One of the great maxims of traders and Wall Street pros is to follow the "smart money."
I'm not much for the thesis that institutional shoppers tend to make smarter investing decisions, but many of you who've read my ruminations on insider buying say you'd also like to know how the Big Money is betting. Your wish is my command.
Next up: Sirius XM Radio
Foolish facts
|
Metric |
Sirius XM Radio |
|---|---|
| Motley Fool CAPS stars (out of 5) | ** |
| Total ratings | 4,683 |
| Percent bulls | 80.2% |
| Percent bears | 19.8% |
| Bullish pitches | 995 out of 1,200 |
| Highest rated peers | Comcast, Dish Network, DirecTV |
Data current as of Oct. 24.
Fools rating Sirius in Motley Fool CAPS give the stock only two of five stars, an indication they don't think of much of its chances to beat the market from here.
"Seriously, [what's with] all the recent thumbs up? Between $17 in debt for every dollar of equity, paltry earnings, and a good chance that smartphones will soon provide competition ... I don't see who would want this business without somehow retiring that debt," wrote All-Star investor wwheeling last week.
I'm less concerned about Sirius' debt than I used to be. Management's had no trouble refinancing hundreds of millions in obligations, and the stock trades for a historically reasonable 2.98 times revenue when compared to enterprise value.
Institutional ownership history
|
Top Owners |
Latest* |
2009* |
2008* |
2007* |
|---|---|---|---|---|
| MFC Global Investment |
147,589,685 |
162,675,859 |
56,106,368 |
61,045 |
| The Vanguard Group |
141,292,404 |
153,951,809 |
85,525,638 |
38,606,558 |
| BlackRock |
121,807,972 |
59,417,116 |
3,317,588 |
5,400,188 |
| Apollo Management |
91,857,857 |
91,857,857 |
91,857,857 |
91,857,857 |
| State Street Global Advisors |
37,468,206 |
12,697,880 |
30,084,307 |
25,883,808 |
| TOP 25 TOTAL |
834,749,482 |
559,984,593 |
562,531,994 |
206,775,099 |
Source: Capital IQ, a division of Standard & Poor's.
*Indicates the number of shares owned.
Forget what I said about the smart money not being smart. Big-money institutions have loaded up on shares of Sirius over the past three years, with buying accelerating in the last year. Many have since more than doubled their money.
Competitor and peer checkup
|
Company |
Institutional Ownership |
Insider Ownership |
|---|---|---|
|
Apple |
66.47% | 0.72% |
|
CBS |
84.67% | 0.37% |
|
Entravision Communications |
42.97% | 21.70% |
|
Motorola |
65.10% | 0.19% |
| Sirius XM Radio | 18.87% | 0.52% |
|
Time Warner |
81.00% | 0.06% |
Source: Capital IQ. Data current as of Oct. 20.
Sirius XM fits the industry average when it comes to insider ownership. And CEO Mel Karmazin still holds 8.8 million shares.
But it's institutional ownership where this stock story gets most interesting. The Big Money may be buying, but with less than 20% of the outstanding shares, they've yet to fully commit to Sirius XM Radio. The stock should rally nicely when they do. As such, I'm calling for it to outperform in my CAPS portfolio.
Now it's your turn to weigh in. Do you think now's the time to buy Sirius XM? Let the debate begin in the comments box below. You can also recommended other stocks for Tim to evaluate by sending him an email, or replying to him on Twitter.
For further Foolishness featuring Sirius XM Radio:
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