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Why It's Hard to Be Bullish on Sirius

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- Investors of satellite radio giant Sirius XM (SIRI - Get Report) woke up this morning to news that the company's CEO, Mel Karmazin just recently sold 11 million of his 60 million options for a gain of over $25 million.

Investors have wanted so badly for something to cheer all year and this news has suddenly placed a damper on expectations of its first-quarter earnings report due out on May 1. Astute investors must wonder why any insider would -- much less the CEO -- sell shares only two weeks ahead of the report? If I were an investor, I would question the kind of message that is being sent to the market in terms of confidence -- something that has already been on shaky ground to begin with?

The stock has surged to as high as $2.41 and has gained as much as 30% at one point this year. However, watching the daily price movement offered an indication of where sentiment really is as each increase continues to be met with severe selling pressure.

Some of this is due to the fact that speculation surrounding Liberty Media (LMCA) continue to run rampant, but in particular, the fact that Liberty is said to be unwilling to pay anything above $2.50 seems enough to convince investors to adopt the thinking of "let me just get what I can." Is it possible that Mel's transactions this week just confirmed this level of thinking? Why would he sell now if he thought there were any chances of selling at a much higher premium?

This news not only just heightened the intrigue that will be the conference call but also establishes what many have perceived to be Sirius' current fair market value. After all, if a CEO sells for an average of $2.20 what will be revealed during the conference call to either inspire investors to buy north of $2.20 and/or prevent a selloff?

At its fourth quarter full-year 2011 announcement the company said that it expected churn to increase slightly by .2% while also suggesting that there was a "modest" response from subscribers regarding its recent base price increase. From that standpoint, I am expecting the subscriber numbers to not be as robust as many are anticipating.

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