Sirius (SIRI): The Shorts Pile In

April 25, 2008 by Douglas A. McIntyre

Short sellers have fallen in love with Sirius Satellite (NASDAQ: SIRI). Actually, they were already in love. It has moved to infatuation.

The short interest in SIRI sky-rocketed for the period ending April 15 compared to March 30. Shares sold short moved up 20.2 million to 157.9 million. The company’s merger partner, XM Satellite (XMSR) also watched its short interest rise by 6.3 million shares to 22.7 million.

The figure for Sirius is especially disturbing because, at $2.67, it was recently at a 52-week low.

Investors could be making one of two bets. The first is that the FCC will not approve the merger of the two satellite radio companies because the agency believes that it would create a monopoly. SIRI and XMSR are counting on the tie-up so that they can save redundant costs. Neither makes money now.

The other concern may be that a merger will do very little to save the companies. Each has over $1 billion in debt and in the current credit environment, that may be almost impossible to refinance. The companies may simply not be well capitalized enough to make it at all.

Douglas A. McIntyre

Take This Retirement Quiz To Get Matched With A Financial Advisor (Sponsored)

Take the quiz below to get matched with a financial advisor today.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the
advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future

Take the retirement quiz right here.