compounding Posted March 23, 2018 Share Posted March 23, 2018 For what it's worth here are my numbers. 3.2B SIRI shares x $6.26 = $20.03B Cash = $615M -$69M held at SiriusXM=$546M Margin Loan = ($750M) Other public Holdings (includes the newly acquired IHeartMedia debt) = $100M (the 20% stake in Pandora is at the SiriusXM level) >>> NAV = $19.926B LSXM outstanding shares = 336M NAV / Share = $59.30 Current Price / Share = $41.11 Discount (%) = (44.2) Your numbers look basically right except for the discount. Your calculation should be 1-41.11/59.30 = ~30.6% Symantics. Discount is 30.6%, but upside is 44.2% This board is not very forgiving ;-) Sorry, I was operating under the assumptions that words have meaning and that people who post material on this forum are open to suggestions for improvement. My mistake. chill out guys... I appreciate everyone's contribution including the clarification as I hadn't run the numbers and hadn't noticed 8) Absolutely. You misunderstood Compounding. I liked the way you're keeping WW honest. Ok, my bad then. By the way, I wasn't emotional before if it came across that way. WayWardCloud, I think the proper way to think about it is terms of a discount, i.e. you are buying an asset worth 100 for 70 (30% discount). I'm glad the post was well received. Link to comment Share on other sites More sharing options...
vince Posted March 24, 2018 Share Posted March 24, 2018 compounding is right, u are buying dollar bills for 70 cents, a 30 percent discount. but ur return will be 43 % if gap closes to 100 Link to comment Share on other sites More sharing options...
vince Posted March 24, 2018 Share Posted March 24, 2018 by the way, thats one reason Buffetts 2 rules of investing are "dont lose money". you have to make a 43 percent return to get back to even if u are down 30 percent. its harder to make up lost dollars than it is to lose them in the first place is what Dr Burry wrote in one of his shareholder letters Link to comment Share on other sites More sharing options...
NBL0303 Posted March 25, 2018 Share Posted March 25, 2018 Forgive me if that has been discussed in this thread - but is anyone executing or considering a pair trade Short SiriusXM/Long Liberty? I haven't looked into the specifics at all so perhaps it is not feasible - but just curious if anyone is going that route with this. Link to comment Share on other sites More sharing options...
MrB Posted March 26, 2018 Share Posted March 26, 2018 Forgive me if that has been discussed in this thread - but is anyone executing or considering a pair trade Short SiriusXM/Long Liberty? I haven't looked into the specifics at all so perhaps it is not feasible - but just curious if anyone is going that route with this. I believe there are issues around borrowing stock, but have not verified that myself. Link to comment Share on other sites More sharing options...
petec Posted April 6, 2018 Share Posted April 6, 2018 Hi all. what will actually trigger payment of the capital gains tax liability? I guess this goes to the heart of how the discount gets unwound. My assumption is that eventually LSXM buys out the stub of Sirius and converts from tracker to corp, in which case I assume no capital gains tax is payable? Thanks. Link to comment Share on other sites More sharing options...
WayWardCloud Posted April 8, 2018 Share Posted April 8, 2018 by the way, thats one reason Buffetts 2 rules of investing are "dont lose money". you have to make a 43 percent return to get back to even if u are down 30 percent. its harder to make up lost dollars than it is to lose them in the first place is what Dr Burry wrote in one of his shareholder letters I've read this point many times but it always stroke me as more of an element of language without a reality behind it. It's just a view of the mind because we talk in terms of percentages and they can be misleading. When you say: If a stock goes down by 50% it has to go up by 100% after that to only break even it sounds scary and asymmetrical. (10 -50% = 5 + 100% = 10) But if instead you say: if a stock's price gets divided by 2, it needs to get multiplied by 2 after that to recover it sounds symmetrical. (10 / 2 = 5 *2 = 10) In other words, I don't believe it's "harder" to go up than down. Anyway, sorry for the off topic :) Link to comment Share on other sites More sharing options...
petec Posted April 10, 2018 Share Posted April 10, 2018 Another question to add to my one about the tax liability... What worries me here is churn. 1.9% sounds small but if I understand correctly it is a monthly figure. That means they are losing nearly a quarter of their subscribers a year. That, in turn, means they need a solid funnel of new adds just to stay even. The new car market is closer to the peak than the trough, so it is unlikely to be a huge source of growth. They are underpenetrated in the used car market but actually within the franchised dealers they are fairly fully penetrated - the opportunity is in the independent dealers and the person-person sales, and those are much harder to access and much harder to convert as the buyers tend to have less income. So it's quite possible that rising penetration in the used car market would not be enough to offset a slowdown in the new car market. If the number of subs falls all those lovely fixed cost/high incremental margin dynamics go into reverse. Does this thing get more cyclical as it gets more penetrated? Related to this, if new trials are 21-22m a year and there are 185m cars on the road, within 9 years nearly all motorists will have had a trial (obviously there is some turnover in the pool of motorists, but it's fairly low - most transactions are people changing cars not buying one for the first time). Why would the ones who didn't like it have another trial? And if they don't, how do you add new subs to offset the churn? The best counter to these arguments that I know of is that Sirius devices are in 108m cars and that this will go to 185m using company figures for a growth of 71%. But this is dependant on turnover in the older car fleet so I would imagine it is fairly slow; and as addressed above, converting devices into subscribers within the older car fleet, which is mainly sold through independent dealers and person-person sales, is the toughest bit of the market. What am I missing? Link to comment Share on other sites More sharing options...
vince Posted April 10, 2018 Share Posted April 10, 2018 Sirius 360L. Their current platform does not give them access to all that customer data that we know is potentially very valuable. Obviously this alone is not going to carry them but I am more positive about their opportunities than you are. In addition, I really like them at 13 times free cash flow (lsxma) where management treats that cash very well. Link to comment Share on other sites More sharing options...
petec Posted April 11, 2018 Share Posted April 11, 2018 Sirius 360L. Their current platform does not give them access to all that customer data that we know is potentially very valuable. Obviously this alone is not going to carry them but I am more positive about their opportunities than you are. In addition, I really like them at 13 times free cash flow (lsxma) where management treats that cash very well. I feel the same - I'm just focussing on why I might be wrong. My issue with 360L is that it will take a very long time to penetrate the fleet. Otherwise it looks great. Link to comment Share on other sites More sharing options...
MrB Posted April 26, 2018 Share Posted April 26, 2018 Solid numbers for Siri - subs topping $33m for the first time. Good FCF and stock buybacks continuing. http://s2.q4cdn.com/835250846/files/doc_news/SiriusXM-Reports-First-Quarter-2018-Results.pdf CC https://seekingalpha.com/article/4165650-sirius-xm-holdings-siri-q1-2018-results-earnings-call-transcript Link to comment Share on other sites More sharing options...
mwtorock Posted April 26, 2018 Share Posted April 26, 2018 Solid numbers for Siri - subs topping $33m for the first time. Good FCF and stock buybacks continuing. http://s2.q4cdn.com/835250846/files/doc_news/SiriusXM-Reports-First-Quarter-2018-Results.pdf CC https://seekingalpha.com/article/4165650-sirius-xm-holdings-siri-q1-2018-results-earnings-call-transcript lovely music to my ears :) Link to comment Share on other sites More sharing options...
Shooter MacGavin Posted May 22, 2018 Share Posted May 22, 2018 By my math, SIRI is trading at around 28-29x run-rate EPS. Is my math way off here? If i'm right, why the heck are they still buying back stock? I must be wrong on something here. Link to comment Share on other sites More sharing options...
mwtorock Posted May 23, 2018 Share Posted May 23, 2018 By my math, SIRI is trading at around 28-29x run-rate EPS. Is my math way off here? If i'm right, why the heck are they still buying back stock? I must be wrong on something here. I think the goal is to buy back shares regardless of PE or whatever the valuation metrics are. Malone once tried to take it private, so i guess he probably figured out it is easier this way - basically instruct the company to buy back as much as it can so that his ownship eventually will be 100%... i am just betting on that some day he will need to off a good price for the residual shares. Link to comment Share on other sites More sharing options...
AJDelphi Posted May 23, 2018 Share Posted May 23, 2018 By my math, SIRI is trading at around 28-29x run-rate EPS. Is my math way off here? If i'm right, why the heck are they still buying back stock? I must be wrong on something here. I'm estimating owner earnings of about $.38 this year. EPS around $.25 so yea your math checks out with the stock at $6.95. I own it through Liberty though so getting a massive discount on that right now. Link to comment Share on other sites More sharing options...
WayWardCloud Posted May 23, 2018 Share Posted May 23, 2018 Has anyone looked into buying some iHeartMedia? It trades on the OTC market for 33 cents. What would happen to the stock if SiriusXM + Liberty SiriusXM do end up getting a controlling stake in the next 6-12 months, which seems somewhat likely? Do we get crazy diluted? By how much? Could it still be worth it given the low entry price of today? Link to comment Share on other sites More sharing options...
Broeb22 Posted May 23, 2018 Share Posted May 23, 2018 In all likelihood, the equity gets completely wiped out through the bankruptcy. The private equity sponsors have been negotiating to retain some of their equity interest in the company, but that seems unlikely to occur, so the chances are 99.9% that these shares are worthless. Malone bought the debt because the debt will be converted to equity. If you want to be aligned with Malone, buy the debt. Link to comment Share on other sites More sharing options...
Shooter MacGavin Posted May 23, 2018 Share Posted May 23, 2018 By my math, SIRI is trading at around 28-29x run-rate EPS. Is my math way off here? If i'm right, why the heck are they still buying back stock? I must be wrong on something here. I'm estimating owner earnings of about $.38 this year. EPS around $.25 so yea your math checks out with the stock at $6.95. I own it through Liberty though so getting a massive discount on that right now. I do too. Still they're kinda crushing the IRR of SIRI by paying such a high price. How do you get $0.38 EPS on a run-rate or "owner's" basis? Are you assuming zero taxes? I tend to just include the taxes and add back the cash offsets from NOL's. Is is more important for Liberty to get a controlling 80% position or 100%? Do the deferred tax liabilities on Liberties books disappear if they are an 80% controlling shareholder? Link to comment Share on other sites More sharing options...
Liberty Posted September 24, 2018 Author Share Posted September 24, 2018 http://investor.siriusxm.com/investor-overview/press-releases/press-release-details/2018/SiriusXM-to-Acquire-Pandora-Creating-Worlds-Largest-Audio-Entertainment-Company/default.aspx Link to comment Share on other sites More sharing options...
dwy000 Posted September 24, 2018 Share Posted September 24, 2018 Well I guess that's one way to get additional stock out there for future buybacks. Will be very interested to hear their business plan going forward. I remember Maffei commenting that the streaming music business was a difficult one because there was no differentiation except the user interface. Hoping they can find a way to use the Sirius music rights costs under the Pandora platform or this could be long road to cash flow profitability. Link to comment Share on other sites More sharing options...
Sportgamma Posted September 24, 2018 Share Posted September 24, 2018 Well I guess that's one way to get additional stock out there for future buybacks. Will be very interested to hear their business plan going forward. I remember Maffei commenting that the streaming music business was a difficult one because there was no differentiation except the user interface. Hoping they can find a way to use the Sirius music rights costs under the Pandora platform or this could be long road to cash flow profitability. They could upsell unique Sirius XM content to Pandora users, right? Link to comment Share on other sites More sharing options...
compounding Posted September 24, 2018 Share Posted September 24, 2018 For revenue synergies, my guess is that they will use Pandora to further monetise the installed base, namely the part of the installed base without an active subscription. Offering Pandora radio as a free alternative to people that listen to FM radio seems like it could be a good business move. Pandora subscribers are probably generally in the price segment under SiriusXM, so wouldn't bet on too many of them signing up to SiriusXM. There should be some cost synergies on the Pandora side. Financing will be cheaper coming from operating cash flows and I'm guessing they can cut costs in various ways. It seems like Pandora has underinvested in technology, so that could be a potentially high ROIC use of cash flows out of core SiriusXM. I'm a bit surprised they used 100% equity to finance the deal though. They have a full turn up to their stated leverage target, and that would have reduced the dilution in a meaningful way. Either they have near term uses for that potential cash, or this is a pretty clear signal that Maffei, Meyer and Frear think the stock is at least fairly valued. Further data points to support that conclusion would be the decision to start paying a dividend, and the reduced buyback pace. I haven't followed Pandora particularly closely, but it seems like they have turned a corner this year, and the stock is upp 88% prior to the deal. Would be interested to hear other takes on Pandora. Link to comment Share on other sites More sharing options...
dwy000 Posted September 24, 2018 Share Posted September 24, 2018 There's definitely a natural synergy there in that Sirius owns the in-car market (where streaming services need coverage/use data plan) while Pandora is strongest as an out of vehicle streaming. I think Sportgamma is right that there are programming synergies from the proprietary rights owned by Sirius if they could be used on the Pandora network. I'm quite sure Maffei, Mayer et al have a detailed monetization plan. Link to comment Share on other sites More sharing options...
Leverage Capabilities Posted September 25, 2018 Share Posted September 25, 2018 I'm a bit surprised they used 100% equity to finance the deal though. ave turned a corner this year, and the stock is upp 88% prior to the deal. Would be interested to hear other takes on Pandora. You think John Malone would ever let them use cash to fund an acquisition? Link to comment Share on other sites More sharing options...
Shooter MacGavin Posted September 25, 2018 Share Posted September 25, 2018 I'm a bit surprised they used 100% equity to finance the deal though. ave turned a corner this year, and the stock is upp 88% prior to the deal. Would be interested to hear other takes on Pandora. You think John Malone would ever let them use cash to fund an acquisition? Sure he would. If the stock was cheap, he'd fund it with cash/leverage. However, Siri stock is kinda rich. By my estimate, even after the fall in price, its trading around a 25x P/E multiple. It makes perfect sense to use stock rather than cash. In effect, they're getting a discount even though they're paying a slight premium. And they're getting $150M in net cash to help fund it. They're keeping their firepower in leverage plus cash and the seller also feels great that they don't have to pay taxes in a stock for stock deal. They're offering ~2.3x EV/revenue, but less if you think the SIRI (not the LSXMK) stock is rich, which I do. So it's a relatively modest valuation. But is it a good deal? They must think so. Jim Meyer and Maffei were on the board with Liberty's preferred studying the thing seeing how it could add value. The two biggest themes in my view: 1) using/selling advertising data in pandora more effectively. Maybe some sirius/talk content gets monetized on Pandora through ads. It wouldn't be difficult to do this. 2) pushing sirius xm as a paid service to pandora's 70M users to get them out of the car and into the homes - echos/apple tvs/iphones etc. Link to comment Share on other sites More sharing options...
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