Sell Sirius XM on More of the Same

NEW YORK ( TheStreet) -- Stock charts often tell profound and painful stories.

Consider the intraday mayhem in Sirius XM ( SIRI), as the chart from midday Tuesday shows, above, courtesy of Yahoo! Finance.

Grab a calendar. Throw a dart at it. I bet there's a 50/50 chance you home in on a day when SIRI did something just like this.

Gap up at the open. Plummet to new lows within two hours and stagnate just above lows until the close. If you're a day trader, you can be done with work before noon on days like Tuesday. Watch the retail suckers gap SIRI up in the premarket and at the open and then short the living snot out of the stock at 9:31 a.m. Cover an hour later and you're on your way to the shore.

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Thanks, in large part, to a gaggle of unsophisticated "investors" Jim Cramer recently called "penny stock guys," you can count on this stock behavior whenever news breaks that SIRI permabulls could somehow perceive as bullish.

I agree with Cramer, "I don't like them as my colleagues when I own a stock." I will, however, play counterparty to this surly lot any day of the week.

TheStreet's Richard Saintvilus hit the clunky satellite receiver on the "power" button this morning when he wrote:
In situations such as Sirius XM where fundamentals are often missing from the equation, "catalysts" end up driving the stock.
But the biggest "catalyst" over the past three years has been Liberty Media's ( LMCA) intent to raise its stake in the company to more than the 40% it already owns.
Many have suggested that this event would send the shares soaring toward $3.00. They were proved wrong Tuesday morning.

Saintvilus goes on to explain that Liberty has entered an agreement to purchase 302 million shares of SIRI at $2.15 each. Only $2.15. That might help explain why insiders have been fleeing from this stock in recent months.

Yet again, we have and will likely continue to have another case of misdirected anger. I talked about this phenomenon this morning in an article on TheStreet detailing denial on the part of Research in Motion ( RIMM) bulls and Apple's ( AAPL) legion of most-hardcore fan boys and girls.

Longs in these cult stocks get angry with everybody but the very people responsible for current or potential future messes. They'll shoot messengers such as myself and Saintvilus, yet refuse to go after the most inept co-CEO team in the history of the world, a guy Steve Jobs ultimately would classify as a "Bozo" and a host of company insiders who sold out shortly before another firm made a pathetic, yet perfectly legitimate offer for more shares.

Now, I want to make it completely clear. I have no knowledge that these Sirius insiders sold on the basis of information that Liberty was about to offer $2.15 or any other type of non-public information. That said, shareholders in Sirius XM should, at the very least, demand answers.

It would be downright wrong and irresponsible of me to link, without question, the insider sales to the Liberty deal. But, at the very least, a reasonable person could come to the tentative conclusion that an association might exist. It's not much different than asking for an inquiry into how RIM handled guidance last year or questioning the ability of Tim Cook to keep Apple rolling on the Steve Jobs-like cylinders that made it successful.

At the end of the day, Sirius XM is little more than a project. CEO Mel Karmazin executed leg one nicely as he, with a bailout from Liberty, brought the company from the brink of bankruptcy. At this juncture, he is not fit to lead what needs to be a transition in rapid growth and innovation mode. The much more forward-looking and progressive John Malone at Liberty knows this.

While I am sure he would like to make Sirius XM part of Liberty Media's multiplatform and synergistic stable, he sure is not going to overpay for what amounts to a long shot and a work barely in progress.
At the time of publication the author held no positions in any of the stocks mentioned.