In My Humble Opinion
Now that Sirius XM has laid out its cards on the table, I’d like to offer my view. I’m surprised at all the surprise and negativity from these other analysts. I mean, they have to be kidding, right?
On the reverse split issue, allow me to paint myself into a corner and applaud the company. It’s about time they got proactive in defending the stock price! This should have been done years ago. One of the biggest problems for Sirius XM over the past several years is that it has had far too many shares outstanding. Such a large number of shares combined with a sub 5.00 stock price has made manipulation too easy. The number of outstanding shares alone validates its reversal.
Have you seen the stock price lately? Dilution has been factored into it already. Several analyst reports that I have read this quarter have planned on it. They may have expected it in February, but what’s the difference at this point? So go ahead, trade the 35 cent shares for debt, then do a 50 for 1 reverse split. As a shareholder, I’d rather see the company trying to protect my investment rather than sit back and watch it evaporate further.
On the issue of the debt for shares “surprise,” I am just as excited about this as I am a reverse split. I thought Wall Street analysts were supposed to be smart! I can easily recall Mel Karmazin’s recent statements, that Sirius XM would be very close to being in a position in February, to pay off its debt with CASH ON HAND. My thinking is that the 30 million dollars raised will make that Feb 2009 debt retirement completely plausible. This is the single best sign of the future of Sirius XM that I have seen in many years.
The markets want visibility and it plans up to 18 months ahead. The market right now cannot see past February when it comes to Satellite radio. Many analysts have speculated about a potential restructuring at that time that could wipe out shareholders. Up until now, the company has been silent. These signs are the first real indication of its intentions to avoid bankruptcy and to reduce its debt. This is not just talk. Who, for instance, would accept 30 million dollars in common stock in exchange for repayable debt if bankruptcy were even a remote possibility? NO ONE!
The only reason to enter into such a deal is the belief that the equity has more value than not only the bond interest, but its principle. That is good news, no matter how you look at it, for shareholders.
Position: Long SIRI
BM,
What flavor kool aid are you drinking?
Brandon-
I agree with you completely that these developments are very positive. They tell potential lenders that the company has alternatives and, with stockholder approval to do a reverse split and number of shares increase if the need ever arose, money could be repaid to lenders even if business was slowed because of the economy. Not that we’d like to see it, but the company can say to potential lenders that lenders would be protected because the company would have the option to float more stock (at a higher share price) to raise money, should the need ever arise. Also, with the recent $30 million stock issuance, this is nothing to sneeze at as a show of support for the stock, expecially at a price higher paid than the current price. To me that shows support by the purchaser. All of these put together indicate to me that Sirius XM refuses to be a victim of the market’s current terrible current trend. As much as I hate the current stock price, I think the company is getting its ducks in a row, and preparing for any contingencies. That’s a hell of a lot better than being at the mercy of the “trend” of market sentiment.
Brandon a 50 for 1 split kills curent investors and not doing it will mean BK. You must see the hopelesness investors are feeling right now
I agree with Brandon’s take. Mgmt will try to avoid BK at all costs to protect the shareholders. Further dilution to raise capital & reverse split to avoid possible delisting is needed for plan B if financing can’t be obtained. would you rather the Co. declare BK now?
Brandon, with all due respect, wow! Haven’t you been following the threads on this board and Seeking Alpha? At the continuing pace of decline what do you think the SP will be by the time an RS occurs? A penny? Let’ see a 50:1 would mean, uh, .50 centavos. I remain long … but forelorn.
Or forlorn or however the hell the word is spelled … discouraged.
1 0 year investment after merger it is like stating over but 100 times stronger,mel and stern turn this company to one effin huge powerhouse and rome wasnt built in a day.shut off the computer and call me in 15 years ill be in the hamptons!!!!!!
Brandon, in no way do I see this as a positive. The repeal of the 201 uptick rule, naked shorts and legal shorting will, in my view, drop the shares again. The short game will reset and the game will continue anew. Growing share value might need to become a SIRI management priority. Mel said he did not care if the shorts got screwed along the way. However, it does not seem like tat will happen if share numbers go up 4 billion.
My thinking is a 50 to 1 stock split would bring the current price to $15, then the share dilution would drop the price to around $8 or 9, that would mean I would need the stock to hit like $100 to break even. There is no chance of that
Steve,
A buy out at a $1 doubles the $30 million dollar investment. Are you drinking the same kool aid as BM?
While I am freakin P.O.’d I do understand what the company is doing and do not want a bankruptcy filing. I was just expecting to get a pop in the stock at the merger completion, sell a portion of my shares and play with the houses money. Now I will ride it out and see what happens before adding to my current position.
Wow, Brandon, come on dude, get off the koolaid. Seriously. Its good news for anyone YET to buy a Sirius stock. For current stockholders longer than 3 months, its a practical deathsentence. We need to find another place to post, I wish to now boycott all Seeking Alpha and sirius BS(buzz) sites. I would like options, if possible.
Chiz, to get $8 off a 50:1 RS you assume .30 going in. That’s a penny from current SP. It ain’t not gonna happ’n cuz, ’cause the rate of decline is eating us alive. The good news? A stock can’t go below zip so the pain can’t last forever…. All I want to see is a trend change and confirmation. Then I will become a fan again.
The yahoo message board is retarded. It might be good news for someone wishing to wait 15 years to see it go from 5 to 50 dollars. Unfortunately, I dont have 15 years to wait on a spec stock panning out.
Best case senario, would be 25-35 dollar range for 500 million shares outstanding. That would value the company at 12 billion, a lofty long term goal for the company. Now if they buy back shares after they RS when they are profitable, then maybe, but id have to see it in writing, because ever word out of Mel’s mouth is a lie. And yes, I can prove it with past quotes, conficting with current quotes.
And before someone lays into me, I know, at this point we face a vote for / against RS, dilution or BK. Well, BS. We all know something isn’t right with this stock’s behavior. Funny thing is, is that even the most experienced traders on this board can’t quite nail down the root cause. We are being played like cheap fiddles.
Now, if they reverse split when the stock is over $1, then I would have less of a problem with it. At these levels, I would have to file a lawsuit, unfortunately. For GROSS fraud and liable.
why not wait
A passing vote, would make me file, not the proxy itself being illegal. Its EVERYTHING prior to that that would enact my wrath.
Unlike some investors, I dont like being lied to by my employee, nor will I stand for it. Brandon, I am very disappointed to see you write what you wrote. Your acting like .31 cents is a fair current price for this stock now, and for up to one year out. Do you really think that? Then why did you buy pre-merger levels then? Did you change your mind? What new information since August has made you think this company is going out of business?
Brandon, block me if you like but I must ask what others must be wondering? Are you affiliated with Sirius XM at any legal, contractual, or other level? I hope not, actually, because I like reading your generally insightful articles. The one over this thread, however, comes across as pumping. Respectfully, PM
Chizzle – it would take the exact same % move in the stock to go from 8 to 100, then it would to go from .15 cents to whatever you need it to go to to break even.
Dilution will either happen from .30 to .15 or from 16 back to 8 after your example of RS and this will happen from selling shares (the increased shares sold at market or exchanged for debt)
It won’t get shorted down at any higher % than it has been already. If the company proves it will not lose $ anymore, this shorting will stop.
My guess is they will do a reverse split to get to whatever share price before more dilution that will be enough not to fall below $ 5.
So if they sell the shares to pay off some of the debt that the cannot get a term loan on and they do this before RS, then they will RS to get back to $ 5. If they RS first, they will likely go for a $ 8 – 10 price before selling shares that will bring it back to $ 5.
$ 5 is the key # here, I guarantee it.
SXM, “guarantee” or I get my money back? Can I have that over your signature? All we can do is guess what will happen. What we need are facts and answers from those accountable–Mel and his C’s.
PM –
I only guarantee that at least $5 is where they would like the stock to settle after RS & any dilution. Maybe guarantee is too strong, but very confident.
It makes sense because of psychological reasons and for fund ownership. Not that this is news.
Would you disagree with this ?
I never said I know what will happen, but believe strongly that this will happen. Hoping less dilution and more term loan & cash, but hope is not high for this right now.
WHO THE HELL KNOWS IF THIS WILL BE GOOD OR BAD!! we are all in the house of pain and we all hate mel.. but at .32 what the hell do I have to lose to stay in … everyone is down huge, so waiting till feb 7th isnt that big of a risk to get my money back or stay were we are.. peace.. WAR STEELERS OVER GIANT AND MCCAIN OVER OBAMA AND THOSE WENDYS STACKERS FOR .99$ DAM THOSE ARE GOOD….
All, I’m kinda haven some fun tonight to get past the roughly 14% decline in the SP today off a nickle move. In fact, pardon me but I’m going to go pour a short Edradour (smallest distillery in Scotland) and consider several other positions that don’t suck like a black hole.
are we goin to hear from mel when we get the 3rd quarter results, or do we have to wait til december to get some answers?
One thing a lot of posters here are missing: Sirius XM is currently asking permission of shareholders to give it the right to issue more stock (if the need arises) and to do a reverse split (if the need arises) – all of this is IF THE NEED ARISES. I would rather give the company permission to do this IF THE NEED ARISES than to not have them be able to do either if it were necessary. Don’t forget -we are not living in normal economic times. Stocks get slaughtered in the marketplace if they miss estimates by a penny. I don’t think Mel or anyone whose judgment he trusts wants to dilute the stock, nor do they want to raise the share price only to have it recede. However, I think they need to have the option given to them by shareholders to have options to present to lenders when asking for financing. Sirius XM does not necessary have to issue more stock nor does it have to necessarily do a reverse split. What it does have to do, however, is let lenders know it is not backed into a corner.
I can answer for Brandon (just in case he never sees this since we do not normally read comments) none of us are affiliated with Sirius. Do you really think that Sirius would put people on the payroll to post on blogs and hide those blogs under personal registrations? Would they ever risk getting caught doing that?
It always boggles my mind because I know who we are (Tyler, Brandon, and I) and we are the furthest from working for Sirius. Although… if they want to hire us, I have my resume ready.
Steve –
I agree with what you are saying, but it is likely they will have to clean up some of the Feb converts or May term loan by way of dilution.
The stock seems to be pricing that in or at least I hope that is the reason it has dropped so low.
And if they don’t dilute, then the stock should recover even moreso. Either way, they likely will do a reverse split to get price above $ 5, although it may not happen till the end of ’09 once 1 plus year of synergies are in.
Kinda like the merger except we have the convert date due in February. With the merger we just twisted in the wind with the rope around our neck.
October for investors can never end soon enough and we still have 7 more trading days. My first take is that if you feel like trading, High School Musical three opens Friday and is going to go off the charts for Disney. So maybe buy this week and sell on Monday.
Two. Sirius. The “only” reason I’m not completely convinced that something is being priced in right now, is because the volume has been incredibly low. Now remember it’s incredibly low and the sp is what 1/10th what it once was. So dollars traded volume, is even lower.
Finally. This management team has to go down in history as the most pathetic public relations group ever assembled.
I trust the three of you. I have always thought this was a good long term play. This is the first plausable news I have seen recently. My only concern is BK. Do we have a chance to avoid BK? I think I trust Mel. But I am not totally sure. Ifg the market always looks 6-18 months out why are we going straight down?
“Finally. This management team has to go down in history as the most pathetic public relations group ever assembled.”
Agreed!
SXMInvestor-
I think the problem with the stock price has had a lot to do with the delay of the merger approval, the low starting price of the stock in the $3 range at the point of approval, the unfavorable terms of the loan on the day of merger, shorting, Wienkes and his ilk, and the absolutely fearful state of the markets regarding debt financing, etc. Stir that all into the pot which also contains a societal credit paralysis, fear of job losses, fear of low consumer spending, fear of recession/depression, etc. Yikes!!!! At 3 bucks, a 12 cent price decline translates into a 4 percent decline and at the price of 80 cents, a 4 cent decline translates into a 5% price decline. Now, even when Sirius XM gets up a couple of cents, the market crashes and the resulting couple of cent loss to Sirius that day translates into a large percentage loss. I, for one, will exhale when the debt issue is put behind Sirius XM and the marketplace sees it as a viable business. I hope Mel and Co. do whatever it takes to keep Sirius XM alive until that time. I have faith that they are trying to do just that.
Charles, thanks for replying for Brandon. Sorry, but we’re in a dark forest here and no one is vetted. And yes–but with nothing against you personally–I wouldn’t put it past a coniving operative to put up a board and use it to advantage. Lesson learned from politics. Want bias? Spin it up. Having said this, I just wanted to ask the question. Thanks again for replying. Long SIRI but angry at Sirius XM’s worthless PR. Only recompense is a turnaround. On other stocks I don’t post on blogs, just do tech analysis, pattern recognition, set targets and triggers and let automation keep me detached. I WILL NEVER GET ON THIS EMOTIONAL KIND OF ROLLER COASTER AGAIN after I get closure on SIRI. Great products and service–but the stock, company and its management need DRASTIC Change.
Love ya man, but with all due respect Brandon….what are u FRIGGIN NUTS????
The ONLY reason you must be SO enthusiastic about the Reverse Split is that you SOLD your original LONG position in Sirius already.
Others like me STILL have our original LONG position and/or couldn’t average down lower than $2.50 from the $6 days.
WE ARE GOING TO GET KILLED ON A REVERSE SPLIT. I have absolutely NO…AS IN NONE….NADA….ZIP….ZERO confidence that the SHORTS we all know and love WON’T COME IN AND RIP THE $19 reverse split price to pieces.
Which MEANS my ORIGINAL 10,000 shares will not only become 200 FRIGGIN SHARES….it will then be DESTROYED BY SHORTS TO EVEN MORE WORTHLESS THAN IT IS NOW!!!
I don’t understand why you are SO gung ho about this…and THEN say the 30 Million debt refinance is the BEST sign that the Feb debt will be taken cared of.
DUDE. IF Your so confident about this, WHY NOT LET US SEE WHAT HAPPENS after the Feb debt is refinanced before we start getting SO FRIGGIN EXCITED ABOUT a 1 for 50 REVERSE SPLIT?
You really must not have alot in the game to be THIS excited.
And why do you say you’ve been waiting for the RS for YEARS?
I don’t know about you, but for the last 2 years I was just waiting for the friggin MERGER.
If THAT was approved on time, we WOULD HAVE passed $5 a share a LONG time ago.
Anyway. I understand what you’re saying. Perhaps if i didn’t STILL have a LONG position that I’ve been thru hell with and which would be UTTERLY wiped out…I’d sit on the sidelines and BE “ALL FOR such a drastic move.
Sure why not.
But as it stands…I’ll take my chances with the risk of BK. If I’m going to lose my money…I’d rather i at LEAST have the chance of a company buying out Sirius before it goes BK…then have my shares wiped out for SURE with a 1 for 50 reverse split.
frigginregan give me .50 and I am out I feel your pain and everytime you post I understand how you feel
I am amazed at the sell-off in this stock over the course of many months. I would never have dreamed that the stock would trade at 31 cents per share or a 1B market cap. Overall, I agree with Steve Sirius’s remarks above, but would also add that GS and other (probably hedge funds) are having a field day with the converts and naked short sales. This has been going on (in my opinion) for months and months with no enforcement action taken by the authorities. SIRI is wrongly trading at these low prices and I am quite surprised that Mel has not been more pro-active in doing something to stop it. He indicated on Cramer’s show that he also had these concerns.
I do not agree with the author of this article since, as another poster suggested, the shares handed over for the paying of debt may have offset a short position that this same debt holder already had out there. Therefore, the debt holder does not have a long position at present and merely closed out his or her short position upon consummation of the transaction. Further, I wholeheartedly think it is an error to do a r/s at these low prices — it shows desperation. Then again, perhaps Mel is rather desperate at this point. We shall know soon enough, though, when management finally informed shareholders of what exactly is going on which, absolutely, does not correspond to what Mel said in recent remarks about dilution and a reverse stock split.
SteveSirius…
IF THE NEED ARISES????..
Let them ask for a reverse split when they know the exact amount of the split.IF THE NEED ARISES
Let them ask for additional shares when they know how many shares and what they will be use for.IF THE NEED ARISES
SoCalRunningFool..says Finally. This management team has to go down in history as the most pathetic public relations group ever assembled.”
Agreed
imho
vaporgold
Brandon, with all due respect to you, you flip-flop considerably about SIRI on a regular basis given the movement of the stock price. I agree with you that the stock price is rather poor at present, but, from all indications, the business is growing and things are getting better financially. Mel has assured shareholders that he will get the financing done. We have to believe this is the case. We, at this point, don’t know what else he has in mind. We need to wait and see. Your article really says things that are not true or may not have been intended at this point. Let management talk soon.
Charles. Vaporgold. Thanks.
It’s like watching the hourglass and we know the sand is trickling down, we just have no idea how much sand there is and we REALLY don’t have any idea WHO IS SUPPOSE TO TURN THE DAMN THING OVER.
You know Brandon I have to say after pondering this article. That writing this article without management direction, regarding their reasoning behind the R/S and the debt/dillution, was a mistake.
I’ve always thought you were a Maverick. But I think Tylers current fact finding articles and his sharing any information he comes across is a better approach right now.
IMHO.
Who would have ever thought that we would have to go to message boards and forums for any information regarding a publicly traded company?
Wow. Think about it. Without Tyler, Brandon and Charles and others like them. We would be completely without any information at all.
It’s like the merger blackout all over again. Except…………Theres no blackout.
Wow Business Week just uncovered something that nobody new.
Sirius has debt – Oh Really ?
Maybe the writer was reading our message boards, the friggin genius that he is.
brandon, smoking some good stuff eh !
Brandon,
For someone that supposedly worked as a broker and has a history with this stuff, I’m amazed at some of your articles and opinions. You are all over the place.
I strongly disagree with your analysis.
Siriusbuzz is going to Hartleib-land……
Demonotaku,
May I ask how many shares you own and what your cost basis is?
I am only asking to learn more about where different investors are with their price and how the RS / dilution will affect them.
Thanks.
Brandon must be smoking crack
Tyler, You need to dump this moron off your website. Along with your mistake giving the idiot Michael Harlieb a forum, This is your second mistake. Anyone on earth that thinks a Reverse split has been good for anyone is an idiot. Sirius has 440 Million in cash right now. Do you have any idea at these prices how much stock that would buy back? If Sirius was really working for its shareholders it would take 400 million and at 30 cents buy back 1.2 billion shares back. But this isnt the first time this moron Brandon has shown his ass. You need to get rid of this idiot, quit giving a forum to Hartlieb and go back to supporting Sirius before we all abandon your lowlife ass.