There are two ways to look at management’s sales of millions of shares in Sirius XM (NASDAQ:SIRI). One is that the executives saved the company from an almost certain bankruptcy and deserve a pay day for that. The other is that the people running Sirius believe that the stock has peaked.
According to a report in The Wall Street Journal, the top five officers at Sirius plan to sell shares they have received as they vest. The total of the grants is 10 million shares which vest over 40 weeks. The executives have already sold seven million shares worth $3.2 million.
There is a reasonable argument that Sirius shares have peaked, at least for the period between now and when the company releases its next set of earnings. Sirius stock currently trades about where it did in May, around $.58. The shares had a brief run to $.78 in August, but for five months the price has been relatively flat.
That leaves the question of what management’s successful attempt to save the company is worth. Sirius shares traded as low as $.05 in mid-February so they are up about 12-fold since then. That has added about $2 billion to the firm’s market cap and has saved many investors from watching their holdings go to zero.
Sirius trades 50 million shares a day, so the market can easily absorb the sales by the firm’s management. A few million dollars is not much to pay for keeping Sirius from drowning.
Douglas A. McIntyre
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