|Gabelli & Company "soapbox" on Barron's:|
Gabelli & Co.
We are initiating coverage and we recommend buying Liberty Media SiriusXM Group stock as an arbitrage on Sirius XM Holdings.
Liberty SiriusXM (ticker: LSXMA ) commenced trading on April 18 as a Liberty Media ( LMCA ) tracking stock. Liberty SiriusXM owns 62.8% — about 3.162 billion shares — of Sirius XM ( SIRI ) and has $200 million of net debt.
We estimate that Liberty SiriusXM is trading at a 10% discount on a mark-to-market basis and a 25% discount on a 2016 mark-to-model basis. Investors are effectively buying Sirius XM for $3.51 per share. We anticipate that the discount should shrink as Liberty Media has been simplified and now allows investors to isolate the assets they are more interested in.
SIRI closed at $3.93 down $.05