$SIRI It Seems The Buyback Has Started Quote:
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$SIRI It Seems The Buyback Has Started
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A bold prediction?
It's no secret that Sirius XM (SIRI) has authorized a $2 billion share repurchase program. It's no secret that share repurchases are expected to "start any day now." But the question of if and / or exactly when repurchases will, or have started, is left up in the air.
The company itself has not been particularly forthcoming about its share buyback plan other than the initial announcement. And why should it be? Beyond initial required disclosure, investors should not expect further details of the buyback program as it would disadvantage the company to release details. I expect investors will find out details which must be disclosed only upon completion of the plan, or within quarterly statements which disclose shares outstanding.
That being said, watching daily activity and understanding what may be majority holder Liberty Media's (LMCA) goals can point to certain activities which may tip off an observant investor that share repurchases have begun.
Understanding Liberty Media's goals is quite simple. It should be concerned about preservation of the value of its stake or preferably increasing the value of its stake. Liberty will also likely wish to sell back some of its high basis shares eventually in order to recoup the cash spent bringing it over 50% ownership of the satellite radio company.
Let's focus on preservation of value. Currently, Sirius XM has been in a rather predictable longer term trend shown by my graph from a recent article here:
That green trend line is slowly ascending at a rate of roughly half a cent per day. Follow the line to the end of the year, you will arrive at a point only a few pennies shy of my end of the year $4.25 target. That being said this trend line is fairly well known, and considerable volume may be found very close to this line as traders place their bets, long or short.
Where is Sirius XM's best choice to buy? Right on that line, and an algorithm could easily be put in place to do just that. By providing support for the share price Sirius XM can buy relatively low while simultaneously maintaining the trend. Given that this line just reached $3.08, and miraculously Sirius XM closed at $3.085, the trend thus stays intact.
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