SIRI - You Can Buy Sirius XM at a Discount but There's a Catch
One of the market's better turnaround stories is Sirius XM Radio (NASDAQ: SIRI) . The satellite radio provider was on the brink of bankruptcy a dozen years ago as regulators dragged their feet in getting the combination of Sirius and XM approved. John Malone's Liberty Media stepped in to provide financing in a pinch, and Sirius XM has been a 124-bagger since the shares bottomed out at $0.05 -- yes, a nickel -- in early 2009.
Liberty Media's arrival eventually opened the door for investors to get into the country's lone satellite radio company at a discount. It was given a 40% preferred share stake in Sirius XM as part of the 2009 financial bailout, and it has increased its position to where it's now an 80.2% stake. Liberty Media split into several tracking stocks, with Liberty SiriusXM (NASDAQ: LSXMA) (NASDAQ: LSXMB) (NASDAQ: LSXMK) backed by its majority stake in the radio giant.
Retail investors generally prefer Sirius XM Radio stock as the more straightforward play in the broadcaster's empire, but a lot of value-minded institutional investors -- including Warren Buffett -- tend to favor the tracking stock. Liberty SiriusXM has historically traded at a roughly 25% to 30% discount to the value of its stake in Sirius XM Radio. It seems like an obvious way to grab the satellite radio provider at a discount, but there's a pretty big catch.
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You Can Buy Sirius XM at a Discount, but There's a Catch