Buy Sirius XM (SIRI)   6 comments

As Marshall pointed out in the Traders Corner comments, Liberty Media’s proposed buyout of Sirius XM (SIRI) is far too cheap. For all of it’s flaws, Sirius is still a growing company, and does have significant potential. As growth stocks go, it is actually fairly cheap with a 1.85 PEG ratio and a market cap below the enterprise value. On top of that, Sirius is profitable, and generating free cash flow.

I added a half position to my IRA of SIRI at $3.73 this morning. I may add more later.


Posted January 13, 2014 by edmcgon in Portfolio Moves

6 responses to “Buy Sirius XM (SIRI)

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  1. This is one of those picks that just doesn’t feel good to me because I don’t believe in the product. I can’t evaluate the financials, so I’m entirely confident that the financials could make this a good buy. It just seems to me that satellite radio is a has been technology.

    • John,
      Last quarter, Sirius grew revenue 12% yoy. It’s hard to call that “has been”.

      That said, I don’t see Sirius as the future either. But looking at the present, they have a moated technology which adds a bit more value to anyone trying to take it over.

  2. What do you guys think should Liberty Media’s offer be?? I would like to know what you target sell price would be.

    • Ted – I think the bid needs to approach the 52 week high of $4.18.

    • Ted,
      I’d give it a rough value between $4.16-4.20, so Marshall’s number is certainly in my ballpark. I’m mainly looking at the difference between market cap and enterprise value. Even then, I’d say it could be cheap at that price, because it neglects growth potential.

  3. Sirius has a big relationship with some of the car makers. They already have a dedicated button on my 2010 Honda Pilot. The new ones have a dedicated button also. If there is a future in internet integrated apps in cars, Sirius has a start. It also works wherever your car is (except long tunnels.)

    The stock price has declined in the past year from over $5.00 after the reverse split. Liberty has been trying to “pick off” Sirius for over two years with cheap offers. Watch out for an offer from a car company.

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