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Sirius XM Investors Shouldn't Fear a Spinoff

Sirius XM Radio (NASDAQ: SIRI  ) reports quarterly results next week, but the stock has been stagnant for weeks.

Ever since Liberty Media (NASDAQ: LMCA  ) achieved majority control of the satellite radio provider earlier this year, the market's biggest fear is that John Malone's eclectic media empire will spin off Sirius XM. It hasn't had a problem spinning off other investments in the past.

This doesn't have to be the end of the world. Liberty Media's most recent spinoff was Starz (NASDAQ: STRZA  ) , and that has worked out pretty well. Starz opened at $14.15 in January after it was spun off by Liberty Media, and the stock is trading roughly 60% higher now.

Yes, there are larger float concerns with Sirius XM, but the leader in premium radio has been preparing for this day with a massive buyback authorization. In this video, longtime Fool contributor and Sirius subscriber Rick Munarriz argues that the company's fundamentals are strong enough to withstand being spun off.

Despite Sirius XM being one of the market's biggest winners since bottoming out three years ago, there is still some healthy upside to be had if things go right for it -- and plenty of room for it to fall if things don't. Read all about Sirius in The Motley Fool's brand-new premium report. To get started, just click here now.

Read/Post Comments (2) | Recommend This Article (3)

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  • Report this Comment On April 24, 2013, at 6:29 PM, Austin77478 wrote:

    Interesting take Mr. Munarriz! "Crunching Numbers" has been perpetuating fear with RMT shenanigans for so long now.

  • Report this Comment On April 25, 2013, at 4:35 AM, Varchild2008 wrote:

    Yes but Sirius XM capable radios are sold in bricks and mortar stores and everyone knows that everything is being digitally dnloaded and so therefore Gamestop is set to go lower.

    Sirius XM just needs to be more like AMAZON.

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Related Tickers

9/23/2016 4:00 PM
SIRI $4.21 Down +0.00 +0.00%
Sirius XM Radio CAPS Rating: **
STRZA $31.60 Down -0.09 -0.28%
Starz CAPS Rating: ****