Wednesday, November 15, 2006

XM Shares Seeing Fast Upward Movement

November 15, 2006

Since the completion of the conference calls, XM Satellite Radio has seen a sharp upswing in share price. Whether it is a fundemental move or a technical one is not really the issue. the upward movement bodes well for the sector as well as shareholders of XM Satellite Radio.

Right, wrong or indifferent, there is a large pool of investors that have had trouble with the valuation gap between Sirius and XM. Sirius carries a larger market cap than XM, and some feel that the gap between the two market caps was simply to wide.

The Solution......either Sirius to come down, or XM to appreciate. Seeing positive calls from BOTH companies did wonders for sector sentiment. With bad news for the sector seemingly complete, and narrower losses seeming to be the new trend, it would appear that the street believes that rather than taking down Sirius to close the market cap gap that they want to bring XM up.

The next question people should be considering is what the appropriate gap in market cap should be, and which company should enjoy the higher market cap. That question can be debated until the cows come home, but in the end, we will see the dust settle a bit after Q4. until then, both XM and Sirius should see some nice price movement for investors.

In my opinion, there is still a bit more room for XM to have a faster pop, but the window is closing at the same rate the gap in market cap closes. My personal opinion is still a "Twin Trade" with an investment in both for short and long term. If you have a favorite, or belief as to which will perform better, then put more eggs in that basket. Either way, it looks like some good days ahead for SDARS.

11/15/2006 12:50:00 PM

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