Last week Liberty converted almost 50% of its preferred shares of Sirius to common and in so doing it was able to increase its Sirius stake to 49.5 percent while also owning roughly 32 percent of common shares.
Though it remains unclear what this will mean for investors, it does signal that the stock will likely not appreciate from current levels. So the question is what is the benefit of holding at this point?
Just ahead of Liberty's conversion, Gabelli & Co. last week downgraded Sirius to sell. They have become aware that the stock rose artificially as Liberty was buying shares on the open market as it increased its holdings from 40%.
If I were a Sirius or Pandora investor, I would try to embrace the idea that hope no longer serves as a sound investment premise.As well as both companies have performed so far on the year, I think it would be wise to be sellers of both stocks and seek shelter in other companies with less murky outlooks. Both stocks may start to see a downtrend as a result of what might be around the corner -- from Apple and Liberty. At the time of publication, the author was long AAPL and no position in any of the other stocks mentioned. Follow @rsaintvilus This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV