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Jim Cramer's Unnecessary Beating Over Sirius

by: Gino Lattarulo August 20, 2008 | about stocks: SIRI    

Gino Lattarulo

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I would like to address the criticism that Jim Cramer has received concerning Sirius Radio (SIRI). On the surface it might seem to the uneducated person that he retracted his "buy" opinion after the deal was done and was responsible for sending the price downward. For all of you who think this way, you should be ashamed. I would like to first point out that I own 15k shares of Sirius and have felt the pinch along with everyone else so I have no personal interest in defending Jim Cramer.

But let's clarify a few things here. In the 18 months leading up to the merger, I too listened almost daily to Cramer push, yell, scream, make political enemies, and name names in an effort to tell the world why the merger should happen. In doing so, many people jumped on the band wagon, bought a $3.00 lottery ticket, and envisioned themselves calling their bosses from their cell phone to tell him/her what to do with their jobs while boarding a plane to early retirement on a tropical beach. Admit it. You thought about it didn't you?

Then suddenly after all that time waiting we find out that the merger was going to happen. 3 to 2 vote in favor of it. The next morning the masses were glued to their stock tickers to watch the stock price sky rocket them into financial bliss. 7 am, 8 am, 9am . Where was the pre-market jump? 9:30. Nothing. It is flat. Then we see it slowly go south. More and more. "How can this be possible??" everyone screams. That very same day after the market closes everyone rushes to their TVs and Satellite Radios to listen to Cramer's take on the subject. He'll have the answer for sure. Jim will make everything all right. Then Jimmy boy does the unthinkable. We listen to him retract his opinion on Siri. What?? Not possible!!

What a day, right!? Big money losses and no moral support from daddy Cramer who at the very least was supposed to make us feel better and give us the Rah Rah routine. He was supposed to tell us not to worry about junior's college money and that the stock will go up very soon. But that didn't happen, did it? "So who do we blame now?" Everyone asks. I know , let's blame Jim Cramer for turning on us! It is his fault! How could he do this to us! Let's threaten to kill him. Witch Hunt! Witch Hunt! Witch Hunt! Get the torches!!

Everyone who actually believes that garbage needs a deep, deep reality check. Here is the reality. The refinancing caused this. No one, not even the mighty Jim Cramer, knew about the bond financing until it was released to the press. It was because of this that the stock went south. If you wish to place blame for the condition of the stock, direct it toward the real culprits - the FCC. They are the ones guilty of delaying this merger to the point where the companies were hemorrhaging too much money and made it necessary for Mel Karmazin to make that kind of a loan shark deal. It was a no-win situation for Mel. Was it the right decision? Only time will tell.

All Jim Cramer did was give the world the truth. No sugar coating, no rubbing on the tummy saying "it's going to be all righ,t honey". Just the hard truth  the moment he heard it from the press. His opinion was not a catalyst for the stock going south, it was a reaction to the direction of the stock after it was already going south. The FCC was the the cause. The bond deal was the reaction. Period.

And let me say one final thing. If a person has so much money tied up in one stock that it would cause him or her to lose sleep or make death threats, then this person has no business investing without an advisor. Get smart, get educated. Then come back to the table. This is not your parent's game room. It is real life. Act like an adult and deal with it.

Disclosure: Long SIRI.

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This article has 80 comments:

  •  
    Aug 20 08:55 AM
    Amen Gino! I am sticking with my premerger plan anyway and going long on Sirius. We can't blame Cramer for beaurocratic footdragging!
    Reply
  •  
    Aug 20 09:04 AM
    I stopped reading after you got your facts wrong. Jim Cramer went on TV in a silent period before financing was to be done and called our stock a lottery ticket, running around like a baffoon. He caused the stock to drop quite a bit, which in turn caused a poor financing deal. Jim Cramer attacked the company and the stock. This was after months of pumping it. This guy will not appear on my TV ever again. He can rot in hell for all I care. Jim Cramer is the mouthpiece for Goldman Sachs.
    Reply
  •  
    Aug 20 09:06 AM
    Hey Gino, Cramer should have never touted the stock if there was any question about there financial standing. This led to people buying the stock and their loss. Cramer knew the companies were bleeding cash but not how much? Cramer should have never recommended it. For Gods sake this is his field of expertise. If he had any doubts whatsoever he should have never had been the poster child for the merger. He made a big mistake and is loosing creditability for SIRI and many other bad stock recommendations. I to am long SIRI and have been since 2002 at 230,400 shares.
    Reply
  •  
    Aug 20 09:08 AM
    Right on, I am long on SIRI as well. This stock will, in the long term produce the gains I expected in the beginning. Every one i know uses SIRI radio, I have it in my home and in my Avalanche, my Mercedes convert, and my wife's R350, and our motor home. I bought a three subscription, and intend to renew it.
    Reply
  •  
    Aug 20 09:14 AM
    You are right about the FCC Gino. But everyone knows the government these days. They are all corrupt, self serving pieces of dog crap. They would screw there Mom for a buck. Business as usual.
    Reply
  •  
    Aug 20 09:22 AM
    The real lesson here is that nobody is going to do research on a stock any better than you can do for yourself. Any blame game played by any investor is a futile attempt at denial. YOU bought it. Not Jim Cramer. Even if Jim Cramer went on his show and spent an hour shouting "YOU MUST BY THIS STOCK! IT IS GOING TO MAKE YOU FILTHY RICH!", it is YOUR fault when it doesn't come to fruition. Adult game. Adult decisions. Do you want your adult decision made by a guy on TV selling soap, throwing things, pushing sound effect buttons? The timing of his opinions against the timing of the financing and merger silliness is inconsequential. The point is, as the author explains, is that nobody saw what the company had to do with refinancing coming except Mel Karmazin, whom I hold culpable in the least for not warning shareholders of his "sudden" plan. Don't tell me he didn't have advance notice. Those plans don't just land in his lap in a few minutes. He held back so the stock price wouldn't take as big a nosedive. The FCC was the facilitator for the conditions, but it was Mel that executed the deal that dropped the stock price to 1.50. Not like it wasn't already struggling, but that was a big drop in a small amount of time, and I blame Mel Karmazin and his executive staff for engineering the post-merger dip. Bad form, in my opinion.
    Reply
  •  
    Aug 20 09:30 AM
    "Get smart, get educated. Then come back to the table. This is not your parent's game room. It is real life. Act like an adult and deal with it." - What a fantastic maxim to live (and invest) by! I tell many of my colleagues: "don't play this (investing) game unless you have balls of titanium!" Make your own decisions and maneuvers. It's our own fault for playing a risky game, no one forces us. Live with your failures and bask in your successes. Read, get educated, then try again.
    Reply
  •  
    Aug 20 09:33 AM
    Enough with the lectures already. god.... dam.
    Reply
  •  
    Aug 20 09:35 AM
    If Cramer had been as forthright about why he chose to reverse (or even admit that he did reverse) his opinion and provide a rationale, then people may have been willing to give him the benefit of the doubt. However, as others have already pointed out, Cramer pumped and pumped the stock like no other on his program only to reverse his decision once it appeared that the merger was a done deal -- a few weeks before confirmation from the FCC. Then he tried to spin it as this delay suddenly caused a billion dollar loss. Did he not realize as he was pumping that operating losses have always accumulated in the two companies? From what I have seen, Cramer is not a stand up guy who is willing to admit his mistakes -- if they are mistakes and not somthing more sinister!
    Reply
  •  
    Aug 20 09:40 AM
    Wow. Great writing. Well said. Puts things into proper perspective and should be required reading for all Sirius investors.
    Reply
  •  
    Aug 20 09:41 AM
    Wait a minute here! This isn't about being educated or is it? One should always do their own due dilegence but that isn't the point. Crammer does have people less fortunate on the investing education side who follow his advise religously! When you are in the public eye you have a responsibility to others on what you are saying and telling them they should do. So his antics have finally caught up with him and now he knows how it feels to be on the wrong side. I am not saying he should receive death threats but I am saying that he should calm down and start educating the not so savy investors that follow him. He has burned a lot of people with his so called "entertainment show" Call a spade a spade please! I think he is a very smart man but if he would stop with the antics and chair throwing and pushing buttons and what ever else nutty thing he seems to do on a tv show that people watch for insight! Personally I am sick of Crammer and I used to be a die hard fan. His yelling and screaming is useless crap and I stoped watching him a very.....long....time ago. Stop using siri for news driven articles. Leave them alone and let Mel do his magic. Oh wait it isn't magic he has proven himself over and over again in the business world. Signed, Sick of the SIRI controversy
    Reply
  •  
    Aug 20 09:44 AM
    You are wrong Gino. Cramer knew the possibility of financing. He still touted SIRI to the very end. He did not start bashing until his friend Weinke did his thing. His ties to GS run deep. Maybe Gino you are trying in your own mind to justify all of this.
    Reply
  •  
    Aug 20 09:48 AM
    Hey don't kill the Cramer-he's been a good barometer -he says sell I buy and he says Buy ,I sell -- everyone has a story on Cramer - mine- LVLT - yeah ceo on his show,, what a pump, a week after it went south-not just a little 30 % south and in a hurry, since then ,,I do my own DD - CPST, HYGS , QTWW , WFC , BAC , Yeap fell into those --he says don't buy Financials - ok BAC and WFC buy low in morning sell half hour later --ok jimmy --buy sell buy sell ---seems to work,,,but AUGUST has always been a bitch---all the buyers are out of town ,,, good month to average down the portfolio,,,,thanks JIM all the best advice is actuially Warren Buffet's ,,,,yeap
    Reply
  •  
    Aug 20 09:52 AM
    Gino i completely agree with you good article! egiscoder your a fing idiot
    Reply
  •  
    Aug 20 10:10 AM
    I consider myself fairly educated in stocks. I have owned SIRI for several years and followed the news daily. I focused heavily on what Cramer had to say and used to value his advise. I don't care how educated the lay person is, they will not know about this kind of financing typically. Cramer, in all his years of experience, had to know that this type of financing was a possibility. If Mel's boys knew it and made it happen, then with all Cramer's experience why wouldn't he been able to se it coming as well. If only he had said, folks after the merger and because it has taken this long to get approved and because they are losing money, here is one sceanrio that may play out and if it does the stock will go down and the bond holders will be in control. Why couldn't he have shared that scenario with us. I know he has to have run across this before in years of GS and hedge fund experience.
    Reply
  •  
    Aug 20 10:18 AM
    Cramer is no different than Brittany Spears, love me when I'm hot and please don't bother me when I hit a wall. The Fool site is also right up there with him if people really want to be misguided but for the average Joe investor, both of these newsertainment sites qualify as HEADLINES on finance.yahoo.com

    If someone shows me one analyst that actually knew how the CCU/FCC game would be played and what was needed in terms of financing to make this happen two years ago then maybe I'd consider them an "analyst". Let's face it, the FCC hates SIRI because it's content is not under their jurisdiction so that alone was reason for them to stall until the companies almost went under, then at the last minute, pull out of the mix by approving the deal so that no one could really take the blame. Any analyst with real knowledge of how the political process works should have predicted this from the get go.

    The experts are all JFO's and the deal makers will continue to keep it that way unless at a minimum the SEC does something to stop back room shorting in private and require public daily (ie. free, non-subscription based) disclosures of major investment bank / mutual fund activity. Why for example is a GS analyst allowed to trash a stock and at the same time have GS able to buy it? Because the entire trading system is rigged against individual investors, Cramer et. al are just clowns to amuse and scapegoats to keep the eyes off the real crooks, who by the way, mostly are not US citizens and have no names. If it weren't there would be complete and separate analyst coverage and an aggressive SEC oversight of all opinions to look for kickbacks to sponsors and interested parties.
    Reply
  •  
    Aug 20 10:37 AM
    Cramer is a joke and only pushes agendas. Anyone who invests based on what Cramer says is an idiot!
    Reply
  •  
    Aug 20 10:41 AM
    Cramer just flip flops.
    I remember him stating how great it was to get sports. Shortly after said way would he have to spend money for that when he could get it for free. He always seems to flip flop when the stock goes up. Correct me if I am wrong.
    Reply
  •  
    Aug 20 10:42 AM
    If anyone should grow up and be an adult and realize there are consequences to their actions, IT"S CRAMER. He make money being a theatrical clown on TV, dumping on companies and their executives and bragging about how he has Taken Them Down. He also is so proud of Pumping companies and simply saying he was wrong when the stock plummets. I know the financing took the price of the stock down. I don't blame Cramer for that, but Gino please don't lecture me about what Cramer the Clown does to these companies and investor enthusiasm. Stop being an Apologist for Cramer. Death threats are Never called for, but Cramer needs to realize what he's doing to the masses he preaches to.
    Reply
  •  
    Aug 20 10:51 AM
    The fact that Jim Cramer has become a one-man force in finance journalism is due in larger part to his hyper-inflated image as a straight-shooting pundit in a tricked-out TV game show format than by any convincing authority he has to know all things financial. He repeatedly does 180s on stocks (his flip-flops on Intel would make your head spin) and in spite of his attempts to shed his past, he retains a hedge fund day-trader's mentality that is often as behind the curve as it is ahead of it. His hucksterism may draw big audiences, but taking serious financial advice from a clown on TV should speak for itself. Why do you think they call it the "boob tube"?
    Reply
  •  
    Aug 20 10:58 AM
    Wow. You have no memory sir. Or you might have hit your head Gino. So basically what your saying is, the news to take the stock from 2.75 to 1.82 was based on one anaylists pre-knowledge of the merger conditions and refinancing. That was the drop that killed the stock, not the one from 2.35 to 1.29. Goldman was creditied for tanking the stock, ON ONE MANS opinion, and we all accepted that to be the case. Of course I know better. No one analyist can come and and make a stock lose over 40 % of its value. Not when it differs so greatly from all others. Your article is a joke to not address that issue, therefore you cant be trusted. You own 15K, but how many shares are you shorting, sir? Nice try. Big money moved this stock to drive the small holder out of it so shares could be purchased at a discount. If the stock had closed just prior premerger at 2.80, it could have been set at a convertible price of say....2.30ish, max. How could you justify a larger discount than that on the current price. Of course that would leave all margins intake, and thus no sell off. There you go, theres the real reason. No go get a bandaid for your head. I see the bump now.
    Reply
  •  
    Aug 20 11:06 AM
    I couldn't disagree with this article more. The following is taken straight from the article:
    "No one, not even the mighty Jim Cramer knew about the bond financing until it was released to the press."

    OK, now, the key concept here is if you DON'T KNOW about a pretty important variable then why in the world would you give it a rating either way.

    He should just have a show on theory and what to look for in a strong stock ready to explode upward....not give stock suggestions on his gut feeling or opinion. MAKE the watchers do their homework.

    Why in the world would you tout a penny stock with a horrible balance sheet???
    Reply
  •  
    Aug 20 11:10 AM
    Wow, great read.
    Reply
  •  
    Aug 20 11:21 AM
    Has anyone look at what going on with the car sells lately? Siri stock will cont' to fall as long as the cars are not be sold and we start using them in our cars. Want to make to stock go up, start by buying the systems and start using it. More units sold and services started, will build the company back up and there by causing the stock prices to go up. You must also think that sinurs radio is not the only system people are using today. Cramer is only as good as the stock market can make him to be. You on the other and made the buy without doing your homework like Cramer said. After all, it's not Cramer's money you are losing. Know when to Buy and when to Sell.
    Reply
  •  
    Aug 20 11:30 AM
    egiscoder,

    You in fact have your facts wrong.

    Pre-merger, Cramer said SIRI was speculation at best.
    Pre-merger, Cramer did call out the FCC for being bought and paid by the NAB.

    Post merger, AFTER the debt structure was announced, he called SIRI a lottery ticket.

    You should not be in the market if you think Cramer had any influence on the debt financing structure.

    The story Gino mentions is spot on ... I wondered what happened ... I was traveling .... once The Street found out about what even Mel K calls an ugly deal, it was over.

    Mel came on Cramer's show and admitted that he hated making the deal he made, but he HAD TO because he was worried the NAB was going straight to court to file against the FCC.
    Reply
  •  
    Aug 20 11:36 AM
    Its cramers fault, soon as he started talkin bad about the company and the lottery ticket BS, the stock went down 40 cents in after hours trading

    [ED: Comment edited to remove abuse.]
    Reply
  •  
    Aug 20 11:41 AM
    Anyone in stocks that doesn't realize the market is nothing more than a legal, worldwide casino should sew their money into their mattress. Have you all already forgot the bursting bubble of a few years ago when companies were lying about their earnings and so forth? I'm still collecting money from class-action lawsuits. Those of us that live in the rural and semi-rural areas of the country and subscribe to Sirius need it like a drug so we can hear real music. Someone who lives in a major city and never travels anywhere can probably do without the service, but don't say no one needs it. Sirius will rebound--it is not an Enron!
    Reply
  •  
    Aug 20 11:46 AM
    Cramer is just another Dan Dorfman. Cramer practices the fine art of manipulation. Nothing Cramer says has any real credibility. It doesn't matter what stock he touts or trashes.
    Reply
  •  
    Aug 20 11:52 AM
    Sometimes it can be difficult to put one over on "regular"
    people these days. These regular people are very smart
    and can figure out when someone or some entity is
    sticking it to them. These regular people also have some
    very effective ways to communicate to others. Cramer,
    the FCC, the NAB, some of the meddling politicians,
    the Fool, and GS hurt us for their own dark agendas
    and we know it.
    Reply
  •  
    Aug 20 12:07 PM
    He DID know about the debt restructure. That's my point. If someone with his knowledge and experience didn't know this was a possibility, then I know I don't stand a chance on having this knowledge for many more years to come. Correction: I now have this knowledge tatooed on my forehead. I no longer need Cramer to warn me of this kind of refinancing. However, leading up to my "learn by fire" experience, I was relying on Cramer's ability to smell this kind of refi coming and at least throw it out to us as a possibility. HE GOOFED. He didn't see it coming but clearly has lots of experience with it because he was able to dedicate the whole "Lottery" show on how it works and how we are all screwed.
    Reply
  •  
    Aug 20 12:09 PM
    Well Well Well. Crammer gets all the attention just like the little dweeb wants. Everyone has an an entitled opionion and if Crammer was so smart as he says he is he is lieing when he tells you he didn't know. I have seen him play out scenario's like this before on his show on his radio show etc etc. His motto was always I am here to help the little guys not the big wall street big wigs. What has he done you may ask? He is killing the little guy. Everyone at CNBC has hated siri for years it's ridiculous! The only reason you writers blog about it because then you get others to make hits on your website and personal adjenda's. I am telling you I wouldn't bet against Mel he is a very smart man. Maybe all the so called writers should talk about the big bad oil companies. Nope we are gonna bash this stock to .50 and then everyone will be happy. Enough with the hidden agenda's it is totally stupid
    Reply
  •  
    Aug 20 01:05 PM
    They need to put spell check on here, because the amount of grammatical errors I see in these blogs is replusive. Copy and paste your message from Microsoft Word or something. Everyone in here I hope has at least a diploma or G.E.D. equivalent so you should be able to spell at some degree.
    Reply
  •  
    Aug 20 01:18 PM
    The need to issue converts to refinance XM debt WAS known prior to the merger. The issue was how long Siri was going to take to do it to get the merger done. The Converts are non-dilutive because of how the deal was done. The stock price is way under valued and the market has over-reacted. It will shake out over time. Patience is what is needed. I see it as an opportunity and I have bought more stock at very low prices. Cramer seems to focus his advice on traders rather than long term investers. I now have 45,000 shares--15,000 of which I aquired at 3.00, 15,000 or so at around 2.50, and the remaining 15,000 at current prices. I am not really unhappy at the price action as a long term investor becuase I beleive in the product and companies future and see that as the company becomes profitable, the stock will go way up over the next several years. And, while Siri has become a larger percentage of my portfolio than I intended, I still have a large time horizon and I still have a very diverse portfolio.
    Reply
  •  
    Aug 20 01:45 PM
    Hey Tavares, You misspelled repulsive. And you typically would not use a comma here...."They need to put spell check on here, because the amount of grammatical errors I see in these blogs is replusive." Other than that it looks correct.
    Reply
  •  
    Aug 20 01:47 PM
    Tavares, your sentence reads:

    "Everyone in here I hope has at least a diploma or G.E.D. equivalent so you should be able to spell at some degree."

    Shouldn't that read:

    "I hope everyone in here has at least a diploma or G.E.D. equivalent so you should be able to spell at some degree."
    Reply
  •  
    Aug 20 01:49 PM
    I agree with Gino, I also respect the fact that cramer can move stocks some with his tv show, but, not this much. Anyone who pays attention to the show realizes "mad money" has a double meaning. The first one being ideas to do spend your "mad money" ie the money between the cushions on your couch, or your small sliver of speculation allotted in your portfolio if your young enough. O Duck has it right, his picks are for trades not investments, try reading his books his fundamentals are spot on because they have been borrowed from peter lynch.
    Reply
  •  
    Aug 20 01:51 PM
    or........

    "Everyone in here, I hope, has at least a diploma or G.E.D. equivalent so you should be able to spell at some degree."

    Reply
  •  
    Aug 20 02:17 PM
    I agree with OregonDuck exactly....

    "Everyone in here I hope has at least a diploma or G.E.D. equivalent so you should be able to spell at some degree."

    - Spelling: A+
    - Grammar: F
    Reply
  •  
    Aug 20 02:33 PM
    Maybe you guys need to check your facts. Mel himself said that Cramer interfered with the financing due to his comments in the silent period.

    Cramer is justly being attacked and discredited. And his comments were post-merger approval, but before the merger was consumated. Look it up.

    [ED: Comment edited to remove abuse.]
    Reply
  •  
    Aug 20 02:35 PM
    And Cedar,

    Perhaps you should go back on vacation, because you have no fiking clue what you are talking about. Mel said it himself, you loser.
    Reply