents and representatives shall not, (A) directly or indirectly, initiate, solicit or knowingly encourage or facilitate any inquiries or the making of any proposal or offer with respect to (x) a tender offer or exchange offer or proposal for a merger, consolidation or other business combination involving the Company and its Subsidiaries, or an investment in Equity Securities representing 10% or more of the outstanding Equity Securities of the Company or (y) any proposal or offer to Refinance, or to raise funds to be available to Refinance, all or any substantial portion of the outstanding indebtedness of XM Opco and/or , XM Satellite Radio Holdings..."



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Quote:

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Originally Posted by homer985

It's too late... whoever wrote that didn't read the agreement very closely -- and I'm talking about the FULL agreement attached to one of Sirius' recent filings.

The agreement mentioning "May 17th" was for if they hadn't completed the 2nd phase by then... but now that the 2nd phase is completed - the two are married. They cannot and will not undo it at this point.


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EDIT: Looking through the agreement, there is no "May 17" deadline given to repay the $250MM XM loan. How and where that date came from, I don't know -- but it doesn't exist. I think they may have been thinking about the May expiration of the facilities -- however, those are now extended.

There was an April 15th non-solicit provision, which stated Sirius couldn't "shop around" for a better deal until April 15th... but the date is irrelavent now. The agreement makes it pretty clear that the termination of the agreement was only available to Sirius until the 2nd phase closed. The agreement stated that Sirius couldn't look for a better deal until after April 15 - but if one came along, they could terminate for a $7MM fee; after April 15th they could then shop around and also pay the termination fee. But this is irrelevant now because Phase 2 already closed. The point is moot.



"The Company agrees that until the earlier of the Closing Date and April 15, 2009 (the “Non-Solicitation Period”): (i) it and its executive officers and directors shall not, (ii) its Subsidiaries and its Subsidiaries’ executive officers and directors shall not, and (iii) it shall use reasonable best efforts to ensure that its and its Subsidiaries’ agents and representatives shall not, (A) directly or indirectly, initiate, solicit or knowingly encourage or facilitate any inquiries or the making of any proposal or offer with respect to (x) a tender offer or exchange offer or proposal for a merger, consolidation or other business combination involving the Company and its Subsidiaries, or an investment in Equity Securities representing 10% or more of the outstanding Equity Securities of the Company or (y) any proposal or offer to Refinance, or to raise funds to be available to Refinance, all or any substantial portion of the outstanding indebtedness of XM Opco and/or , XM Satellite Radio Holdings..."



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There you go. Its irrelevant to even dicuss. Its not even possible, nor was it going to happen in any condition. There may be legal steps SiriusXM could take, but that would never happen.