Image source: Sirius XM.   

The number of speculators hoping to cash in on a declining stock price for Sirius XM Radio (NASDAQ:SIRI) continues to grow. There were 201.5 million shares of Sirius XM stock sold short by the end of May, the highest tally of naysayers in more than a year.

Sirius XM stock has routinely been one of the market's most shorted investments. A low share price and history of volatility has a funny way of smoking out the riverboat gamblers. However, the pessimism is intensifying. We've seen short interest in the satellite radio monopoly grow by 37% so far in 2016. 

It's an odd sight, especially since Sirius XM's volatility has been curbed significantly. This isn't the same endangered media company that was on the brink of bankruptcy in early 2009. It's now consistently profitable and growing, and even the stock's one-year beta -- a measure of volatility -- clocks in at a tame 0.95. 

Let's blame the tracking stock

One thing that could be at the heart of the spike in bearish activity in Sirius XM stock has nothing to do with its fundamentals. Liberty Media (NASDAQ:FWONA) completed its recapitalization in April, and with that came new classes of shares that account for Liberty Media's majority stake in Sirius XM Radio. Investors can now buy Liberty SiriusXM (NASDAQ:LSXMA) (NASDAQ:LSXMB) (NASDAQ:LSXMK), and last week we saw Deutsche Bank initiate coverage, recommending that investors buy the tracking stock instead of a direct purchase of Sirius XM.

Deutsche Bank argues that there's a 14% discount in Liberty SiriusXM to its representative stake in Sirius XM. Discounts don't always diminish over time, but the analyst argues that it's still feasible for Liberty Media to acquire all of Sirius XM -- a move that would lock in the discount. 

How would that boost short interest in Sirius XM? Well, an arbitrage-seeking investor would short Sirius XM and buy an equal amount of Liberty SiriusXM, cashing in on the difference as the discount narrows. 

This is unlikely the only thing at play with the escalating short interest at Sirius XM, but it's hard to see what the rest of the folks shorting the stock are eyeing. This is no longer a bucking bronco. The stock has traded between $3.72 and $4.05 over the past three months, tame by most speculative standards.

Sirius XM keeps growing, now reaching more than 30 million subscribers. Revenue growth actually accelerated in its most recent quarter, with earnings and EBITDA growing even faster. This isn't the kind of performance that will make bears rich anytime soon, but the boo birds still keep coming.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.