Bankruptcy: The word Sirius investors fear the most
Today's Financial News - Posted September 28, 2009
After a summer of bliss, Sirius XM Radio (NASDAQ:SIRI) investors are once again dealing with the notion of a future bankruptcy filing. Whether it is true or not, shareholders are paying the price today.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Oh no, not this again. Bankruptcy is the last topic Sirius XM Radio (NASDAQ:SIRI) investors want to hear about these days. After getting out of a bind earlier this year, the beleaguered firm is once again fighting off rumors of a bankruptcy filing.
And as usual, shareholders are paying the price.
Shares of Howard Stern’s employer are down by more than 7% today as a report that shows Sirius is one of the top bankruptcy candidates spreads across Wall Street.
Whether the news is true or not doesn’t really matter. What matters is the highly speculative stock continues to move on anything but material information.
The action stems from an Audit Integrity study that lists the companies most likely to file for bankruptcy in the coming months. Of course, Sirius, with its massive debt, monstrous costs and limited revenue stream was near the top of the list.
In fact, the report puts Sirius in sixth percentile of companies likely to make a filing. In other words, a whopping 94% of publicly traded companies are in a stronger financial position.
That makes you think twice about buying into that sixty-cent share price.
Thinking is overrated
Now comes the fun stuff, when that outspoken horde of Sirius investors clamors and fights over any rumor or tiny nugget of news in an effort to dispute the report’s findings. It is more evidence that Sirius continues to have the same sort of odds and action of a game of five-card stud. The stock’s movement certainly does not represent the action of a fully transparent, predictable equity.
For many investors, that is the thrill of investing in a small, risky play like Sirius. After all, I can’t knock the stock’s incredible run throughout the spring in summer.
But before any investor puts a penny into this $0.58 gamble, they had better know the risks. In this case, there is a good chance of more liquidity issues in the not-so-distant future.
A last-minute financing deal saved the company last winter, but that debt is still on the books and the company’s revenue stream – long expected to be booming by now – is not so much different than it was six months ago.
Today’s news should be a strong, well-needed wakeup call for the investors sitting on strong profits. Get out now, while you still can.
This one is getting top-heavy.
Next Article: TFN eNews 09/28/2009: The one word Sirius investors fear the most
8 Responses to “Bankruptcy: The word Sirius investors fear the most”
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September 28th, 2009 at 10:24 am
How many shares have you sold short?
September 28th, 2009 at 10:44 am
What a joke! S&P rated the last two debt offerings, and they were both over subscribed. Three recent ‘Buy’ ratings by analysts with targets over a dollar, and no significant debt due until 2012 and you still write this stuff. People who have listened to your last three articles missed a whopping run up too.
Audit Integrity is nothing more than a mathematical equation. It is dead wrong so often as to be ignored by everyone credible. I guess that explains why you bought into their ‘insight’. Sorry, but after the last three ‘misses’, I won’t be acting on your
‘wisdom’.
Peace!
September 28th, 2009 at 10:47 am
BUY MORE SIRI
September 28th, 2009 at 11:35 am
Good to take into consideration, but like the post above mine…. There’s plenty of time for change. If you are an investor you’re always taking a bit of a chance with your money. You write this article like we have our lives invested into the company (I hope no one is THAT addicted to trading). This means to me, you have another reason for writing this. Do you want to see them fail?
Hurry all you guys, bail out now while you have a chance!! SIRI is gonna go bankrupt and you’re all gonna DIE!!
September 28th, 2009 at 11:47 am
6th percentile is just the AGR – 1 of 3 factors in their assessment, and also an entirely ridiculous factor when you consider that this was by and large the heaviest weighted factor resulting in their assessment of a mere 9% chance of a BK filing. AGR is just Audit Integrity’s made up in-house assessment tool to set them apart from the rest of the pack and sell their RiskPofiler tool. Delving deeper into the AGR, you will see that even that score was by and large a result of corporate fraud risk (ratio of option to CEO and CFO vs salary) . . . you really think Mel Karamzin is a crook after 30 odd years in the radio business?! It’s no wonder companies are beginning to file lawsuits against audit integrity (Google Hertz Global Holdings).
Read that again, they have only a 9% chance of filing even in the Audit Integrity trash piece (in other words 91% chance that it DOES NOT HAPPEN)! Yet this article mentions nothing about that and play up the bogus 6th percentile AGR score . . .
Lastly, this is hardly “news” today; the Audit Integrity report came out over a week ago and little mention of it (other than the day the report came out) until today you see a blitz of articles on this report . . . just days before the next positive catalyst for Sirus is due out (September auto sales). Coincidence or a coordinated attempt to keep the stock down? You call us an “outspoken horde of Sirius investors” but in the face of this kind of misinformation and mainstream media slant against Sirius you can’t blame us!
September 28th, 2009 at 12:41 pm
It is rather interesting that Wall Street is saying that Sirius XM is one of the most likely companies to go bankrupt in the next few months. As far as reports go, they negotiated a large chunk of their debt which gives them until 2012 to get their issues resolved. They also got their Apple application marketed and deals with just about all foreign car dealers over the last quarter. I do believe that most of the new trial subscriptions will be over this quarter and those that choose to stay will be paying subscribers in the next few weeks or two. Financially, Sirius XM has been improving their bottom lines over the previous two quarters. Also, option trading has been down for the company.
If I were an investment firm and a stock that showed good potential happened to drop in price just prior to having one of their strongest quarters for the year it would make me a buyer too. This to me is price manipulation. Here is a quote directly from the highlighted paragraph at the top of the article, “Whether it is true or not, shareholders are paying the price today. ” Convenient, no.
October 1st, 2009 at 11:59 am
None! Laura Cadden, TFN
October 2nd, 2009 at 6:08 am
This article is the evidence of novice research at best. Short seller push at worst. No journalism here, move on.