Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next
Author: newsreporter Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 10873  
Subject: Mel selling shares Date: 2/19/2012 3:46 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Sirius XM CEO Plans To Sell Stock: What Investors Should Know
http://seekingalpha.com/article/374721-sirius-xm-ceo-plans-t...


With the news that Sirius XM (SIRI) CEO Mel Karmazin has adopted a trading plan for shares of the company's stock in accordance with Rule 10b5-1 of the Securities and Exchange Act of 1934. I've begun to receive email and tweets asking the question, what does it mean?

...

According to the article, Mel's pre-planned sales are part of a strategy for financial planning in connection with his philanthropic efforts. The transactions are set to start this coming April where he will first exercise 60 million options which he will then sell to cover the price to exercise the options. At which point he will sell the remaining shares at market price for profit. To be fair, Mel will still own almost 70 million shares as well as options of the company. But at the end of the day, those were his shares and his right to earn a profit.

...

Maybe it does not mean anything at all and simply implies what Mel intends to do and the direction of his focus. Many have speculated that he plans to retire at the end of the year. This news somewhat lends credence to that theory. But anytime an insider sells stock of the company on the open market, it tends to raise a red flag with astute investors - where it is typically look upon as a negative. Even to the extent where some may completely ignore certain attributes of the transaction and focus solely on the fact that it took place.

To be perfectly fair, I don't think this transaction by Mel makes Sirius more or less favorable of an investment than it was yesterday. In this case, Mel's enactment of the Rule 10b5-1 suggests that the sales will be systematically pre-arranged and continue at regular intervals where it is not perceived by investors as an underlying reason to be cautious about the stock. This news will allow investors to be aware of and understand that Mel is simply opting to either diversify or as the article notes, a part of a strategy for financial planning in connection with his philanthropic efforts. I say good for him.

...

For Sirius to succeed, it needs to put its eye back on the ball and realize that unless it adapts, there will be no such thing as subscriber growth as it will eventually flatten and the company will assume the same fate as newspapers and magazines. As a reader recently noted, if the company believes in the product and respected consumers why have they not developed a marketing plan to address the needs of entertainment and consumers as a way to capture a broader spectrum of subscribers? Instead the company has been on a mission to cut costs on content - yet we continue to say "content is king." As I've said before, Sirius XM needs to wake up - and more importantly, so do Sirius XM investors.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Apple

The Saddest Place on iPhone Day
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement