This Week in Sirius XM Radio

There's never a dull week with Sirius XM Radio.

Mar 15, 2014 at 11:15AM

Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio (NASDAQ:SIRI) closed at $3.44, down 2% on the week. The media darling's slide was in line with Nasdaq's 2.1% drop on the week.

There was more going on beyond the share-price gyrations, though. Liberty Media (NASDAQ:LMCA) abandoned plans to take over all of Sirius XM's stock, while Sirius reiterated its guidance and also received a bullish analyst note that pegged a $5 price target on the shares. 

Let's take a closer look.

There won't be Liberty for all
John Malone's Liberty Media announced on Thursday after the market close that it's withdrawing its plans to acquire the minority stake in Sirius XM that it doesn't currently own. The eclectic media conglomerate will instead reclassify its stock to create two new tracking stock groups.

The news wasn't necessarily a shock. The offer didn't represent much of a premium at the time, and it's not as if Liberty Media could've sweetened the offer without valuing Sirius XM at billions more than it was willing to offer. Only investors outside of Liberty Media were going to be able to vote, and anyone with an Internet connection could've seen that the vibe among retail investors was that they weren't going to vote in favor of the deal.

Both stocks rose Friday on the news. Sirius XM climbed 2% to make up half of the loss that it had accumulated earlier in the week, and Liberty Media shares popped 7% on Friday. Then again, Liberty Media's increase could be tied to the decision to still split Liberty Media into two entities.

Still on course
Sirius XM took advantage of Liberty Media's withdrawal to announce that it will resume its share buyback initiatives.

The satellite-radio star also reiterated its guidance for all of 2014:

  • It still expects to close out the year with 1.25 million net subscriber additions. This is less than its gains in previous years, but at least it's positive after a sequential dip during the holiday quarter. Self-pay subscribers did climb nicely during the fourth quarter.
  • Sirius XM sees revenue clocking in above $4 billion and adjusted EBITDA of roughly $1.38 billion.
  • Free cash flow should approach $1.1 billion.

Reiterating guidance is typically a non-news event, but it's important for Sirius XM to remind investors of its massive free cash flow generation now that it's a swinging single again.

Moving on up
Sirius XM wasn't the only one to take advantage of Liberty Media's retreat to sing its praises. Bank of America Merrill Lynch reinstated coverage of Sirius XM with a bullish "buy" rating and an even more bullish $5 price target.

The upside is no longer capped by the limits of being part of Liberty Media's collection of media assets. The same can also be naturally said about the downside, but Sirius XM has mad the most of that volatility over the past five years years to deliver market-thumping returns. 

6 more stock ideas pumping up the value
It wasn't a quiet week for Sirius XM, and the new week isn't likely to be dull. While we wait for the latest news to roll in, we can keep looking around the market for other great investing ideas. Why not start with the Fool's own David Gardner, who has proved the critics wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%? In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of Liberty Media and Sirius XM Radio. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information