Wow! That is a lot of information. If you do not know what I am talking about, check out Brandon Matthew's article Sirius / XM: A Merger of Equals. For those of you that missed it, keep in mind that SiriusBuzz also has a Investor's Tab where articles can be posted that you do not always see on the main page.
Lets keep the discussion going here in the forums guys!
Here is a copy of the 3 comments I left on Tyler's post that was reprinted on Seeking Alpha: (John, thanks for the support over there on this one)
1)
Orford, I hate to break any illusions of grandeure, but you definately have them. Treating these stocks historically rather than hysterically, the two have bounced anywhere from 25 to 50% on day one, prior to settling back down to about a 17% gain. This means that Sirius stock should jump between 72 cents and $1.25 ($3-$3.50) before settling back down to about $2.75.
XM on the other hand will not trade in the same ranges, but instead be based on the arb spread. With Sirius between $3 and $3.50, this will price XM at $13.80 and $16.10, before settling down to around $12.75 at the end of the day, where it will cease to trade.
Given XMs closing price on Friday of 9.28, at the high point this represents approximately 73% gain. Not a bad haul if you are not in too deep, but no where near what you are hallucinating about. May spike to $10? I will asume you are talking about Sirius, because XM hitting $10 is a given. That would put each XM share value at $46!!! Please ship me some of what ever you are smoking...
2)
JPM and User 233387: I have a very simple answer for you: It depends.
I can almost guarentee the arb spread will close VERY quickly monday morning. Everyone knows this is practically over, even the NAB. The NAB may file suit to block this thing, but they cannot delay this into November and they know that. They may go ahead and save their money to actually upgrade their own services... Ok, sorry, that was a joke.
The sell/hold question depends on your investing style and your belief in the sector. I believe in Sirius/XM as a great long term prospect. I have bought quite a few shares however for the merger play. I will sell off those shares, but keep my core investment intact and hold for the long term. Radio does have a future, even in the world of ipods and internet radio and the infamous WiFi (when it finally shows up). The only thing to fear is HD radio... Ok, that was another joke.
3)
If it helps, I just placed my sell orders for XMSR at $20 and SIRI at $4.25 just in case I miss a good pop early in the morning. Other than that, I plan on being at my computer all afternoon tommorrow to enjoy the action. **This is for my trading stock only. My core stash of Siri is not going anywhere any time soon.**
haha That's weird I had the same limit prices. I'm not sure it will spike up to that point, but fingers crossed.
All these people are expecting Stern Part 2, and its not coming. I really think there are going to be a lot of disappointed stock holders this morning, and I'm kind of afraid what that is going to do to the share price. There is going to be a lot of sell pressure, and I'm wondering how fast the market will soak it up.
Pre-market: I would have expected the arb gap to slam shut as soon as pre-market trading was available, but its still 50 cents short $2.3 : $10.00
What could people possibly be waiting for? That's a quick 5 percent gain for anyone who wants it. It's not like the merger is in danger of falling apart at this point.
Open: Okay I wasn't expecting an explosion, but for us to open only 2 percent up? Anyone care to comment? What's going on? Are we waiting on an official FCC release? For the merger to close? Was it really that baked in to the price? Why is the arb still not closed?
Last edited by zcurzan; 07-28-2008 at 09:43 AM.
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