Why Do Non-Value Investors (AKA, Traders) Love SiriusXM Stock So Much?

[BargainValueHunter]

If you read the various stock boards (especially Yahoo! Finance and SA) you may notice that there are a large number of traders who seem to love the stock of SiriusXM.

 

For example:

 

http://seekingalpha.com/article/236682-ge-takes-a-big-stake-in-sirius-xm?source=hp_latest_articles

 

My question is...why?

 

http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=SIRI&lstStatement=CashFlow&stmtView=Ann

 

The stock (from a value investor's perspective) is not compelling but lots of stock watchers can't get enough of it!  ???

[ExpectedValue]

I think you can actually argue that it was appealing to value investors at one point, specifically after John Malone did his deal with XM Sirius and they were able to pass on that price increase (back when they went to EBITDA positive for the first time).

 

If you had bought at that point you would have done pretty well I think.

[Myth465]

SirusXM appears like new technology and sounds like a pretty good growth story. I dont get it because  I just listen to MP3s in my car and most cars are coming with USB Drives these days. My friend liked Sirus and at the end of the day it was because its a good sounding growth story.

[StubbleJumper]

Well, not only do I fail to understand why investors are interested in Siruis, I fail to understand why consumers are willing to pay for the service.  I must listen to the radio for at least an hour per week in my car.  I have any number of stations that I can tune into for free, and mostly what I want are a few tunes and traffic reports.  I can't imagine wanting to hook into some radio station in NYC or LA, and I really can't imagine paying money for that.

 

Does anyone on this board actually pay for the service (either monthly or in the upfront lump-sum payment)?  Am I the only tightwad here?  When I look at Ford's website, they are really flogging the Sirius and the bluetooth connectivity thing...supposedly people get all ga-ga about it and reduce their diligence in making an astute vehicle purchase (ie, the technology makes me so horny, so I don't care if car XX is truly a better deal than Ford YY).

 

 

SJ

[Myth465]

The only thing I think they have going for them is content like Howard Stern. There is content I pay for (The Economist) but its tough. I think if they can get key talk radio guys to go to satellite then they can get viewers. Think if some of the Conservative talk radio guys went to satellite. I wouldnt pay but I am sure someone out there would. Talk Radio personal and Sports are the only thing I think could drive Sirus. The only time I use it is when I am in a rental car without an AUX connection.

[stahleyp]

It has a good story, a low share price, and the stock is up a ton over the past 2 years or so.

 

 

Sirius has a monopoly in satellite radio and that is "the future."

 

Also, it has a share price in the single digits and that makes it "cheap."  For what ever reasons, people feel cheap if it's a small dollar amount. They also feel it's good because they can buy a lot of shares.

 

It was up 400% last year and over 100% this year.

 

Add all of these up and it's a good story stock.

 

[KFRCanuk]

Well, not only do I fail to understand why investors are interested in Siruis, I fail to understand why consumers are willing to pay for the service.  I must listen to the radio for at least an hour per week in my car.  I have any number of stations that I can tune into for free, and mostly what I want are a few tunes and traffic reports.  I can't imagine wanting to hook into some radio station in NYC or LA, and I really can't imagine paying money for that.

 

Does anyone on this board actually pay for the service (either monthly or in the upfront lump-sum payment)?  Am I the only tightwad here?  When I look at Ford's website, they are really flogging the Sirius and the bluetooth connectivity thing...supposedly people get all ga-ga about it and reduce their diligence in making an astute vehicle purchase (ie, the technology makes me so horny, so I don't care if car XX is truly a better deal than Ford YY).

 

 

SJ

 

Ford Sync is pretty darn neat from what I have heard.

 

I have paid for the service for the last 5 years. I actually got the service before it was available in Canada.

 

I really like Sirius XM for a couple of reasons

1) Same channels no mater if i'm 10KM or 1500KM from home.

2) Lots of content. I don't have a large music collection. I rarely purchase or download music online.

3) The Sirius radio that I have allows me to pause, fast forward or rewind. That's really useful when I'm going in and out of the car.

 

I also have an ipod that I use while I'm in the office, shoveling snow, mowing the lawn and walking the dog. It's filled with podcasts. I never use the ipod in the Car.

[KFRCanuk]

I also became a huge Stern fan after he moved to Sirius. If he doesn't stay I will likely keep my subscription.

 

I think the subscription fee is so small that people prefer to keep the service once they already have it. It's like getting winter tires. Most people are like "you don't need them", it becomes a different story once you tried them. People also don't tend to change their insurance companies once they purchase a policy.

 

Oh yea, I never bought the stock even though I loved the service. Even during the dark days, I couldn't bring myself to buy any. It just didn't seem cheap enough but Mel Karmazin is the man to turn the company around. Great jockey but the company wasn't cheap enough.

[ericd1]

I've been a subscriber (XM previously) for a number of years...Reason...We don't have a local jazz station and it's great when traveling cross country!

 

There's some recent big buyers including GE...

 

http://seekingalpha.com/article/236682-ge-takes-a-big-stake-in-sirius-xm?source=article_sb_popular_1

 

 

[PLynchJr]

I'm also a subscriber.  At various times I've subscribed to both services.  Right now I'm with Sirius.  I love listening to Stern on the way to work.  Once you try satellite radio and get used to it it's really hard to imagine going back to terrestrial radio IMO.

[nodnub]

I'm also a subscriber.  At various times I've subscribed to both services.  Right now I'm with Sirius.  I love listening to Stern on the way to work.  Once you try satellite radio and get used to it it's really hard to imagine going back to terrestrial radio IMO.

 

Does satellite radio have ads?

 

I never listen to commercial radio stations anymore for this reason.  I would rather listen to a cd I have heard 1000 times than have music interrupted by ads.

[StubbleJumper]

Wow!  I am surprised that there are so many people who find that it's worth ~$10/month.

 

I really must be a cheapskate!  :o :o

 

 

SJ

[ericd1]

I'm frugal (just ask my wife), but we enjoy SiriusXM and our Tivo...

 

Virtually no ads...sometimes there's a Sirius promo for shows, etc...

 

I sure missed this Peter Lynch opportunity--"buy what you like". After XM was acquired it might have made sense, but I passed...still limited earnings and a huge short position...Perhaps there's something here, but it's too much of a crap shoot for me!

 

 

[ExpectedValue]

One of the things that works for XM Sirius' benefit is a lot of new cars feature a free trial offer, now for people that have to commute to work daily I think there is a good chance that they convert to full subscribers after the trial runs out, just because they fall in love with the service.

[dcollon]

The conversion ratio from trial users is close to 50%.  I spend a decent amount of time in my car, so it's been absolutely worth the cost. 

[oec2000]

If you read the various stock boards (especially Yahoo! Finance and SA) you may notice that there are a large number of traders who seem to love the stock of SiriusXM.

 

My question is...why?

 

 

The same reason why people buy lottery tickets or play the slot machines.

[BargainValueHunter]

I am beginning to understand why Watsa, Buffett, Berkowitz, Klarman, et al. are so rare in the investing world.

 

Most people seem to be hardwired to see a stock like SIRI and think, "Woo-Hoo! Lemme on that rocket ship!"

 

I guess while most crash and burn (1990s day traders, 2000s home flippers, 2010s SIRI "investors") the aforementioned value masters just keep stacking capital on top of capital all the way to the sky!  ;D ;)

[ExpectedValue]

I am beginning to understand why Watsa, Buffett, Berkowitz, Klarman, et al. are so rare in the investing world.

 

Most people seem to be hardwired to see a stock like SIRI and think, "Woo-Hoo! Lemme on that rocket ship!"

 

I guess while most crash and burn (1990s day traders, 2000s home flippers, 2010s SIRI "investors") the aforementioned value masters just keep stacking capital on top of capital all the way to the sky!  ;D ;)

 

The other thing to note is that I think in 2 years or so Malone has an option to acquire more stock in the company. I've seen one idea tossed around where LCAPA acquires XM Sirius so that they can be spun out with actual operating earnings (right now LCAPA is basically a HF for John Malone). So maybe some people have this expectation and are investing because of it.

 

I don't own the stock -- but like I said, looking back there were specific times when it was very attractive, even to value investors.

[KFRCanuk]

Does satellite radio have ads?

 

Generally talk and specialty(cnn, cnbc, bloomberg) channels have commercials. Music channels are commercial free. Stern has commercials but he is not locked into when he goes to a commercial break. He can go as long as he wants without a commercial. He did 90 minutes today with Billy Joel without a comercial.