This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Sirius XM: A Tale of Two Stocks

Stocks in this article: SIRILMCAAAPLMSFTGOOG

I understood that it was the first time the stock had broken the 30-cent level since November of the previous year. Many didn't know what I already knew -- the worst was over. The stock reached a high on that day at 38 cents per share and closed at 33 cents. But it was just the beginning.

Sirius' execution during the entire 2009 was "mixed," to put it mildly. A stock does not flirt with death because expectations are high. What sort of realistic demands can there be during a recovery? The economy had not yet seen the worst and auto sales were plummeting fast. Sirius was hemorrhaging subscribers each quarter and its CEO, Mel Karmazin, couldn't stop the bleeding.

Then something changed. After having lost 590,000 subscribers in the first half of 2009, Sirius was able to recover 60% of those subscribers in the second half of the year. With the investors having taken this as a sign that the "worst is over," Sirius ended the year trading at 59 cents per share. In nine months my $5,000 investment had made 84% and I entered 2010 playing with house money. Vegas, er, the Street, didn't know what hit them.

The Worst of Times: Missed a 2-Bagger

A little more than a year ago, I outsmarted myself. In May 2012, I announced here that shares of Sirius XM would not go higher than $2. My premise was simple: The stock was expensive. Given its price-to-earnings ratio, which was in the mid-30s at the time, there was little value to be had.

Complicating matters, the company's CEO, along with several other insiders were dumping the stock at rapid rates, under $2 per share. Plus, Karmazin still had millions more worth of options to exercise under his pre-planned sales.

In the midst of all of this, there was the ongoing drama of Liberty Media (LMCA) and its fight to gain control of Sirius.

Given how much Wall Street hates uncertainty, I felt these events had relegated Sirius to one of the best short plays on the market. I felt the stock was going to $1.65 (at least). But as the stock fell to $1.80 (twice) I still didn't pull the trigger to buy. But Sirius would never fell below $1.80.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • 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 Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs