Is the Liberty SiriusXM tracking stock a good investment?
- Investors can buy the Liberty SiriusXM tracking stock or sell Sirius XM short
- Sirius XM stock may be overvalued
- Spread between prices may not narrow due to borrowing difficulties and short interest
- Deal is projected to close in the third quarter of 2024
- Shareholder litigation and IRS scrutiny could delay the deal
- Once distributed, the float in Sirius XM may surge and depress the stock
- Hedge funds and Berkshire Hathaway hold stakes in Liberty SiriusXM
- Sirius XM is valued at 10 times projected 2023 EBITDA
- Comcast and Charter Communications are valued at seven times projected 2023 EBITDA
- Citi analyst has a Sell rating on Sirius XM with a price target of $3.60
John Malone’s Liberty Media has opened up a trading opportunity for investors with the merger of the Liberty SiriusXM tracking stock and Sirius XM. Investors can choose to buy the tracking stock or sell Sirius XM short. However, there are potential risks involved. The spread between the prices may not narrow due to borrowing difficulties and short interest. The deal is projected to close in the third quarter of 2024, but shareholder litigation and IRS scrutiny could cause delays. Once the stock is distributed, the float in Sirius XM may surge and depress the stock. Hedge funds and Berkshire Hathaway hold stakes in Liberty SiriusXM, but Sirius XM itself may be overvalued. It is valued at 10 times projected 2023 EBITDA, while Comcast and Charter Communications are valued at seven times. A Citi analyst has a Sell rating on Sirius XM with a price target of $3.60. Investors should consider these factors before investing in the Liberty SiriusXM tracking stock.
Public Companies: Sirius XM Holdings (SIRI), Liberty Media (LSXMA), Berkshire Hathaway (BRK.A), Comcast (CMCSA), Charter Communications (CHTR)
Private Companies:
Key People: John Malone (Media Mogul), Ted Weschler (Berkshire Investment Manager), Warren Buffett (CEO of Berkshire Hathaway), Jason Bazinet (Citi Analyst)
Factuality Level: 7
Justification: The article provides information about the merger between Liberty Media and Sirius XM, as well as the potential trading opportunities for investors. It includes estimates and projections, but also acknowledges the possibility of the Sirius XM stock being overvalued. The article presents different perspectives and factors that could affect the outcome of the merger. Overall, the information provided seems to be based on available data and analysis, but there is still some uncertainty and speculation involved.
Noise Level: 3
Justification: The article provides a detailed analysis of the merger between Liberty Media and Sirius XM, discussing the potential trading opportunities for investors. It also highlights the overvaluation of Sirius XM stock and the potential risks and challenges associated with the deal. The article supports its claims with examples and estimates from Barron’s and Citi analyst Jason Bazinet. Overall, the article stays on topic and provides actionable insights for investors.
Financial Relevance: Yes
Financial Markets Impacted: The article discusses the merger between Liberty Media and Sirius XM Holdings, which could impact the stock prices of both companies.
Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article focuses on the financial aspects of the merger between Liberty Media and Sirius XM Holdings, without mentioning any extreme events or their impact.
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