Shares of Sirius XM Radio (Nasdaq: SIRI) fell 4% yesterday, after Gabelli analyst Brett Harriss downgraded the satellite radio giant.

Harriss, who has been covering the media and entertainment sector for Gabelli & Co. since 2008, feels that Sirius XM has limited upside at its present valuation. He's cutting his rating from "Buy" to "Hold" despite his fondness for the company in general.

Few are arguing that Sirius XM is cheap these days.

The $1.49 share price may seem like a fast-food bargain, but investors need to remember that there are 6.4 billion shares outstanding. Tack on the roughly $3 billion in long-term debt on Sirius XM's balance sheet, and we're talking about a company with a $9.5 billion market cap and $12.5 billion in enterprise value.

Harriss suggests Liberty Capital (Nasdaq: LCAPA) as a thinking investor's play on Sirius XM.

This argument has been floating around since Liberty Capital lucked into a 40% preferred share stake in Sirius XM, after lending the then-desperate satellite radio provider a chunk of change last year.

Liberty Capital's stake is currently valued at nearly $4 billion, whereas Liberty Capital itself commands a market cap of $5.2 billion.

But wait, says the infomercial announcer! There's more!

Liberty Capital also owns the Atlanta Braves and GPS tracking solutions specialist True Position. In addition, it holds small stakes in several familiar stocks, including a 14% stake in Live Nation (NYSE: LYV) and 2% stakes in Sprint Nextel (NYSE: S) and Motorola (NYSE: MOT).

By Harriss' math, Liberty Capital is trading at a 40% discount to the value of its portfolio. However, it would be hit with a huge capital gains tab if it were to ever cash out its Sirius XM stake, given its microscopic cost basis. Spinning off those holdings would be one tax-advantaged option, likely narrowing Liberty Capital's discount for the remaining holdings with kinder cost basis points.

In the end, Liberty Capital offers a way to buy into Sirius XM at a discount -- but with a diversified portfolio that would smooth out Sirius XM's volatility. Gunslingers may not care for that kind of safety -- especially if Sirius XM itself continues to appreciate at a headier clip than the rest of Liberty Capital's holdings -- but it may appeal to those, like Harriss, who feel that Sirius XM itself has gotten ahead of itself this year.

Would you rather own Liberty Capital or Sirius XM? Share your thoughts in the comment box below.

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Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the stocks in this article. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.