This Week in Sirius XM Radio

Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio (NASDAQ: SIRI  ) moved higher on the week, climbing 2% to close at $3.56. The media darling's move was in line with impressive as gains for the Dow, Nasdaq, and S&P 500 on the week.

There was more going on beyond the share-price gyrations, though. Sirius XM's short interest clocked in at a 52-week low, and cable TV consolidation may play a part in how Sirius XM's proposed buyout plays out.

Let's take a closer look.

Short people
There are fewer Sirius XM naysayers willing to wager real money on their pessimism. Short interest for the end of January was posted this week, and we see that just 218.9 million shares were sold short. This is the lowest short interest that Sirius XM has recorded over the past year. A year ago we had more than 400 million shorts, so the negative bets have fallen by nearly half.

The Liberty Media (NASDAQ: LMCA  ) takeover proposal likely plays into that. As long as John Malone's offer remains on the table, the downside to Sirius XM is limited to Liberty Media's less volatile stock.  

Even knowing that Sirius XM was set to report fourth-quarter results a few days into February -- often a time for bulls and bears to place their speculative wagers -- wasn't enough to rally more skeptics.

Cable consolidation leaves a mark
Comcast's (NASDAQ: CMCSA  ) head-turning deal for Time Warner Cable (NYSE: TWC  ) is something for Sirius XM investors to keep an eye on.

This isn't about experiencing another regulatory hurdle the way that Sirius XM did several years ago when it wanted to combine two satellite radio giants. Malone had his sights set on Time Warner Cable, and as Sirius Buzz's Spencer Osborne speculates, the plan could have been to acquire Sirius XM in an all-stock deal to gain financing leverage to bankroll a play for Time Warner Cable.

As Osborne and CNBC point out, Sirius XM shares dipped on Thursday's seemingly unrelated merger news. Liberty Media moved higher. Does Malone's missing out on Time Warner Cable make a deal for Sirius XM more or less necessary? Shareholders upset at the meager premium that Liberty Media originally proposed would probably like if Liberty Media just went back to the way things were -- even if it means the return of short-sellers.

Now let's see what the new, abridged trading week brings for Sirius XM investors.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 15, 2014, at 9:23 AM, Varchild2008 wrote:

    Not about going back to the way things were. It is preferable that Liberty spin out Sirius XM.

    With John Malone focused on cable consolidation, makes no sense to have his people on the SIRIUS XM board...We need an independant Sirius XM with their own people making up the board of directors to return the focus to Radio and Telematics.

    Liberty just wants to leverage up SIRIUS XM for their own benefit, not to any benefit of SIRIUS XM.

  • Report this Comment On February 16, 2014, at 5:45 PM, zukerman wrote:

    Welcome to purgatory, where time stands still, without hope or dreams that might have been. Gone are the promises that John Malone has only good intentions for any company he owns and will reward those who go along for the ride.

    Come, come was the resounding cry of his minions to the man with the Midas touch, for surely you'll receive great wealth for your fateful decision. I now know how the red man felt after they traded a handful of beads and some trinkets for all that they owned.

    Worse than that we are nothing but poker chips in Malone's sick little card game to rule everything that is cable. Never have I seen an owner of a company collapse the net worth of his company in an attempt to swallow up the remaining shares of a subsidiary like John Malone has. If you don't have respect for your holdings why should anyone else.

    Well, where is the magic Sirius shareholders expected? I say it's time for Malone to save face after his latest blunder for the king of cable throne and actually do something to the benefit of Sirius because association alone will no longer cut it.

  • Report this Comment On February 17, 2014, at 9:48 PM, BillFromNY wrote:

    What a difference a few years make. I owned Sirius in 2009 when I came close to losing my whole investment to bankruptcy. Malone's loan saved me the loss and, after I stepped in bought a lot more at about 30 cents a share, brought me a windfall profit.

    Nobody knows for sure what his intentions are with Sirius, but he is not known for screwing shareholders and I'm not going to assume that that's what he's doing.

    There are some good reasons why Sirius stock is trading about 75 to 100 points lower than many shareholders think that it should. The company added less net new subscribers last year than predicted and guided an even lower increase in net new subscribers than expected.

    If Malone really tries to screw Sirius shareholders, then a majority of them won't approve the stock swap.

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