Sirius XM Gets Hedge Fund Love
BOSTON (TheStreet) -- It took a 1,400% rise in the shares of Sirius XM (SIRI) - Get Sirius XM Holdings, Inc. Report for hedge funds and institutional investors to turn bullish on the satellite-radio company.
Sirius XM Chief Executive Officer Mel Karmazin recently said the company is "no longer a long-shot concept and company," and big-money investors agree. During the fourth quarter, institutional investors' increased positions in Sirius XM outpaced decreases by a count of 99 to 69. New stakes totaled 48 compared with 29 who sold out of the stock.
Mel Karmazin, CEO of Sirius XM |
Hedge fund managers are raising their stakes in Sirius XM. Eighteen hedge funds added to current positions or established new ones, including heavyweights like
Steven Cohen's SAC Capital Advisors
and
. Ten hedge funds trimmed positions while only three completely sold out.
Institutional ownership accounts for only 33% of Sirius XM's outstanding shares, with more than 64% in the hands of individual investors, according to data compiled by Capital IQ. That compares to institutional ownership totals of 75% for
JPMorgan Chase
(JPM) - Get JPMorgan Chase & Co. Report
, 71% for
Apple
(AAPL) - Get Apple Inc. Report
and 63% for
TheStreet Recommends
(GOOG) - Get Alphabet Inc. Class C Report
. Many stocks that trade below $5, such as Sirius XM, typically don't see high institutional ownership. Many mutual funds, for instance, have charter rules that prohibit ownership of stocks below a certain price level.
What makes the institutional purchases significant is the fact that shares of Sirius XM are up 15-fold since the lows of February 2009, when the company briefly flirted with bankruptcy before
Liberty Media
(LCAPA)
stepped in with a lifeline. The stock is hovering near a 52-week high of $1.88 a share, the highest since before the financial crisis hit in late 2008. Institutional buyers, it seems, expect the stock to continue to climb.
Sirius XM has rebounded along with car sales. While Sirius XM does have a retail side of the business, the company gets its biggest boost from radio units installed by manufacturers like
Ford
(F) - Get Ford Motor Company Report
and
General Motors
(GM) - Get General Motors Company Report
. Sirius XM offers new-car buyers a trial subscription and then works to convert those trials to paid subscriptions.
The improvement is shown in the company's key metrics. In Sirius XM's fourth-quarter 2008 report, subscribers totaled 19 million and the conversation rate of trial subscribers was a weak 44.2%. Average revenue per user was $10.60, while subscriber acquisition costs totaled $70. By comparison, Sirius XM ended last year with more than 20 million subscribers and a conversion rate that inched up to 45.1%. Average revenue per user climbed to $11.80 in the fourth quarter 2010, and subscriber acquisition costs dropped to $58.
Analysts are predicting that Sirius XM's share price will continue to ascend. Firms like Barrington Research and Wunderlich Securities, among others, increased their price targets on shares of Sirius XM. The stock is still well below the premerger share price of $4 but analysts, like hedge funds, still see some more room to run.
The following pages detail 10 hedge funds that initiated new positions in Sirius XM during the fourth quarter, ranked by share count, as well as what the funds were also buying and selling.
Hedge Fund
:
, based in Stamford, Conn., has a trading-oriented style and counted more than 1,800 equity holdings worth $15 billion at the end of December. Speculation is that the
Securities and Exchange Commission's
ongoing insider-trading investigation largely centers around SAC Capital. In November, SAC Capital reportedly issued a letter to investors stating that it has received an "extraordinarily broad" government subpoena.
Shares of Sirius XM Purchased in Fourth Quarter
: 280,901 worth $461,000. The hedge fund has disclosed ownership of Sirius XM shares in 13 different quarters, dating back to the final quarter of 2004. While most of SAC Capital's reported stakes in Sirius XM were small, the fund snatched up 10 million shares in the first quarter of 2010 but sold out of the position by the end of the second quarter.
Top Buys in Quarter
: One of Cohen's biggest purchases in the fourth quarter was
Sprint Nextel
(S) - Get SentinelOne, Inc. Class A Report
, as the fund snapped up more than 10 million shares. SAC Capital also bought 6.6 million shares of
Novell
(NOVL)
and 5.1 million shares of
Gap
.
Top Sales in Quarter
: Among U.S. equities, SAC Capital sold 6.3 million shares of
Hertz Global
(HTZ) - Get Hertz Global Holdings Inc Report
during the fourth quarter, as well as 4.3 million shares each of
Petrohawk Energy
(HK)
and
Psychiatric Solutions
(PSYS)
.
>>View SAC Capital's Portfolio
Hedge Fund
: UBS O'Connor is based in Chicago and reported 709 asset holdings at the end of the fourth quarter, which carried a value of $6.1 billion. By comparison, the fund ended the third quarter with 585 reported holdings worth $5.3 billion.
Shares of Sirius XM Purchased in Fourth Quarter
: 376,595 worth $618,000. UBS O'Connor last disclosed ownership of Sirius XM shares in the first quarter of 2005.
Top Buys in Quarter
: UBS O'Connor's buy of Sirius XM is small compared to the 3 million shares of
Citigroup
(SIRI) - Get Sirius XM Holdings, Inc. Report
the fund bought during the quarter. UBS O'Connor also bought more than 2 million shares each of
McAfee
(MFE)
,
Qwest
(Q)
,
Newell Rubbermaid
(NWL) - Get Newell Brands Inc Report
and
AirTran
(AAI)
Top Sales in Quarter
: The fund unloaded 2.6 million shares of
Lowe's
(LOW) - Get Lowe's Companies, Inc. Report
, 2.1 million shares of
Staples
(SPLS)
and 1.9 million shares of
CVS Caremark
(CVS) - Get CVS Health Corporation Report
.
Hedge Fund
: Dawson Capital Management, based in Southport, Conn., reported 69 fourth-quarter holdings worth $332 million. That's up from 61 holdings worth $263 million at the end of the third quarter.
Shares of Sirius XM Purchased in Fourth Quarter
: 662,600 worth $1.1 million. Dawson Capital has held Sirius XM shares before, both before and after the merger in 2007. The fund held shares from the second quarter of 2005 through first quarter of 2006, and once again picked up shares from the third quarter of 2007 through the second quarter of 2008.
Top Buys in Quarter
: Sirius XM was the fund's top purchase on a share-count basis, according to the latest filing. Dawson Capital also bought 478,000 shares of
Weatherford International
(WFT) - Get Weatherford International plc Report
, 364,000 shares of
Hertz Global
(HTZ) - Get Hertz Global Holdings Inc Report
and 257,000 shares of
Foot Locker
(FL) - Get Foot Locker, Inc. Report
.
Top Sales in Quarter
: Dawson Capital sold 303,000 shares of
DivX
(DIVX)
, 284,000 shares of
Ciena
(CIEN) - Get Ciena Corporation Report
and 194,000 shares of
Iron Mountain
(IRM) - Get Iron Mountain, Inc. Report
.
Hedge Fund
: Craig Drill Capital is based in New York and last reported 30 holdings worth $586 million. In the third quarter, the fund had only 24 holdings with a value of $33 million, according to SEC filings.
Shares of Sirius XM Purchased in Fourth Quarter
: 702,900. This is the first purchase of Sirius XM for Craig Drill Capital.
Top Buys in Quarter
: Sirius XM was Craig Drill's largest acquisition on a share-count basis. The fund also added 574,000 shares of
American Water Works
(AWK) - Get American Water Works Company, Inc. Report
, 394,000 shares of
Cynosure
(CYNO)
and 228,000 shares of
Merge Healthcare
(MRGE)
.
Top Sales in Quarter
: The fund had a relatively small amount of share sales in the quarter. Craig Drill dumped 407,000 shares of
Cepheid
(CPHD)
, 246,000 shares of
Calpine
(CPN)
and 184,000 shares of
Astoria Financial
(AF)
.
Hedge Fund
: Gerry Farber, based in New York, counted 98 reported holdings with a value of $160 million at the end of the fourth quarter. That's down from 104 holdings with a value of $165 million at the end of the previous quarter.
Shares of Sirius XM Purchased in Fourth Quarter
: 830,000 worth $1.3 million. It is Gerry Farber's first ownership of the satellite-radio company.
Top Buys in Quarter
: Sirius XM was Gerry Farber's top stock purchase in the quarter, based on share count. The next largest was 330,000 shares of
Sonus Networks
(SONS)
and 300,000 shares of
ShoreTel
(SHOR)
.
Top Sales in Quarter
: The fund's largest sale was 666,000 shares of
WidePoint
(WYY) - Get WidePoint Corporation Report
, followed by 295,000 shares of
RF Micro Devices
(RFMD)
and 250,000 shares of
UTStarcom
(UTSI) - Get UTStarcom Holdings Corp. Report
.
Hedge Fund
: Mark Asset Management is based in New York and reported 135 holdings worth $290 million as of Dec. 31. At the end of the third quarter, the fund had 129 holdings with a value of $243 million.
Shares of Sirius XM Purchased in Fourth Quarter
: 1.22 million worth about $2.1 million. Mark Asset Management is no stranger to Sirius XM, though. The fund owned shares in the first and second quarters of 2007, and again held shares from the third quarter of 2008 through the second quarter of 2009.
Top Buys in Quarter
: Sirius XM was the fund's largest buy on a share-count basis in the fourth quarter, followed closely by a purchase of 1.1 million shares of
Citigroup
(C) - Get Citigroup Inc. Report
. Mark Asset also bought 299,000 shares of
Lennar
(LEN) - Get Lennar Corporation Class A Report
and 288,000 shares of
Host Hotels & Resorts
(HST) - Get Host Hotels & Resorts, Inc. Report
.
Top Sales in Quarter
: Mark Asset unloaded 320,000 shares of
Las Vegas Sands
(LVS) - Get Las Vegas Sands Corp. Report
last quarter, as well as 243,000 shares of
General Growth Properties
(GGP)
and 190,000 shares of
PulteGroup
(PHM) - Get PulteGroup, Inc. Report
.
Hedge Fund
: Standard General Management, based in New York, said it had only 14 holdings worth $108 million at the end of the fourth quarter.
Shares of Sirius XM Purchased in Fourth Quarter
: 1.59 million. It is Standard General's first ownership of Sirius XM shares.
Top Buys in Quarter
: Standard General appears to be a new fund, as it has only one 13F filing on record with the SEC. Sirius XM was the fund's largest purchase in the fourth quarter, followed closely by
Dynegy
(DYN)
with 1.5 million shares. Standard General also purchased shares of
News Corp.
(NWSA) - Get News Corporation Class A Report
and
Cedar Fair
(FUN) - Get Cedar Fair, L.P. Report
, among others.
Top Sales in Quarter
: None
Hedge Fund
: TCS Capital Management is based in New York and reported 32 holdings valued at $162 million at the end of the fourth quarter. That compares with 35 holdings worth $238 million at the end of the third quarter.
Shares of Sirius XM Purchased in Fourth Quarter
: 1.71 million worth nearly $2.8 million. TCS Capital was previously a fan of Sirius XM, owning at least 3 million shares of the satellite-radio company from the first quarter of 2004 through the second quarter of 2006. The fund bought and quickly sold 3 million shares of Sirius XM in late 2009, according to the fund's third-quarter and fourth-quarter filings in 2009.
Top Buys in Quarter
: Sirius XM was the fund's largest purchase based on share count in the quarter. TCS Capital also bought shares of
Atmel
(ATML)
,
Interval Leisure Group
(IILG)
, and
Entropic Communications
(ENTR) - Get ERShares Entrepreneurs ETF Report
.
Top Sales in Quarter
: TCS Capital shed 3.5 million shares of
Move
(MOVE)
, 2.1 million shares of
Information Services Group
(III) - Get Information Services Group, Inc. Report
and 1 million shares of
Vonage
(VG) - Get Vonage Holdings Corp. Report
.
Hedge Fund
: Corriente Advisors, based in Fort Worth, Texas, had 22 reported holdings worth $85 million as of Dec. 31. In the previous quarter, Corriente had only two holdings worth $16 million.
Shares of Sirius XM Purchased in Fourth Quarter
: 2.9 million worth $4.72 million. Corriente has claimed previous ownership of Sirius XM, disclosing that it held 800,000 shares as of the end of the third quarter of 2009, a stake the fund sold out of three months later.
Top Buys in Quarter
: Corriente added 22 new positions during the fourth quarter, with Sirius XM being the largest in terms of share count. The fund also bought shares of
Popular
(BPOP) - Get Popular, Inc. Report
,
Yahoo!
(YHOO)
and
Cheniere Energy
(LNG) - Get Cheniere Energy, Inc. Report
.
Top Sales in Quarter
: The fund cut holdings in only two names during the quarter,
Clorox
(CLX) - Get Clorox Company Report
and
E-House Holdings
(EJ)
.
Hedge Fund
:
is a Greenwich, Conn.-based fund started by Chris Shumway in 2002. Shumway said early this month he would return all of its external capital to investors by the end of the first quarter, after the fund was hit hard with redemptions after he announced in November he would step down as chief investment officer.
Shares of Sirius XM Purchased in Fourth Quarter
: 69.7 million. This was not Shumway's first ownership stake in Sirius XM, as the fund owned more than 31 million shares of the company at the end of the second quarter 2010, as well as 76,000 shares in the first quarter 2006.
Top Buys in Quarter
: Shumway bought 40 million shares of
Citigroup
(C) - Get Citigroup Inc. Report
in the quarter, as well as 18 million shares of
MGM Resorts
(MGM) - Get MGM Resorts International Report
.
Top Sales in Quarter
: The fund dumped nearly 10 million shares of
Las Vegas Sands
(LVS) - Get Las Vegas Sands Corp. Report
, 4.6 million shares of
Live Nation
(LYV) - Get Live Nation Entertainment, Inc. Report
and 2.7 million shares of
CVS Caremark
(CVS) - Get CVS Health Corporation Report
.
>>View Shumway Capital's Portfolio
-- Written by Robert Holmes in Boston
.
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