Jim Cramer Continues To Dig A Hole For Himself
Sirius Xm stock has been up several days in a row. Personally, I thought we’d see another Goldman Sachs downgrade following positive reports from Citigroup and Merrill Lynch last week. Instead Jim Cramer has made yet another appearance regarding Sirius Xm stock. No one should really be surprised however, as Goldman Sachs last week added 814,465 shares to their portfolio bringing their total holdings to 4,220,646 shares. It seems even Mark Wienkes own firm no longer finds him credible!
So what are the hedge funds to do? Good ol’ Cramer never lets them down, and he sure didn’t disappoint them this time. I want to point out that the first thing mentioned in this video interview was that Sirius Xm was the most frequently searched stock within Jim Cramer’s website. It also seems to be the stock most talked about by Jim Cramer himself. Yet the first thing out of his mouth was to stop searching for Sirius Xm. The reason this is so ridiculous is that thestreet.com cannot print an article about applesauce without mentioning Sirius Xm radio. Why? Because it is the only thing that generates traffic to that ridiculous publication. So be clear on this…Jim does NOT want you to stop searching.
He then proceeds to explain that investors should avoid Sirius Xm stock until 2009. He offers a plethora of speculative reasoning to make his case. He makes claims that the bondholders will miraculously be able to keep shorting the stock although as most SIRI followers know, there are no shares to short. He threatens future dilution through convertible offerings as though they are the only way to refinance old debt. Hey Jim, ever hear of loans? There are lines of credit available through the automakers such as the former Xm enjoys with General Motors.
Now if Sirius Xm has a better balance sheet come 2009 as expected, they won’t be issuing new converts, and the old converts will be covering their already shorted positions from 5 years ago. Merrill Lynch’s analyst states in a research report last week that: “As a worst-case, a $1bn convert with $1.50 conversion price could be an additional 17% dilutive, although we do not believe such a scenario is likely.”
Jim seems to have a problem understanding new debt vs. the refinancing of old. He should stick with stocks. At least he gets 1 in 10 right in that arena. If he took a look at the potential of Sirius Xm stock he would be screaming buy, buy, buy!
So why all the negativity and speculation? Well apparently Jim has gotten some death threats and it seems he has decided to bash Sirius Xm in retaliation. Several weeks ago he was bragging about how he destroyed companies back in the 80’s, and yet this seems to come as a surprise to him. I don’t condone this type of behavior, but I have say: Jim Cramer, you might want to try keeping your mouth shut for once.
The GM line of credit is for use to pay for GM services/payments only.
They CAN use this line of credit however, instead of making payments to them, and instead use that cash to pay down debt. I would see this as a positive development.
They will also be paying back a small portion of the 1.1 billion in debt they have, but probably not much. They will be issuing new convertables. I do not see a way around that. In order to issue new convertables, they will have to issue them at a premium to their current debt, so yes, there will be a BIT more dilution, but I think the debt they pay back (thus killing those shorts) will more than cover that dilution.
Cramer definately acts like has an agenda. It is amazing how 3-6 additional months of a merger process has turned him from BUY BUY BUY to SELL SELL SELL. What has changed in those 6 months? Nothing really that wasnt forseeable. Except maybe the pressure exerted on him…
Brandon,
That was one of the best darn articles I have seen written, I would of expected Sirius/XM itself to write such a piece, but you have become my #1 go to person for information about my Sirius/XM investment. Keep it coming. Mel Karmazin would be wise to hire you, you really are good.
It is also shocking Brandon that James Cramer can have a successful career when the damage of his stock picking record is so abysmal, and he seems to become unglued and have tantrums and melt downs that would destroy almost anybody else. This guy Cramer wears teflon, he seems to be protected from criticism, and almost above the securities laws that apply to everybody else.
Brandon,
Will you please read the following and then e-mail it to CNBC and its parent GE. Jim Cramer is out of control and needs to be investigated for his very apparent “hidden agenda.” Thanks in advance for your prompt attention to this matter.
A Look Back At Some of Cramer’s 2008 SIRI comments:
Thurs 3/27/08:
Cramer says BUY
JJC: It is a merger together. SIRI made the proposal. SIRI has got the management team. I believe, by the way, that this stock is way undervalued. I see a lot of people worried that the FCC is not going to do it. People have to understand that, when you have one car company putting one system in, and another car company putting in another, then you’re not going to make money. But, if all 16 million cars have Sirius and XM in them together, that company’s going to make a ton of money…
4/25/08
Cramer says BUY
SIRI – This is now 67 days and 1 year that they have not approved this. I mean, now they’re starting to talk about… It’s pretty clear they want to stop this deal… I am telling you this deal is going to go through. I still think, that when it goes through, you’ve got a $5 stock… But we must keep writing the FCC! We can’t let them off the hook! We can’t let them be just completely… I’m trying not to say, in bed… I’m trying not to say, in the pocket of… I’m trying not to say, owned by terrestrial radio… So I’ve eliminated all those possibilities, and let’s just say that I think the FCC’s behavior raises eyebrows…
Price target if the deal is approved: $5.00
5/7/08
Cramer says BUY
SIRI – There are going to be some earnings soon, but let me just tell you something… I have had it! I want everyone to go to the FCC’s website, and that meeting, and say, enough!… It’s an outrage! My take is SIRI should be bought! I’ve been sticking with that the whole way! There’s only one government organization standing in between what 18 million consumers want. What are they doing? What is this? Is this some sort of top secret thing that has to be blocked? I don’t get it!…
6/16/08
The Bottom Line!: Commissioner Tate… Our nation turns its lonely eyes to you… we’re banking on you. I ask you… Should we be forced to only have terrestrial radio?… Or can we let Sirius Satellite Radio Inc. (SIRI) and XM Satellite Radio (XMSR) combine, so that consumers can have a choice between free commercial radio… filled, of course, with commercials… and paid commercial-free radio. I’m betting this deal goes through, and I maintain that, together, Sirius and XM will be a powerhouse. Maybe not immediately, but soon. And, somehow, I think the merger will be more consumer friendly than that terrific Exxon/Mobil combo, which sailed through antitrust without much of a problem.
Wed 7/23/08
On The XM Satellite Radio (XMSR) & Sirius Satellite Radio Inc. (SIRI) Merger…
JJC: One year and 156 days of course, much longer than it took to combine Exxon with Mobil, I mean it is crazy… Now, I will tell you this… I thought that the additional things they had to do weren’t that bad… They did miss the 2008-2009 automobile season and the bill for cars so much lower… This is going to be a powerhouse… Be careful, they have to refinance, the common stock is going to be diluted, but I think as a spec, why the heck not?… I have to tell you that I think your information, and I hate to contradict you because you’re wonderful and fabulous, but the anecdotal that you just gave is different than the empirical evidence we just heard from XM, where the churn has gone down dramatically as a percentage basis… I’m stuck with the facts… I always hate to let the facts get in the way of a good story but the facts do indicate that people like the product… Here’s an anecdote for you: I have Sirius in one car and XM in the other because I like major league baseball and football, but I would not take it from me that that’s what most people have… I’m a Phillies fan too…
Fri 8/7/08
During an interview with a street.com reporter, Cramer claims SIRI needs to be a lot higher than $1.50 and calls the stock and its CEO an OUTPERFORM!
B – Excellent piece! The guy is headed for a nervous breakdown trying to play all sides from the middle. His outstanding chits are making his antics and tantrums all too obvious, even to his “homeplayer” fanbase on CNBC. Old timers see nothing new in his game except a much wider exposure (thus greater pressures and scrutiny) than when he first started The Street. The clown has too many balls in the air to handle.
How can this guy get away with months and months of telling people to do all they can to help get the merger approved, tells people that this stock will double when approved, and glorfies Mel and Siri for months on end only to absolutely crush it with criticisms as soon as they merger? should they investigate and CONVICT him for spreading stock rumors?
I’m starting a ‘Crap on Cramer’ campaign. Everyone who subscribs to his site should cancel, turn off his show, and, like he told us to write, we should all write CNBC to let them know we are turning to Fox.
everyone…..’Crap on Cramer’ !!
It is quite amazing how many people think that Jim Cramer and Mark Wienkes have more influence over share price than does Sirius XM’s own management.
Perhaps that is why Mr. Karmazin referred to Sirius XM investors as “unsophisticated.”
Serious Roadkiller!
I don’t remember you praising the management as the stock kept going up when this lunetic was saying BUY! BUY! BUY! Just look back at Cramer’s 2008 comments on SIRI and you’ll see this criminial is still breaking the law as he did, and admitted doing it, when he was running his own hedge fund.
Unfortunately, the power of the media cannot be ignored, especially when it comes to a $1.50 stock, and when a mad man with a hidden agenda has that power at his disposal then all best are off.
I really do believe Jim Cramer’s numbers as a TV host is numbered and thanks goodness for that.