Why Sirius XM Radio Inc (SIRI) Is a Buy

Are you on the fence about what to do over Sirius XM Radio Inc (NASDAQ:SIRI)?


If you were to ask many of your fellow readers, hedge funds are assumed to be bloated, old investment vehicles of an era lost to time. Although there are over 8,000 hedge funds trading currently, Insider Monkey focuses on the moguls of this club, around 525 funds. It is assumed that this group controls the lion's share of the smart money's total capital, and by monitoring their highest quality equity investments, we've figured out a few investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).


Equally as useful, positive insider trading activity is a second way to look at the stock market universe. There are a variety of motivations for an executive to sell shares of his or her company, but just one, very simple reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this method if you know where to look (learn more here).


Sirius XM Radio Inc (NASDAQ:SIRI)


Keeping this in mind, let's analyze the newest info surrounding Sirius XM Radio Inc (NASDAQ:SIRI).

How have hedgies been trading Sirius XM Radio Inc (NASDAQ:SIRI)?


In preparation for the third quarter, a total of 46 of the hedge funds we track were long in this stock, a change of 10% from one quarter earlier. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes considerably.


According to our 13F database, Omega Advisors, managed by Leon Cooperman, holds the most valuable position in Sirius XM Radio Inc (NASDAQ:SIRI). Omega Advisors has a $240.8 million position in the stock, comprising 3.7% of its 13F portfolio. The second largest stake is held by John Griffin of Blue Ridge Capital, with a $145.1 million position; 1.8% of its 13F portfolio is allocated to the stock. Remaining hedgies that are bullish include Philippe Laffont's Coatue Management, Christopher Lord's Criterion Capital and Donald Chiboucis's Columbus Circle Investors.


As one would understandably expect, specific money managers were breaking ground themselves. Omega Advisors, managed by Leon Cooperman, created the biggest position in Sirius XM Radio Inc (NASDAQ:SIRI). Omega Advisors had 240.8 million invested in the company at the end of the quarter. John Griffin's Blue Ridge Capital also made a $145.1 million investment in the stock during the quarter. The other funds with brand new SIRI positions are Philippe Laffont's Coatue Management, Christopher Lord's Criterion Capital, and Donald Chiboucis's Columbus Circle Investors.

What have insiders been doing with Sirius XM Radio Inc (NASDAQ:SIRI)?


Legal insider trading, particularly when it's bullish, is at its handiest when the company we're looking at has experienced transactions within the past six months. Over the last six-month time frame, Sirius XM Radio Inc (NASDAQ:SIRI) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).


We'll also take a look at the relationship between both of these indicators in other stocks similar to Sirius XM Radio Inc (NASDAQ:SIRI). These stocks are Salem Communications Corp (NASDAQ:SALM), Saga Communications, Inc. (NYSEAMEX:SGA), Entercom Communications Corp. (NYSE:ETM), Cumulus Media Inc (NASDAQ:CMLS), and Pandora Media Inc (NYSE:P). This group of stocks belong to the broadcasting - radio industry and their market caps resemble SIRI's market cap.

Company Name
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling

Salem Communications Corp (NASDAQ:SALM)
3
0
4

Saga Communications, Inc. (NYSEAMEX:SGA)
0
1

Entercom Communications Corp. (NYSE:ETM)
5
0
5

Cumulus Media Inc (NASDAQ:CMLS)
10
1
1

Pandora Media Inc (NYSE:P)
33
0
8

Using the returns shown by the previously mentioned strategies, average investors must always pay attention to hedge fund and insider trading activity, and Sirius XM Radio Inc (NASDAQ:SIRI) is no exception.


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