Wednesday, December 14, 2005

Part 2--Even Dylan doesn't move XM

So, to continue from the previous post, XM has a number of highly reputable lead steer institutional shareholders among its top ten, and S has one. And more facts: Debt to capital is about the same, at X .80 and at S .70; but price to sales is radically different, at X 14x and at S 50x; and short interest is also very different, at X 11% and at S 3%; and one more fact--S has as CEO the apparently highly regarded corporate pitchman, dealmaker, and self promoter Mel Karmazin, and X has somebody else.

---SIRI is currently in favor, with retail buying, a higher growth rate off a lower base, shorts at bay, Stern coming on, and a super salesman at the top.
---XMSR has far more top tier institutional holders, more subscribers, nominal subscriber growth projected well in excess of S, a lower market valuation than S, and Major League Baseball. Who knows how this small new growth industry will be treated as a whole by the market, BUT on a relative basis XMSR should outperform SIRI in 2006. If this shift comes in a stable market, the shorts will need to cover and the ramp could be dramatic. And who wants to bet against baseball and Bob Dylan.


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