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Sirius XM Investors Shouldn't Fear a Spinoff

By Rick Munarriz - Apr 24, 2013 at 5:52PM

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It's OK if Liberty Media decides to spin off its stake in the satellite radio giant.

Sirius XM Radio (SIRI 0.00%) reports quarterly results next week, but the stock has been stagnant for weeks.

Ever since Liberty Media (FWONA) 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 (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.

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Stocks Mentioned

Sirius XM Holdings Inc. Stock Quote
Sirius XM Holdings Inc.
SIRI
$6.19 (0.00%) $0.00
Liberty Media Corporation Stock Quote
Liberty Media Corporation
FWONA
Starz Stock Quote
Starz
STRZA

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