XM Satellite Radio (NASDAQ: XMSR) - The FCC Chairman Kevin Martin recommended approval of the Sirius Satellite (NASDAQ: SIRI)-XMSR merger. The FCC Commissioners could rule on the proposed merger soon.
XMSR and SIRI announced a merger of equals in February of 2007. XMSR shareholders will receive 4.6 SIRI shares for each XMSR share.
XMSR July option implied volatility of 76 is near its 26-week average according to Track Data, suggesting non-directional price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
The Wall Street Journal reported that after years of rapid grows, many hedge funds are shutting their doors or merging with others, as expansion has dramatically slowed. As a result, the industry is being dominated mostly by big firms, such as Och-Ziff Capital Management Group LLC (NYSE: OZM), D.E. Shaw & Co., and Paulson and Co.
Shares of Ctrip.com International Ltd (NASDAQ: CTRP), China's major Internet travel booker with about 58% of the country's online travel business, have dropped about 30% in the last six weeks alone creating a possible buying opportunity, according to the Wall Street Journal's "Heard in Asia". Travel in China is expected to grow solidly in the long-term and Ctrip.com said it expects revenue to grow 30% for the three months ending June 30 from a year earlier.
In a move that could potentially usher in a new phase in the credit crunch, the Financial Times reported that The Goldman Sachs Group Inc (NYSE: GS) is said to be close to finalizing a plan to restructure a $7B investment vehicle formerly run by Cheyne Capital, a London-based hedge fund.
Short sellers are guessing that the merger between Sirius (NASDAQ: SIRI) and XM Satellite (NASDAQ: XMSR) will be approved in the fairly near future. Short interest in Sirius fell 29.1 million shares between May 15 and May 30 to 141.3 million.
There are several reasons for the change in sentiment. One is simply the passage of time. The FCC has had the matter for over a year-and-a-half and FCC chairman Kevin Martin recently said a decision would come soon.
Another reason the merger may get green-lighted is that Sirius is probably willing to give up some of the merged company's spectrum for the government to auction off in the hope of creating yet another satellite radio company.
The final and best reason that the FCC may decide to let the marriage move through is that satellite radio is not the big consumer electronics boom that it was a few years ago. There are too many programming competitors in the market. Sirius and XM cannot even make money. There is, in fact, the issue of whether they can survive at all.
Some investors shy away from low priced stocks., but Rick Aristotle Munarriz thinks some stocks under $10 have nice growth potential. Here's his list of five such stocks to consider.
Alvarion Ltd. (NASDAQ: ALVR) is currently at $8.98; its development trajectory looks impressive if we take into account the fact that it has gained 53% over the past two months. In addition, its quarterly earnings results and its cash-rich balance sheet point to further growth.
Sirius Satellite Radio Inc. (NASDAQ: SIRI), currently at $2.72, is showing a lot of potential as its subscriber base continues to increase, while reducing its quarterly losses. Munarriz also cites the company's advantages tied to its pending merger with competitor XM Satellite Radio (NASDAQ: XMSR).
Builders FirstSource Inc. (NASDAQ: BLDR) is currently at $7.48, down from $23 two years ago. Despite the fact that the company's quarterly earnings numbers weren't so good, BLRD was able to gain market share and is nicely positioned for a recovery in the next couple of years.
Internet Brands Inc. (NASDAQ: INET), currently at $6.48, is seen as a good investment in the current dot-com world. Last week's $1.8 billion decision by CBS Corp. (NYSE: CBS) to acquire CNET Networks (NASDAQ: CNET) could be a sign that we should consider Internet Brands and its high traffic volume. Internet Brands has several pages that have high advertising potential, and should see this pay off in the future, or lead to a possible buyout by one of the major players.
Natuzzi (NYSE: NTZ) is currently trading at $3.77. The company is facing some trouble related to its declining revenue and profit, but it is has the advantage of a lot of cash on its balance sheet.
XM Satellite Radio (NASDAQ: XMSR) shares are up after the company reported that its subscriber base grew 9.33 million subscribers in March, up from 7.9 million a year earlier. This comes despite the company reporting a first-quarter loss of $129.3 million, or 42 cents per share, this morning, worse than analysts' predictions of a 39 cents per-share loss. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on XMSR.
After hitting a one-year high of $16.44 in December, the stock hit a one-year low of $9.62 in January. XMSR opened this morning at $11.90. So far today the stock has hit a low of $11.70 and a high of $12.41. As of 12:30, XMSR is trading at $12.40, up $0.60 (5.1%). The chart for XMSR looks bearish and improving slightly, while S&P gives the stock a bearish 2 Stars (out of 5) Sell rating.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $10 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in just ten weeks as long as XMSR is above $10 at July expiration. XM would have to fall by more than 18% before we would start to lose money.
XMSR hasn't been below $10 by more than a few cents in the past year and has shown support around $11.60 recently. This trade could be risky if something about the XM-Sirius (NASDAQ: SIRI) deal goes wrong, but even if that happens, that position could be protected by support the stock might find just above $10, where it has bounced quite a few times over the past year.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in XMSR or SIRI.
XM Satellite Radio Holdings Inc. (NASDAQ: XMSR) shares are rising today as analysts again talk up the supposed completion of the US DOJ investigation into the XM-Sirius (NASDAQ: SIRI) merger. We have heard this kind of talk regarding this deal before, so not many are getting overly excited. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on XMSR.
After hitting a one-year high of $16.44 in December, the stock hit a one-year low of $9.62 in January. XMSR opened this morning at $11.57. So far today the stock has hit a low of $11.40 and a high of $12.07. As of 11:55, XMSR is trading at $11.83, up 61 cents (5.4%). The chart for XMSR looks neutral but improving slightly, while S&P gives the stock a very negative 1 STARs (out of 5) strong sell rating.
For a bullish hedged play on this stock, I would consider an April bull-put credit spread below the $9 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 25.0% return in just one month as long as XMSR is above $9 at April expiration. XM would have to fall by more than 24% before we would start to lose money.
XMSR hasn't been below $9.50 at all in the past year and has shown support around $11 recently. This trade could be risky if the stock breaks below its year lows, but for now the uncertainty of the company's situation could keep the stock in its recent trading range between $9.50 and $15.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in XMSR or SIRI.
Sirius Satellite Radio (NASDAQ: SIRI) reported Q4 and full-year earnings this morning, and I have to say that the company, led by the famous and highly-respected CEO Mel Karmazin, tuned into some good numbers. Revenues for the fourth quarter increased 29%; for the full fiscal year, revenues jumped 45%. The net diluted loss narrowed during the quarter to $0.11 per share versus $0.17 per share in the year-ago period, and for the year, it improved to $0.39 versus $0.79.
Perhaps the best news in the earnings release is the cash-flow situation. The company's free cash flow more than doubled for Q4, coming in at $75.9 million. And, hey, it was positive, which is important to note, since this company has sacrificed free cash over the years to invest in its platform. In fact, management noted that, for the first time, the second half of the year saw positive free cash flow (equal to $8.1 million for the period). And subscriber growth was impressive -- the company gained almost 2.3 million listeners, and it ended the year with 8.3 million subscribers. People gravitate toward the various popular brands featured on the platform, which includes shows by Playboy (NYSE: PLA), Jamie Foxx, and, of course, the king of all media past, present, and future, Howard Stern. There's also a lot of sports programming to add value for subscribers, as well as an upcoming slate of health programming called "Doctor Radio."
So, why does the stock trade in the low single digits? Why is it priced so speculatively? For one thing, there is the merger issue with XM Satellite Radio (NASDAQ: XMSR). Until that goes through, investors will have to wait for further guidance on the combination of the two platforms. Also, the market is going to want to see some consistent reports of positive net income on a GAAP basis to become really excited. I like the numbers currently associated with Sirius, and I think it may offer some upside potential for risk capital. As for myself? I'm not inclined to play it just yet. I'd rather see some technical strength assert itself before jumping in.
XMSR and SIRI announced on 2/20/07 a merger of equals. XMSR shareholders will receive 4.6 SIRI shares for each XMSR share. The FCC is expected to decide on the merger before the year's end. XMSR December 12.5 straddle is priced at $2.35. XMSR January option implied volatility of 143 is above its 26-week average of 66 according to Track Data, suggesting larger price risks.
SIRI December 3 straddle is priced at 50 cents. SIRI January option implied volatility of 97 is above its 26-week average of 63 according to Track Data, suggesting larger price risks.
Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
XMSR and SIRI announced on 2/20/07 a merger of equals. XMSR shareholders will receive 4.6 SIRI shares for each XMSR share. The Federal Communication Commission (FCC) is expected to decide on the merger before year end. XMSR December option implied volatility of 122 is above its 26-week average of 61 according to Track Data, suggesting larger price risks.
Bob Dylan's fascination with Cadillac (NYSE: GM) can be traced back to his first album, Freewheelin' Bob Dylan. In "Talkin' World War III Blues," Dylan imagines driving a Cadillac through Manhattan, declaring it's a "good car to drive, after a war."
By now, the irony of '60s musicians cashing in on their anti-establishment image by shilling for The Man is old news. I do often wonder, though, why virtually every rock/pop song used for commercials seems to come from the '60s and '70s. Just how effective are these ancient tunes in reaching potential customers, for whom these songs are as old hat as Rudy Vallee's were in my childhood? (Yeah, I'm old.)
While Dylan has shown the courage to evolve his music gracefully, producing some of his most appealing tunes in what would be the twilight of most careers, this won't do much to enhance his image. The incongruity of attempting to use his scruffy, roots image to rebrand Cadillac seems a bit clueless. I can't imagine playing "A Hard Rain's A-gonna Fall" or a similarly mournful tune about injustice, on the CD player of a Escalade.
PDUFA date for Sanofi-Aventis SA's (NYSE: SNY) Taxotere for induction therapy of locally advanced head and neck cancer prior to chemoradiotherapy and surgery
MOST NOTEWORTHY: The process control sector, R.H. Donnelley, Vonage, Coca-Cola Enterprises and Transocean were today's noteworthy downgrades:
Baird reduced estimates across the board in the process control sector due to lower expectations for North American industrial and residential construction. The firm downgraded Roper Industries (NYSE: ROP), Regal-Beloit Corp (NYSE: RBC) and Baldor Electric (NYSE: BEZ) to Neutral from Outperform and AO Smith Corporation (NYSE: AOS) to Underperform from Neutral.
Goldman downgraded shares of R.H. Donnelley Corporation (NYSE: RHD) to Neutral from Buy after the company updated its 2007 guidance to reflect deteriorating trends in local advertising.
Vonage Holdings Corp (NYSE: VG) was downgraded to Sell from Hold at Soleil due to liquidity concerns.
Coca-Cola Enterprises (NYSE: CCE) was downgraded to Hold from Buy at Deutsche Bank on valuation and mixed near-term trends.
Transocean Inc (NYSE: RIG) was downgraded to Hold from Buy at Gabelli. Even though the deepwater market continues to be strong, the firm is concerned regarding the continuing weakness in the jackup market as well as the limited upside potential due to the company's ships being in use through 2009.
SIRI is recently up $0.22 to $3.53, over 6%. SIRI and XMSR announced on 2/20/07 a merger of equals. XMSR shareholders will receive 4.6 SIRI shares for each XMSR share.
Cowen says: "We expect FCC approval before Dec. 4, the end of the FCC review period. We believe approval as early as Oct. is possible. Maintain Outperform on both XMSR & SIRI."
XMSR-SIRI arbitrage premium spread is at 12%. Mel Karmazin is CEO of SIRI.
XMSR December option implied volatility of 68 is above its 26-week average of 51 according to Track Data, suggesting larger price risks.
XM Satellite Radio (NASDAQ: XMSR) volatility up; Arbitrage spread tightens into FCC decision.
XMSR is recently up $1.07 to $14.69.
SIRI October option implied volatility of 71 is above its 26-week average of 53 according to Track Data, suggesting larger price risks.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
XM Satellite Radio Holdings Inc. (NASDAQ: XMSR) is higher this morning and has climbed recently as current investor buzz is that the merger with Sirius (NASDAQ: SIRI) looks more and more likely to succeed. Analysts have said the Department of Justice could make a ruling on the merger within the next month, and they believe there is a better than even money chance the merger will be approved. If you think the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on XMSR.
After hitting a one-year high of $17.70 in January, the stock has been shaky all year as investors await firm news on the status of the planned SIRI deal. XMSR opened this morning at $13.32. So far today the stock has hit a low of $13.26 and a high of $13.64. As of 10:50, XMSR is trading at $13.55, up $0.35 (2.7%). The chart for XMSR looks bullish and steady, but S&P gives the stock its lowest 1 STAR (out of 5) strong sell rating.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $10 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 16.3% return in just 5 months as long as XMSR is above $10 at January expiration. XM would have to fall by more than 26% before we would start to lose money.
XMSR hasn't been below $10 by more than a few cents since 2003 and has shown support around $11 recently. This trade could be risky if the merger is not allowed, but even if that happens, this position could be protected by the strong support the stock formed just above $10 over the last year.
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Some investors shy away from low priced stocks., but Rick Aristotle Munarriz thinks some stocks under $10 have nice growth potential. Here's his list of 
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