Is Sirius XM's CEO Selling Too Soon?
Sirius XM Radio (NAS: SIRI) CEO Mel -- rhymes with sell -- Karmazin is selling off a chunk of his stake in the satellite radio provider, but there's no reason to panic.
Karmazin is initiating a 10b5-1 plan in two months, where executives commit to the automatic sale of company stock at regular intervals.
Sirius XM's charismatic helmsman is hoping to exercise and unload 60 million options through the plan. It's apparently part of his "strategy for financial planning in connection with his philanthropic efforts" in the coming years.
No, Sirius XM isn't about to roll out a Win Mel Karmazin's Money radio show.
The sum isn't unsubstantial. Even though Karmazin will still own over 68 million shares and options -- and may very well be granted more in the future -- it's still nearly half his stake in the company.
The timing could be better.
At least three different analysts have inched their price targets higher on the media giant in recent weeks.
Berkshire Hathaway (NYS: BRK.A) (NYS: BRK.B) just acquired a stake in Liberty Media (NAS: LMCA) , and it's not because Warren Buffett may be a fan of the Atlanta Braves. Liberty Media's largest investment is a 40% preferred share stake in Sirius XM.
Then again, a 10b5-1 plan isn't about timing at all. The sale of Karmazin's 60 million shares will take place over time. If I'm right about the catalysts, he will be selling the allotted shares at higher price points over time.
Trading volume is so heavy on Sirius XM that Karmazin's unloading of 60 million exercised options won't move the market.
There's no way that Karmazin's decision to diversify his wealth by getting charitable with his Sirius XM stake is a positive, but it's not really the negative that it may appear to be at first glance.
Running of the bulls
I remain bullish on Sirius XM's future. It should come as no surprise that I'm promoting the CAPScall initiative for accountability by reiterating my bullish call on Sirius XM for Motley Fool CAPS.
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At the time this article was published Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Liberty Media. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Motley Fool owns shares of Berkshire Hathaway.Motley Fool newsletter serviceshave recommended buying shares of Berkshire Hathaway. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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