SIRI Intraday Thread: Monday March 23rd

[Hopeful]

No it wouldn't. With fully diluted shares outstanding of, what is it 6 billion? The stock price could never go higher than 1.25-1.75. That's in a time of major economic expansion.

There are too many shares. Bottom Line.

Brandon,

You said this stock could never go higher than 1.25 - 1.75 with fully diluted shares. That is about a 7.5 - 10.5 billion market cap, I am tired so forgive me if my math is wrong.

Saying that, what benefit do you see to the RS if you think the market cap will never exceed 7.5 - 10.5b? All that would happen is you would get an artificially inflated SP and you would have less shares thus reducing future gains...

Hell I will take $1.75 with future opportunity for it go to $4.00 or more, that is close to 200,000 for me after US to CAN conversion.

Go easy on me, I am a newb...


Thanks Bababoooie



Okay I am just going to put my crazy logic out there to be torn apart by the senior members lol.

Currently I hold 100,000 shares. If SIRI can get to $8 US to Can conversion that's about a million in my pocket !

If they do a 1 for 10 RS I get 10,000 shares. So the SP would have to go to roughly $80 US for me to see 1 million.

I see this stock obtaining $8 SP much easier than a $80 SP. I know the numbers are relevant when it comes to the market cap but $8 SP seems more realistic.

I just used these figures because I like them !

Homer plz don't hurt me lol...

[sl62]

Just to address the r/s issue from my perspective...

1. Mel has until Dec '09 to effectuate the split
2. He's notorious for being last minute
3. >>Nasdaq extends waiver of delisting rules to keep stocks from falling off the market

BLOOMBERG NEWS SERVICE • March 20, 2009

Nasdaq OMX Group Inc., the equity market that lists the most companies in the U.S., will suspend its listing requirements for another three months to prevent a wave of delistings after a plunge in stock prices.
Advertisement

Companies will get a reprieve until July 19 from a requirement to maintain a share price above $1 and a minimum market value, Nasdaq said in a regulatory filing. Nasdaq had planned to waive the requirements until April 20.

The plunge in the Standard & Poor’s 500 Index to a 12-year low amid the worst financial crisis since the Great Depression has forced Nasdaq and the New York Stock Exchange to suspend some requirements for their 4,728 publicly traded companies. Shares of more than 1,300 companies trade below $3, including Citigroup Inc. and Fifth Third Bancorp, Bloomberg data show.

“A decline in general investor confidence has resulted in depressed pricing for companies that otherwise remain suitable for continued listing,” Nasdaq said in the filing, which was posted on its Web site late yesterday. “Extending the temporary suspension will permit companies to continue focusing on running their businesses, rather than satisfying market-based requirements that are largely beyond their control in the current environment.”

The Nasdaq Composite Index has lost as much as 20 percent this year, after sliding 41 percent in 2008. Last month, the NYSE relaxed listing requirements until June 30.<<

4. #3 means their clock won't start until July 19 and then they will have 30 days to get back over a buck before receiving a notification of not being in compliance (Aug 19). Then they would have another 3 months (Nov 19) to get into compliance. By then Mel will have reversed. I think it will be announced in July and effected in Oct or Nov.
5. As the r/s was approved by shareholders and needs to be used by its expiration (Dec 09) it will happen regardless if the SP is over a buck or not.
6. One cruel fly in the ointment. If the SP starts gaining steam and starts looking like it will go over a buck...Mel could panic. The main reason he asked for the r/s was to get the SP back over a buck. Although he did say a higher SP could attract bigger fish investors (which is theoretically true), it was largely for the buck thing. If he panics and feels the need to announce before the SP goes over a buck to justify himself, it will kill the momentum of the SP.
7. The upside caveat related to #6 is NASD has in a sense just trumped Mel by extending until July 19. Because of this rule extension for all companies, Mel would have a tough time explaining before July 19 why he is announcing a splitter before then.
8. So I say...he waits until at least July 19. By then we will have at least been over a buck briefly with plenty of chance to solidify intended gains. I still believe the splitter will happen in Oct or Nov '09.

[sl62]

I could be wrong. All of the knowledgeable Senior members seem to be avoiding this question regarding the RS.

Will we get any warning or will they just do it?

Thanks guys for your valuable insight!

Hopeful...

Most companies will give several months notice before the splitter takes effect...

[killerkaul]

Good nite all..................... see you in the morning. ... killer and the Dog.

[john]

You know I just dont get it. Back when the vote came up I noticed many were fine voting for the dilution, but ho no on the vote to RS. That never made sense to me because it is not the RS that caused you to lose your value in the company, it was the dilution. The RS is just a effect of the dilution.



Hopeful, the problem with trying to get that high is you are constantly going to have to deal with massive manipulation there are just to many shares to keep track of. The other problem with the PPS being so low is that it carrys a penny stock stigma with it. People just dont think penny stocks are stable enough to invest in, the preception is everything. It is also one reason the stock does not trade with the rest of the market, as I said before when the stock market gos up big most investors will put their money in the more stable companies.

[sl62]

Btw...just fyi..

>>Citigroup seeks reverse stock split
Measure expected to help offset the massive conversion of government's preferred stock into common shares.

By David Ellis, CNNMoney.com staff writer
Last Updated: March 19, 2009: 4:38 PM ET

Citigroup stock has recovered nicely over the last two weeks, but still remains well below where it was just a year ago.

NEW YORK (CNNMoney.com) -- Citigroup unveiled plans Thursday to pursue a reverse stock split, and the company officially gave notice of its previously announced plans to convert the government's massive preferred share stake into common stock.

The New York City-based bank said it would authorize its board of directors to carry out the reverse split, but it requires a shareholder vote before it can take effect.

The move would help reduce the number of shares outstanding for Citi, which are expected to swell after the Treasury Department completes its conversion of part of its $45 billion stake in the company. The bank currently has a total of 5.5 billion shares outstanding.

Shares of Citigroup (C, Fortune 500), initially surged on the news, climbing nearly 23% in Thursday morning trading. But the stock lost ground as the day wore on and wound up finishing Thursday down nearly 16%.<<


http://www.businessweek.com/investin...temp_investing


>>Is Citigroup’s Reverse Stock Split a Smart Move?

Posted by: Lauren Young on March 19

Last week I wrote a story about a pending boom of reverse stock splits. In that piece, Anton Schutz, manager of the Burnham Financial Services Fund (BURKX), predicted that Citigroup (C) would engineer a reverse stock split in the coming months.

It looks like Schutz’s prediction will come to fruition: In a filing with the SEC on Thursday, Citigroup says it is considering a reverse stock split as part of its effort to convert preferred shares to common shares.

Citigroup’s shares jumped more than 10% in early trading, but now the stock is down more than 6% to 2.89 in midday trading.

Why does a reverse stock split makes sense for Citi? “Whether the stock is $1 or $3, it’s still a low-priced stock,” Schutz says. “If you are the leading financial services company in the world, the psychology of a low-priced stock isn’t going to fly.”

Ideally, Citigroup will aim for a reverse stock split that gets the current price to the $30 range, Schutz says. (Based on today’s price, it would roughly mean a reverse split of 10 shares for one share.)

Yet research shows a reverse split is a signal to dump a stock. A 2008 study of 1,600 companies that did reverse splits found the typical stock underperformed the broad market by 50% on a risk-adjusted basis during the three-year period after the action. “Reverse stock splits are a strong indicator the company is going to be a significant underperformer during the near future,” says Jim Rosenfeld, co-author of the study and an associate professor of finance at Emory University’s Goizueta Business School in Atlanta.

What do you think? Would a $30 stock price make you feel better about Citi’s prospects?<<

Discussion: IMHO, SIRI's splitter will be a crapshoot as to how it is received. Initially it will spook longs and cause shorts to pounce. That's a given. But how it responds from there up until the actual event will depend upon the continuing state of the company. If Q1 offers hope, that's one step. Q2, probably reporting in early August will have the most impact if the event happens in the fall. I just hope Mel waits until July to announce this move. He has the time and it will give the SP time to make its run toward a buck (for us to recoup max losses). The Q2 earnings report in early Aug, I think would be the perfect time to announce a Nov splitter. My take is the SP will be about .50 - .60 (back down off its highs before announcement) at the time of the the split.

[sl62]

Good nite all..................... see you in the morning. ... killer and the Dog.

Killer...

I happened to see tonight that you might have had to wip out the snow shovel again. Hope I'm wrong...have a good night my friend...

[sl62]

You know I just dont get it. Back when the vote came up I noticed many were fine voting for the dilution, but ho no on the vote to RS. That never made sense to me because it is not the RS that caused you to lose your value in the company, it was the dilution. The RS is just a effect of the dilution.



Hopeful, the problem with trying to get that high is you are constantly going to have to deal with massive manipulation there are just to many shares to keep track of. The other problem with the PPS being so low is that it carrys a penny stock stigma with it. People just dont think penny stocks are stable enough to invest in, the preception is everything. It is also one reason the stock does not trade with the rest of the market, as I said before when the stock market gos up big most investors will put their money in the more stable companies.

888's...

As you know most people fear the r/s cuz it's unpredictable. Performing the 'perfect' splitter is next to impossible due to the very nature of why it's done. Most SPs afterwards will become vulnerable to a decent takedown by a new wave of shorts..that then can also include you and me since we can only short stocks $5 and over. When a r/s is done, the particular company better have some pretty damn good reporting coming otherwise a takedown is almost assured. Let's watch C, when they do theirs. Most likely well before SIRI. I say we will see C get really taken out back. The general market may be doing a little better but not enough to keep them from losing quite a bit on the new price. If they math out to about $30, I can see them being $15 in no time at all given their situation with the gov....maybe even $10. But they should hold that unless things get worse for them and banks in general and they probably settle in around like $17-ish...but much money will be made on the intial takedown. Kmart was a great example. But then they recovered and went on to hit $100. So there are some success stories but it takes a while...more waiting for investors...

[billhart22]

You know I just dont get it. Back when the vote came up I noticed many were fine voting for the dilution, but ho no on the vote to RS. That never made sense to me because it is not the RS that caused you to lose your value in the company, it was the dilution. The RS is just a effect of the dilution.



Hopeful, the problem with trying to get that high is you are constantly going to have to deal with massive manipulation there are just to many shares to keep track of. The other problem with the PPS being so low is that it carrys a penny stock stigma with it. People just dont think penny stocks are stable enough to invest in, the preception is everything. It is also one reason the stock does not trade with the rest of the market, as I said before when the stock market gos up big most investors will put their money in the more stable companies.

Perception is the key word. Very good read. You are totally right about investing in other stocks, besides and including SIRI.

[john]

888's...

As you know most people fear the r/s cuz it's unpredictable. Performing the 'perfect' splitter is next to impossible due to the very nature of why it's done. Most SPs afterwards will become vulnerable to a decent takedown by a new wave of shorts..that then can also include you and me since we can only short stocks $5 and over. When a r/s is done, the particular company better have some pretty damn good reporting coming otherwise a takedown is almost assured. Let's watch C, when they do theirs. Most likely well before SIRI. I say we will see C get really taken out back. The general market may be doing a little better but not enough to keep them from losing quite a bit on the new price. If they math out to about $30, I can see them being $15 in no time at all given their situation with the gov....maybe even $10. But they should hold that unless things get worse for them and banks in general and they probably settle in around like $17-ish...but much money will be made on the intial takedown. Kmart was a great example. But then they recovered and went on to hit $100. So there are some success stories but it takes a while...more waiting for investors...

sl62, now while I will agree that many times a PPS is taken down. I think that is mostly due to the perception most have about what happens after a stock RS. The point is that as many think it will go down they tend to make it worse because as you said they also will not only sell but may even short the same stock they held shares long in. That is why I have always said the companies that have done one and have been successful are the companies that have 2 or more catalist to go with it. The reason is simple who shorts a stock with good news coming out not just before but also right after the split. I believe SIRIXM has at least a few. Lets also not forget it will not be difficult to track a few hundred million shares compared to 6 billion. I dont think SIRIXM will be on the REG SHOW list to much after that. Those people that sell or short should be careful on this one it may not act the way you think it will. I find it hard to believe many people are that dumb to think the company should be worth less then it is worth now.




Hopeful, one last thing, My father always told me never to mess with lower priced stocks that it has always been easyer for a stock priced at 50 to go up 2 then for a stock priced at 2 to go up .08. As a reminder he told me about Warren Buffets Company and said you dont see him worried about having to high of a PPS. Now I do realize that other companies do a split to make the stock price more attractive to more investors. Then again they were priced at 50 to 200 dollars a share and had trouble breaking a certain price barrier, not to mention other things such as they been buying enough shares back before or want to reward the share holders.