Sirius XM Canada Holdings Inc (XSR.TO)

This has been hit too hard and there is real value in it. Came out with weaker numbers and a higher churn last quarter. He believes there are one-offs that will help fuel the growth. The US Sirius XM is hitting new highs, so there is a disconnect between Canada and the US. With new car sales growing and with the used car market they are focusing on, this is a great free cash flow story. Trades at about a 20% discount to its US counterpart. Dividend yield of 7.69%.

It tends to trade on weird stuff. The ideas was that they would be installed in all cars and everyone would renew their contract for satellite radio forever. However the retention rate has not been what they anticipated. The Internet becomes more pervasive and it makes many radio stations free.

Chart shows a little bit of a downtrend for the last year, but trying to break out. The last peak of around $7 is going to represent some resistance. There are still 2 lower lows. He would wait for some consolidation, and then buy on the breakout. He wants to wait for it to at least prove that it can hit and test the last high.

A great business, but he thinks they get a lot of their revenue from car sales. Every time somebody buys a car, they get an option to buy X-Sirius. It looks like car sales are kind of slowing down. He would be a little cautious on this.

He recommended it about a year ago. It is a dollar lower now. They have a difficult time getting their subscribers to stick with them. He really likes this business. He added to his position. Almost 8% dividend. They are a free cash flow machine. They have a monopoly in satellite radio. There is another 20-30% subscriber growth over the next few years. Expects a dividend increase late this year or early next.

Sirius XM US came out about a month ago and upped their guidance on earnings and on subscription. Canada always lags. This one really got washed out in 6 months. They missed their earnings and they have to incorporate the royalty fee of $1.50 for all their subscribers. They are merging their XM billing system and cutting CapX. Great free cash flow and it is cheap. Dividend yield of 6.72%. Over the long term, this is going to grow through the used car market.

Held since the merger. Losers merged to make a massive money maker. Stock came down when they paid a special dividend. 2.6 Million subscribers, recurring revenue, hardly any cap x. Cash flow multiples are 50-70% more than it is trading at. Number of cars equipped to receive the signal is growing dramatically. Very cheap right now.

(Market Call Minute) Great company and very tightly owned.

Generates a lot of free cash flow. The worry is, what is Apple (APPL-Q) going to do, what is Google (GOOG-Q) going to do. Are they going to offer a competing product? Haven’t yet, but that scares him.

Has purchased more of this, and still likes it very much. The stock has a couple of challenges. Have missed their subscriber numbers for the past couple of quarters, but that doesn’t really concern him. He thinks there is enough defensiveness in the cash flow model to make it a compelling valuation here. CBC has indicated that they are interested in selling their 15% holdings, which has presented a bit of an overhang on the stock. This doesn’t concern him. Stock did a special dividend of $.58, and the stock has a 5.9% dividend yield. Also, they are a growth stock. This is a fantastic free cash flow story.

Recently announced a special dividend, but the price dropped before the ex dividend date. Sometimes stocks don’t get rewarded, or it gets priced in advance when people start speculating. The company’s business has changed quite a bit in the past 5 years. They have merged, and it has become more of a monopolistic structure. Have more pricing power and less competition, and the cash flow has gone up, so they are returning some of that cash to shareholders, which he likes. Where this falls apart for him is the long-term nature of the business. There is so much change going on in the media space. It is hard to say whether this is going to win, or if your car is going to be connected to the Internet, and you will be streaming things.

You have to be careful with this because they have a couple of major shareholders that are dragging some money out of the company in terms of a special dividend. They raised money to pay that dividend by borrowing from the bond market. This is old, old technology in that you can’t send things up; all you can do is receive. There are shareholders that are trying to take their money out as fast as they can.

Just ranks out of the zone as far as a Buy for him. Has his eye on this for a couple of reasons. 1.) There is a major overhang in the stock because one of their major shareholders has announced they are going to be selling, which could put a lot of pressure on the stock. 2.) It is fairly exciting and a growth business, and wouldn’t be surprised if it moved back into the range where it would be a Buy for him. All new cars get Sirius put into them with a free trial period with many of them ending up subscribing to the service.

A bit of an auto play as well as a satellite radio play. Has a nice 5% dividend. Corrected recently over some concerns with the parent company which came down a little. There was a big overhang in the stock with a big position owned by CBC and Alan Slate (?). They converted their shares to Class A shares so you wonder if there is something in the works. He is interested because this overhang of large stock might actually enter into the float of the shares that trade on a regular basis. They have also refinanced one of their bonds from about 10% to 5.6%. Raised about $200 million and it was oversubscribed. Self paid subscribers and premium content are doing very well. This new raise of money will create more trading liquidity in the stock and bring more institutional interest to the name. Expect there might be a dividend raise as well as a special dividend. Yield of 5.34%.

Watched this for years and always knew there were troubled dynamics. They finally accepted the merger that their US parent did. Not cheap on a PE level, but it is a tremendous free cash flow entity. Have low CapX. Focusing on the used car markets which now all have preset Sirius radio. A great free cash flow business and expects there is a real chance of dividend increases. Yield of 5.3%.