The Liberty SiriusXM Group – Gabelli Research Analyst John Tinker

The Liberty SiriusXM Group – Gabelli Research Analyst John Tinker


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Hi. My name is John Tinker. We are recommending Liberty SiriusXM as both a play on the consolidating radio business and an inexpensive way to buy Sirius XM.

Sirius XM is a satellite radio provider with 33M subscribers and also controls Pandora Media which has 75M unique streaming music listeners. We also recommend SIRI as it is buying back 10% of its stock every year.

LSXMA, in conjunction with SIRI, is offering to acquire 40% of iHeart as part of its proposed bankruptcy filing due to $20B of debt. iHeart is the largest terrestrial radio station operator in the US. The opportunity is similar to Liberty taking control of a near bankrupt SIRI with its original 40% investment in 2009.

Liberty Media, controlled by John Malone, has 3 tracking stocks, which enable investors to own the assets they are most interested in. Tracker LSXMA’s principal asset is 3.2B shares, over 70%, of SIRI.

Tracking stock usually trade at a 10% discount to reflect the greater complexity..

LSXMA intend to shrink their discount which has expanded to 27% and have issued $400M debt to buy back its own stock and in doing so effectively buying SIRI at $4.70 per share rather than its current price of $6.48

Other LSXMA investors include Berkshire Hathaway who own 13.4%.

We recommend purchase of LXSMA with a PMV of $69 per share.