Wienkes Weighs In
We knew we would hear from Goldman Sachs analyst Mark Wienkes sooner or later. With the release of Sirius XM’s preliminary proxy for their annual meeting, Wienkes has once again slated Sirius XM Radio as a “Convicted Sell”.
In his report Wienkes notes, “The proposals seem to run contrary to CEO Mel Karmazin’s 2Q08 conference call commentary ‘we have no plans for a reverse split.’ That said, times change and the proposals are unsurprising given +$1bn of 2009 debt maturities and difficult credit markets set against a business model that is still consuming cash. No change to estimates or price target.”
Wienkes believes that Sirius XM Radio will have no choice but to bring on another round of dilution, pending shareholder permission—”either via an increased proportion of company FCF (reset debt terms) flowing to debt holders, net new equity issuance, or both.”
The fact that Wienkes is still bearish on satellite radio should not come as a surprise to anyone. With the credit crisis still keeping markets imbalanced, there has been no real news or change that would have turned the analyst positive.
Position – Long SIRI
At least he didn’t lower his price target to .25 cents.
25 cents would have been sweet. Think how many more shares we could buy.
So long as they aren’t divided by 50.
If his price target hasn’t changed, shouldn’t that be considered an upgrade from where we are? After all, his target was .50
Weinkes and Goldman are trying to force Mel into taking another bad deal which will be favorable for GS. I am puzzled as to how Mel will come out of this since the debt market is terrible right now. Goldman is holding the cards and Weinkes and various hedge funds are the puppets to push down the stock. Mel alluded to this on Cramer’s show back a month or two ago, which now seems like a lifetime.
Lol. Good point egiscodr.
Weinkes has been the only person right this whole time. And none of us believed him because it wasn’t what we wanted to hear.
Doobz26:
No, my theory is that Weinkes, with the help of GS and his hedge fund buddies, have created a situation where he looks right. GS has most of the convertibles that are due in February of 2009; Weinkes puts out negative evaluations of SIRI — never a positive word; and his hedge fund buddies naked short SIRI. Combine this with an evironment where any company with two nickels of debt is looked at as dead meat, and Weinkes ramblings appear to come true. In fact, Mel said the same on a show with Cramer about a month or two ago.
Of course, this is a theory but I believe it to be true.
SIRI needs to crush this scam. How they do it should be interesting.
PI.
Completely agree. Weinkes and GS are manipulating the price to their benefit. After we get through Feb, it should ease up some.
how does he make it a “convicted sell,” but keep the price target the same, i.e., $0.50?
what am I missing?
or did he just forget about this little inconsistency when he fudged his report?
I don’t believe Weinkes is bearish on satrad; I think he’s bearish on Mel Karmazin running Sirius XM.
Both of my reactions to the story have already been said. GS didn’t lower the price target and therefore, shouldn’t 50 cents be a buy with the stock at 37 cents +/-.
This will all be resolved soon. If they trade 300M of debt for equity at 50 cents a share, I think we can move forward and be at 1.5 by the end of ’09.
See you all at the annual meeting. They should charge admission to this one.
I believe he did bring it down to $.25. If He didn’t then somebody else did, per Yahoo!