Sirius XM Holdings Inc (SIRI)

[Monksdream]

Sirius Stock Rises on Short Squeeze as Liberty Media Arbitrage Backfires -- Barrons.com

4:45 pm ET July 19, 2023 (Dow Jones) Print
Andrew Bary

An apparent short squeeze in SiriusXM, which has the highest ratio of short interest to its publicly available float among companies in the Russell1000 index, appears to be driving up the stock of the satellite radio operator.

SiriusXM (Ticker SIRI) is up 0.4% Wednesday to $5.31 after gaining 7% Tuesday. The stock has risen 25% in the past month.

"There has been a huge rally in the most shorted stocks in the last six weeks," says Jeff Wlodarczak, an analyst with Pivotal Research Group. He says SiriusXM has been one of the beneficiaries.

The rally in SiriusXM has stung investors who have a popular spread trade that involves a long position in LIberty SiriusXM Group (LSXMA, LSXMK), a tracking stock for Liberty Media, and a short position in Sirius.

In the past month, the Sirius/Liberty Sirius XM arbitrage trade has hurt investors with Sirius rising 35% and Liberty Sirius XM gaining just 12%. Liberty SiriusXM's nonvoting "K" shares (LSXMK) are up 0.4% Wednesday to $34.81.

The discount of LIberty SiriusXM relative to Sirius hit around 45% Tuesday, compared with 35% in June.

SiriusXM has a thin float -- or amount of stock available for trading. That's because Liberty Media, controlled by mogul John Malone, holds 3.2 billion of its shares, or a roughly 83% stake. The recent short interest in SiriusXM of 219 million shares represents about a third of the public float of around 700 million, Bloomberg data show.

Other companies with high short interest ratios in the Russell 1000 also have rallied lately including Wayfair (Ticker W), Coinbase Global (COIN), and QuantumScape (QS).