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Which Banks Are Left to Help with Sirius's Financing Needs?

by: Brandon Matthews September 22, 2008 | about stocks: SIRI    

Brandon Matthews

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In a shocking surprise that could only be compared to the Miami Dolphins pummeling of the New England Patriots over the weekend, Goldman Sachs (GS) and Morgan Stanley (MS) are abandoning their investment banking models.

My initial reaction prior to having my first cup of coffee was indifference. The opposite of love by the way, is indifference, not hate. That’s how much I don’t like Goldman Sachs. The fact that I was formerly employed at Morgan Stanley made little difference to me.

Having enjoyed my first cup of coffee and wiped the sleep from my eyes, the wheels in my head are beginning to spin and the first question I pose to myself is whether this means Goldman will be forced to cover their short positions in Sirius XM (SIRI). Will Goldman,s hedge fund clients such as the now infamous “Jonesie” of SiriusBuzz radio fame now cover their short positions also as a result of being left out to dry?

Near as I can tell, the answer is going to be a resounding “yes!.” Details are sketchy as the announcement is only hours old, yet the visibility and transparency required on bank holding companies will give little wiggle room for any manipulative practices.

One benefit of an investment banking business is its research capabilities, which will be dramatically affected at GS and MS going forward. Clients could be leaving in droves which could affect Sirius XM shares.

As for the financing needs of Sirius XM, I would remind others that Sirius XM seemingly had no intention of ever using the services of Goldman Sachs. It is more likely that the company would turn to UBS (UBS), Bank of America (BAC), or Merrill Lynch (MER), all of which have been extremely bullish on SIRI. Even Barclays (BCS) is about to own the investment banking division of Lehman (LEH).

The net effect is that while Goldman henchmen Mark Wienkes and Jim Cramer were busy trying to bash Sirius into non-existence, Goldman instead fell victim to its own practices. Imagine that! Mark Wienkes a bank teller! I can’t wait to see that!

Today is a good day to be a Sirius fan, and a Dolphin fan for that matter!

Disclosure: Long Sirius. No positions in any of the banks mentioned.

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This article has 157 comments:

  •  
    Sep 22 09:08 AM
    AHHH-HA-HA-HA!!! Goldman getting taken down by its own games... the irony is oh so sweet. So what does this mean? As a bank holding company, does this affect their trading ability? Is it just a way to improve liquidity by accepting deposits?
    Reply
  •  
    Sep 22 09:19 AM
    I would like to know why isnt there any siri banners in any of the NFL games being seen on tv, whats going on with that, can anyone tell me?
    Reply
  •  
    Sep 22 09:27 AM
    Being an investment bank was a "trick" to remain relatively discrete about "how" they made money. Now, as directly under the FED banking system, they will have to have complete transparency, and their margin ability is extremely hampered. They are now "safer", as they can directly access funds indefinately(as per law) and are considered more of a money distributor now, than a place to rake in hhhhuuuggge profits of other peoples miseries. I would think It would be good news for Sirius, in my opinion as well. The illegal activity that might go on there could be staggering, and now the SEC will have access to their books, up close and personal. Use those 5 days until its official to get that shredder working overtime baby!!!
    Reply
  •  
    Sep 22 09:29 AM
    For instance, in their "commodities"... trading books, they dont have to tell you what specificially they made money on or how. Now, I think that would have to be relatively more open , but someone who knows more on this topic, please help us clarify this better.
    Reply
  •  
    Sep 22 09:30 AM
    No bank!
    Reply
  •  
    Sep 22 09:50 AM
    Why are we down 5%????????????????????...
    Reply
  •  
    Sep 22 10:02 AM
    On NFL.COM there is a radio button that allows the user to hear Red Zone coverage of their team... That has SIRIUS radio and the dog on it... But thats about it...
    Reply
  •  
    Sep 22 10:33 AM
    Im not sure why the NFL is not advertised more, but as Ive said before they advertise in ESPN the magazine, and there was a story abuot the merger(a small one). Baseball was advertised a lot by XM this past summer. Hopefully we will see the same, maybe keeping costs low for now, trying to save money before their worst quarter they will have in a long time. Q3...08(This is the only quarter this stock might take a hit on).
    Reply
  •  
    Sep 22 10:49 AM
    I believe that some sort of rights offerng to shareholders and or subscribers would allow SIRI to solve its present financing needs and bypass the current credit market turmoil. Why isn't there more discussion of this as a possible solution?
    Reply
  •  
    Sep 22 11:58 AM
    If the shorts have 5 days to cover... look for a nice run this week. That is unless Big Brother shuts us down at .999999999999 again!
    Reply
  •  
    Sep 22 12:00 PM
    Its still early in the trading day... and at least so far the volume has been reasonable so i wouldnt worry about whats happening right now... so far on all of the up days the stock started dow by at least .05...
    Reply
  •  
    Sep 22 04:13 PM
    THERE. Did you see that!!! 9 million shares, covering short by selling to the long. There. I call bottom. Right there. .89 cents. Or its a trick, lol lol . Thats very telling. ONe bank just sold to another. Short covered to a long position(naked) im sure. GS is cleaning up their books today.
    Reply
  •  
    Sep 22 04:19 PM
    So thats the bottom?
    Reply
  •  
    Sep 22 04:22 PM
    Why isn't anyone talking about Mel's riduculously low projections for '09. 2M net new subscriptions with a 50% penetration in the new car market? That means a 4M US car market in '09? Try 14M at an absolute minimum. They are also adding ESPN and CNN to their TV lineup in '09 cars......buy deep, it's ready to run!!!!
    Reply
  •  
    Sep 22 04:24 PM
    Possible Freer(financial officer) got the money from Germany, and is announcing a huge agreement.
    Reply
  •  
    Sep 22 04:25 PM
    Either its the bottom, or they want you to think it is. Did you see the timing on the press release? exactly as the trade went down. To the second almost.
    Reply
  •  
    Sep 22 07:00 PM
    Well, well, well, looks like the tide had finally turned for SIRI. Ever-stringent and long-time detractor, The Fool, now on board...

    www.fool.com/investing...

    As I said a few days ago, the official bottom for this stock happend last week (Monday)--the lowest price for many years to come @ .68. No way it goes any lower. I would tell anyone considering trying to day trade this stock right now to not do it. The refi is at hand and you will never know what premarket or afterhours this stock will take off in. As we saw last week, when it hit 1.08/1.09 bid/ask premarket, that is when it will run like the devil amidst panic covering, euphoria and greed. Don't make the mistake of not being in EVERY NIGHT--or you will be locked out. The financing is the only thing holding this stock back from the first big run back towards normal levels. If they have the deal close at hand, they might be waiting to time in with the official RTC deal announcement this week. Congress leaves in Oct. so the RTC deal will be signed and sealed by end of week. Don't be shut out!!
    Reply
  •  
    Sep 22 07:12 PM
    hairpie, just read your inquiry into a bottom being set at .89. No one can say with the volatility lately and a very bad quarter still to be reported. News of refinancing along with the reporting of merger expenses and continued pressure on "Churn" through 3rd quarter might hold the stock price up but I doubt it. There will be another test of the lows of last week, so be patient and take advantage if your looking to dollar cost in. If not, just be patient until the 3 rd quarter is behind us, the new products hit the street and a continued steady stream of positive news starts to take hold.
    Reply
  •  
    Sep 22 10:54 PM
    Well..................... after reflecting on all comments............ decided to put a buy in at .68, ............. probably too low. It's only 7 thou. but will have at least another 3 in hree days. Sure would like to add that........ to dollar cost down on my average before the Big Blue Dog starts runnin again. Just watch him, he's been pacing and stretching for days now. You just know he wants to run. He's rested and ready. I definately want to be "all in", by the weeks end. Sure feels like things could bust wide open at a moment's notice! Guys............ again thanks for your insight. Gonna owe you some drinks in Vegas! Long Siri. Run Blue Dog Runnnnnnnnnnnnnnnnnnnn... killer.
    Reply
  •  
    Sep 23 12:01 AM
    Ok, but why does .68 HAVE to be the bottom? If the market is down another 300 pints tomorrow couldn't sirius be down another 10 or so? Point being that we're through the looking glass here. Nobody knows what tomorrow will look like.

    When the bailout came out several days ago, somebody (was it you relmor or sl62?) said the government would MAKE money because they would hold and then sell in a better market. At the time, I said that no way would the government have the freedom to turn out those who default on their mortgages, unlike private business, so it would be a money losing enterprise. From today's AP wire:

    "Frank said he and Paulson had agreed to create a congressional oversight board as part of the bailout and to mandate that the government come up with a plan to avoid foreclosures on any mortgages it acquires in the rescue. A government official with knowledge of the talks confirmed the administration backs those provisions."

    That's why it's foolish to think that we can call a bottom. Today's bailout could be totally ineffective, or exacerbate the problem by causing hyper inflation.

    Reply
  •  
    Sep 23 12:33 AM
    Further info why the bailout could actually damage either the lending that sirius needs, or cause runaway inflation. Either way, Mel may have been right on his low ball car subscription numbers.

    From the Washington Post:

    "The higher the prices the government pays for troubled mortgage securities held by banks, the more the rescue will bolster those banks and sustain the lending that is vital to the broader economy. But higher prices would also mean a worse deal for taxpayers.

    In other words, the more effective the plan, the more expensive it will ultimately be. "

    Reply
  •  
    Sep 23 02:04 AM
    I didnt say anything about the government making money on this. No way in hell the government is going to make money on this. Instead of guaranteeing the deposits of the banks only, as the government should do, they are guaranteeing the debt backed up by the deposits too(banks win on that only). If you dont get the money for your loan, too bad. Looks like you messed up.
    Why does .68cents have to be the bottom? It doesnt have to be, I suppose. Its just a call. It looks like the bottom. Thats all. Action would indicate it would be. 9 million share action at the end might signify that. Plus its retrace hit a nice resistance at .90 cents today. If market stays relatively neutral of slightly bearish, Sirius should retrace to 1.00 now. If not, might bottom around .80 cents and then go up. But the new test down wont come close to .68cents. I do predict further down, I sold some shares today to rebuy lower. Lets see if im right.
    Reply
  •  
    Sep 23 01:53 PM
    im not jim...

    I did say that at one point there was a projection of a potential 30B upside when/as the market recovered and things were getting for the most part addressed (years from now)--which would essentially work out as a taxpayer savings, not a pure profit for the gov proper--and which was reported rather than my opinion. I, along with everyone, Paulson, et al, has no idea what is there or not. Also, that report (as reported on CNBC) was when the request/estimate was for 500B. Now it's 700B so probably a moot point, if it was even valid at all. As said, no one really knows what's going on (other than the individual institutions who know their books). That will be the discovery.

    Personally, I'm ready to rant. Watching this testimony today, it's maddening. First, one senator brought up, why not just do this in pieces. I agree. Paulson doesn't need 700B tomorrow. Legislate an agreement to allow gov action now and create broad strokes or stages, all contingent upon review to move up into a next stage. Start out with authority to 100-200B now to steady the markets and let Paulson get started and work through October. When Congress gets back in Nov, Paulson gives a report and assesment of what he's starting to find--pure transparency with no tricks. All of this dicking around when NOTHING is exactly knowable yet is a waste--of my time, yours and theirs--everyones. You don't have to be hit in the head with a brick to understand something needs to start along the Paulson plan, and it needs to start NOW. Waiting even another day is stupid and a waste of time. What needs to happen immediately is to start the investigation and just get going. This whole process is/will be totally mutable so don't be so hung up on a random number right now.

    Second. I'm sick of hearing from every senator that it's only about evil Wall Street. If anyone can be honest, the taxpayer is just as responsible for this mess as the institutions. They signed on the dotted line in euphoria, taking on too much house, participating in a loan without any down payment, no docs or proof of income knowing full well they would not be able to afford the payments long-term (unless their property values kept going up), doing one refi after another and taking cash out (funny money). I mean if someone advertised to you a way for you to jump off a cliff and kill yourself, isn't it up to you to decide if that would be good for you? Isn't your participation your call? I don't recall these institutions walking around with AK's forcng people into these deals. Or are people so hypnotized in this country that they'll just do anything that someone advertises--and probably because their buddy or neighbor just did it? Don't answer that question because the answer is sadly yes. Yep, both sdes of this equation are at fault and if it now costs the taxpayer some cash to dig out of it, so be it--they're at fault too. Where is their responsibility? So far all I hear is they are victims. I don't agree. Congress is today showing what makes them such ineffectual leaders. Fillibuster for the sake of stroking their power egos, waste time, get nothing done, waste taxpayer money with stupid, unnecessary programs for their own states, then go on vacation for a month. Pathetic. If nothing else, Congress should recognize their own failures by not ensuring the proper oversight of Fannie, Freddie et al, and just get Paulson on the case asap. Had they done their job in the first place, we wouldn't be in this mess.
    Reply
  •  
    Sep 23 02:02 PM
    Theres the problem sl62, the government did its job. It created the perfect environment for all this to take place.
    1.1999 Clinton repealed the act that capped investment bank margin abilities.
    2. Greenspan kept the interest rates too long, for too long.
    3. Mortgage oversight went out the window, and brokers got paid MORE MONEY to write BAD loans. Subprime mortgages got the broker more money. There you go, see , it is the industries fault, and who cares what the people signed, they were hosed, had, and screwed over. As a lender, if you write a loan you know probably wont get paid back, then you sell it, thats fraud. And then you take this fraud and you borrow money against the fraud. 100 percent the governments fault and the mortgage and banking industries fault
    0 percent taxpayer(unless you just assume voting democrat or republican(no difference) is their fault, then I will agree. Anyoen who votes democrat or republican in this election is a fool, and doesnt deserve the right to vote. You will get more of the same. They screw up, we pay for it. Period. Governement wanted to consolidate banking, gain more power to the FED and tank the dollar.

    Mission accomplished. Good job Bush, your agenda was perfectly executed. You will go down as the most efficient productive president in history. Look at all you have accomplished for the one world government.
    Reply
  •  
    Sep 23 02:49 PM
    relmor...

    I'm all over that. What a disaster the GWB Admin has created in 8 short years. He will be leaving office with us "at war" which I say loosely because it's more like a huge street fight (not to disparage those boys/women fighting and dying in it--props to them for sure), our entire financial system in a freefall and near a complete meltdown, high unemployment and a completely stalled economy, still reeling from failed FEMA mgmt and N.O. still a war zone, and the list goes on. Great cred! Even he's got to know he's turning over the keys of a beater...nice job G! All in the name of the nwo apparently....

    I agree with your layout on the institutional side but I don't see how you exonerate joe blow. Yes, it was fraud what was done on the other side and proper investigation can expose it and who, but c'mon, how is the person who signed the paper for the obligation not at any fault whatsoever? It's like letting an investor in the market of the hook for buying stock when they probably don't even know what their risks were. There has to be some responsibility there I say. I'm not letting the perps on the other side off the hook..let's get some jail time going..all for it. but the guy who signed on the line is not scott free either.

    And it was Chuck Shumer who said do the plan in stages. In an interview on CNBC a little bit ago, Shumer said Paulson is estimating needing 30B a month to attack this. Well there it is, give him 90B now and let him get started, He's out of here in Jan '09 anyway. Let the one taking over for him keep the train moving and request more money as needed. There, problem solved and this sharade can move forward. What these dudes don't seem to get is the money helps open liquidity and lending asap--which is desperately needed. The paper's already bad--it's a foregone conclusion.
    Reply
  •  
    Sep 23 03:10 PM
    Come on guys, we should be discussing SIRI and its downfall again. Not why George Bush has become one of the best Presidents by avoiding another catastrophy on American soil, keeping our country and citizens safe since 9/11, and keeping the terrorists on the defensive and on the run. I go into airports, stadiums and malls and feel safe to do it, thanks GWB! Hey what about the democratic congress you ask, they had us protected well! NOT!! While the warning signs may have been there for oil and the housing bust, the congress was busy doing more important work, tackling Major League Baseball and Roger Clemens! LOL
    Now whats up with SIRI, or should I ask whats down with it?
    Reply
  •  
    Sep 23 03:39 PM
    Rreagan, couldn't have said it better myself. Go Dubbya
    Reply
  •  
    Sep 23 03:43 PM
    Now you want to know who you can blame for this mess Chris Dodd and Barny Frank both demoreats that forced lower standards for dumb people to barrow money so as they said it is every americans right to own a home. Dont blame Bush and his people they also tried to start harder regulation on Fanny and Fready back in 2003 when they were first found to have misrepresented thier finances. Guess which 2 democrats fought that, thats right Barny and Chris. Almost all the democrats and a few republicans should be included in that. The fact that remains is that it is the democrat ideology that is to blame for this mess. I can tell you this much if it were up to rebuplicans alone we would not be in this mess, because part of their ideology is if you dont have it or you cant pat for it, tuff you dont get it.
    Reply
  •  
    Sep 23 03:53 PM
    P.S. That comment above is exactly why the liberials are wrong and why if Obama (the most liberial in the senate) becomes President we are in for a world of hurt.
    Reply
  •  
    Sep 23 04:17 PM
    I felt safe prior to 9/11 and I felt safe the day after. You sell this crap as if we were constantly under threat, when in reality there have been 2 major terroist attacks (excluding Pearl Harbor as that was a military attack) in the past century, and 1 was by an American.

    If you believe W did anything to make you safer, you are blind. If any thing, the actions of this administration has created more enemies. And as far as adverting the financial crisis, that ship sailed months ago. This was so easy to see it was sickening. I watched as all this construction boomed and wondered who was buying all this stuff. I agree the person who signed the paper is equally responsible and should be held accountible.

    If we arent in a world of hurt now, then what are we in? Turned a surplus into a trillion dollar deficit, 4000 dead Americans, corporate fraud, economy is in ruins, unemployment at stagering numbers. Yeah, W is a god.
    Reply
  •  
    Sep 23 04:31 PM
    There hasn't been one post about SIRI today... Pisses me off
    Reply
  •  
    Sep 23 05:07 PM
    Not really much to talk about....
    Reply
  •  
    Sep 23 05:38 PM
    I gotta wade in on this............. or I'm not a fair and impartial Regan Conservative. I'm still a GWB fan even though he's let us down on an awful lot of fronts. You want to talk homeland security and lack of an attack on this country since 911...................... for the total lack of securing our borders I give him as well as the entire congress an F.......... yes an F, because ther's nothing lower. We are safe only because of dumb luck! A kindergartner could sneak accross our borders. Pres.Bush and the Congress should feel deep shame every single time they remember all of the men and women throwing themselves off of those very very very, did I say VERY tall towers, rather than face the smoke and flames! SHAME on you all......................
    Reply
  •  
    Sep 23 06:43 PM
    I'm sorry, but if you think it matters if you vote republican or democrat you are sadly mistaken.The federal reserve (Rothschilds) own this country.The national debt is money the government owes the federal reserve(and if you think it's a federal institution you better do some research,it's a private bank), and if I owe you money you own me until the money gets repaid.If you don't know about fractional reserve lending, it's when a bank can lend out 10 times the amount it has liquid. So it is lending out money that doesn't even exist and charging you interest.When you can't pay back that electronic invisible money, they take your real property.Do you think these guys are so stupid that they had no idea that loaning out money that won't get paid back would put them in bankruptcy,or just send the stock way down to penny stock value?Or do you think they were just blinded by greed, a bunch of ebeneezer scrooges?lol.These guys are not stupid and they"re not flying a giant rocketship that"s out of control,they are doing everything they have done before.They will create problems and ever so conveniently have a nice little solution for them every single time.And every time your way of life will get a little worse and a little worse until they get what they want.Control of money,control of food supplies,then control of you.Which brainwashing program would you like sir, democrat or republican???
    Reply
  •  
    Sep 23 07:18 PM
    Learn to think,
    Sounds like you read, and understand "The Unseen Hand".

    cuddos!!
    Reply
  •  
    Sep 23 07:27 PM
    NOTHING TO TALK ABOUT????? Two articles came out today and both had GOOD NEWS IN THEM about SIRIUS/XM for a change!!!!!!!! Talk about that. F*^%# homeland security, there is nothing you guy can do about it. Now i'm not saying don't vote, but no matter who you vote for things aren't going to change any time soon!!!
    Reply
  •  
    Sep 23 07:50 PM
    GotSIRI, You are exactly the reason people vote for a incompetent person like Obama. It is like you ether have no memory or you just block things out on purpose. Did you forget about the first World Trade Center bombing, The USS. Cole, The 2 US. Embassy buldings. Oh lets not forget the buldings Obama's friend Aries set bombs in. There is noone that can say with a straight face that they did not expect to be hit again in the next few years much less the next 7. The FBI has said several times that there are few attempts that have been reported on that were stoped. It has not been for the lack of the terrorist trying it is because of the tools that were given to the FBI and others by the Bush administration that is responsible for all the success they have had in stopping the terrorist.
    Reply
  •  
    Sep 23 07:56 PM
    Mr. Booie, thanks for the compliment.And say hello to Howard for me.
    Reply
  •  
    Sep 23 08:05 PM
    Buffet shocks the world and buys into GS...

    SIRI up in AA .88/.89-- last trade .89

    SIRI's stellar bottoming performance last week really impressed a lot of people. Suddenly many more articles are bullish. The Fool's on board and now evil TheStreet.com...by ex pro football and baseball players...go SIRI.

    www.thestreet.com/_aol...
    Reply