Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 15
I don't understand why people who, unless they are short term or momentum players, find that a stock at an 8.50 price is ok going up, but think that same 8.50 price is not ok coming down, when there have been no change in the company fundamentals. That is unless they have no idea of why they bought the stock in the first place, and have no idea of the value, or potential value of the company, in which case they should not buy the stock. If one has done his own homework, instead of asking a discussion board if they should buy or sell, and is a long term investor, he will not let these dips shake him out. Dips are inevitable and unpredictable as to timing.

While the little guys are selling out on these shake outs, the big guys are buying it cheaper.

Placing a stop on a stock most of the time is useless unless it drifts down. That's why many here could not get out today at their stop price. Most of the time large movements come in the pre market or post market trading sessions, because that is when the big news usually occurs. Even if it hits during day trading hours, it can go down so fast that stops don't work.

The Wall Street Journal article by the “journalist” who is not an “analyst” only focused on the market cap of Sirius and compared the satellite radio to the cable industry. He seemed to have no idea of what the future value of the satellite industry is. Just like the Squakbox “talking heads” who every day talk about the Sirius bubble and portend to be helping the new inexperienced investors by stating each day just how high the market cap is, and compare it to XM Satellite price; and that Sirius was spending too much money. That's not analysis, and it certainly isn't helping their inexperienced investor listeners

It's no more than showboat journalism. It reminds me of Herb Greenberg, the glass half-empty guy, who makes his living finding ways to be negative in order to create controversy and attract readers. I notice he did not stay with Street dot com very long. I'm not surprised.

Squakbox, after the WSJ article, didn't bring in the analyst who had downgraded the stock to find out why it was downgraded, so they could provide their listeners a “professional” more realistic analysis. Instead they brought in the WSJ journalist who wrote the article, seemingly to gloat and defend their own position that the stock was a bubble about to burst, and “they told you so.” Small wonder they didn't invite the Bear Stearns analyst because his reasoning made sense, as opposed to their showboating abuot a terribly overvalued stock with a 20 mil market cap (their words, which was incorrect).

Either Kernan or Faber said that Sirius stock could not be borrowed to short, then qualified it, to say that it could be borrowed with a "very high" 5% margin rate. He said because of that, there could not be a short squeeze. Mark got him to repeat that, and he did.

I don't understand his logic because as of Dec 8, there were 87 million shares short. These shares must be sold at some point to cover. They have already been borrowed, so his statement does not affect the already short shares. The 87 million shorted shares are 7% of the float. So there is plenty of room for a short squeeze. However, today was a great opportunity for the shorts cover, and I suspect many did. What gave them the opportunity was the innacurate WSJ article and the Bear Stearns downgrade which created a double whammy.

Institutional ownership is 26.46 percent as of Dec 8. I believe it will begin to go higher.

Kudlow and Cramer, who are very well respected for their knowledge and factual discussions, brought the Bears and Stearns analyst, who downgraded the stock, to their show and asked him why it was downgraded.

He stated that their target price for the stock was 7.50. Therefore, at 9.00 it had gotten 20% beyond their current target price so they felt they had to issue the downgrade. (But that does not mean they are negative on the stock).

He went on to state that the market for satellite radio is much greater than for cable, that there may be announcements made soon at a show and that soon they may receive more guidance from the company, and indicated that there will be more visibility in the future. I'm not quoting, just trying to recall what I heard from the interview.

He felt that Howard Stern will have a highly positive impact on the company revenue growth, and that that Mel, the new CEO (who invested more than 5 mil of his own money in the stock when it was around 5.50) will bring a lot of his people, contacts, and ideas to the company that will help the company grow. He has tremendous experience in growing companies, and he was attracted there after they contracted with Stern. My take was that he was very positive on the company.

The fundamentals of Sirius have not changed since yesterday when it hit 9.00. The company is a growth story, and as such it is a risky and a long term investment. It has a huge market potential and they have the tools and personnel on board to tap and grow this market. In my opinion it is the story of the future, along with XM. And the stock price will grow with the company revenues. It will periodically get ahead of itself and the big boys will use that to make their profits and shake the little guys out from time to time so they can buy more at lower prices.




Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! 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.