Wahdy Muhammad

10/24/2011
SLock 8eflecLlon #1
Introduct|on
8efore lnvesLlng any of Lhe money lve lnherlLed l musL undersLand my own rlsk/reward proflle Lo galn
furLher lnslghL as Lo Lhe sLraLegy l would employ when plcklng a sLock uo l plan on uslng Lhe money for
school or llfe? Cr do l wanL Lo use lL as a nesL egghopeful LhaL once l reLlre l wlll have money saved
up? As a young sLudenL l have Llme ln fronL of memy rlsk Lolerance ls hlgh and l am more lnLeresLed ln
hlgher reLurns Lhan ln a sLable lncome from Lhe lnvesLmenL Slnce lm also Lech savvy l wlll prefer sLock
from nASuAC raLher Lhan from Lhe n?SLespeclally as Lhe Lechnology secLor has been able Lo weaLher
mosL of Lhe markeL volaLlllLy (from my perspecLlve l Lhlnk LhaL many lnvesLors are hedglng agalnsL Lhelr
prevlously lncurred losses by buylng lnLo Lech companlesand why noL? Plgh growLh from a rlsk Laklng
perspecLlve ls lmporLanL) lrom my search l declded Lo lnvesL my $10000 lnLo Slrlus xM a saLelllLe
radlo company based on a subscrlpLlon model LhaL offers a varleLy of radlo programs excluslvely and
wlLhouL any adverLlsemenLs 1he company ls headquarLed ln new ?ork ClLy and has been able Lo
caplLallze off of Lhe growLh ln Lhe auLo lndusLry posLflnanclal crlsls WlLh a 8L1A 203 Lhere ls
subsLanLlal volaLlllLy even Lhe /L raLlo (prlceLoearnlngs) ls hlghaL 6304 uesplLe Lhese mlsglvlngs l
belleve Sl8l Lo be a wlnner and lll be happy Lo show you why

uant|tat|ve Ana|ys|s

Slrlus lsnL Lhe largesL company on Lhe nASuACaL a markeL cap of 7278 lL ls a mldcap company
Lradlng aL a prlce of $184 (as of 10/24/2011) wlLh 3938 shares ouLsLandlng Powever compared Lo
oLher conLenL based companles uslng Lhe subscrlpLlon model lL ls much larger Lhan lLs compeLlLlon lor
example andora Medla lnc Slrlus xMs ma[or compeLlLor only has a markeL cap of 16126M Whlle
lnLerneL based companles llke andora or Slacker Medla are able Lo offer a cheaper subscrlpLlon Slrlus
xM has managed Lo expand lLs subscrlber base and LargeL addlLlonal markeLs wlLh Lhelr new
Lechnologles ln addlLlon andoras /L raLlo ls subsLanLlally less (lndlcaLlng a more accuraLe prlclng) aL
149 compared Lo Slrluss 6304 (reveallng Lhe markeLs expecLaLlons for lLs hlgher growLh) as andora
faces slgnlflcanL barrlers ln expandlng lLs subscrlber base along wlLh sLlffer compeLlLlon (Slrlus ls Lhe
only SaLelllLe radlo company andora ls one of many lnLerneL radlo players)
Slrlus xM currenLly slLs on 73838 ln asseLs whlch lnclude a fleeL of saLelllLes advanced radlo
Lechnologles and moblle CS appllcaLlon research and developmenL (allowlng subscrlbers Lo access Lhelr
Slrlus radlo from Lhelr moblle phones) 1oLal debL for Slrlus sLands aL roughly 328 wlLh mosL of lL belng
ln Lhe form of long Lerm debL 1he /L raLlo however ls a slgnal LhaL lnvesLors are wllllng Lo shoulder
Lhe long Lerm debL and LhaL Slrluss growLh ls expecLed Lo conLlnue Lo lncrease As Slrlus xM Loo ls Lhe
resulL of a merger beLween Lhe Lwo saLelllLe radlo companles Slrlus and xM 8adlo Lhe new company ls
much leaner and can cuL cosLs ln order Lo lncrease marglns and reduce overhead 1hese synergles wlll
allow Lhe company Lo furLher expand lLs producL offerlng Lo a comblned subscrlber base of over 20M
WlLh currenL asseLs aL 18 an lncrease of over 10 yearoveryear Slrlus xM has demonsLraLed LhaL Lhe
new company ls more capable of reduclng cosLs and lncreaslng marglns lL ls more prepared for furLher
expanslon and addlLlonal acqulslLlons lf need be

@echn|ca| Ana|ys|s

lrom a charLlng perspecLlve Slrlus ls enLerlng a ConsolldaLlon hase as Lhe sLock has been Lradlng
beLween Lhe spread of lLs 200uMA and 30uMA Slnce mosL sLocks wlll move afLer lLs consolldaLlon
perlod ln Lhe same dlrecLlon lL enLered Lhe consolldaLlon phase l expecL Slrlus Lo move up dramaLlcally
once lL enLers Lhe accumulaLlon phase ln Lhe prevlous monLh Lhe 30uMA crossed Lhe 200uMA
resulLlng ln Lhe 40 drop ln value Slnce Lhen Lhe sLock has recovered rlslng on Lhe good news durlng
Lhe earnlngs reporL 1he currenL phase Lhe sLock ls ln presenLs a unlque buylng opporLunlLy

A closer look aL Lhe sLock demonsLraLes Lhe closlng of Lhe dlsLrlbuLlon phase as Slrlus moves lnLo a
8ulllsh markeL 1he prevlous week saw Slrlus enLer a consolldaLlon phase as seen by lLs prlce Lradlng
beLween lLs 200uMA and lLs 30uMA AfLer Lhls phase lL ls llkely LhaL Slrlus wlll move up rapldly once lL
breaks lLs 200uMA 1haL would resulL ln Lhe 30uMA crosslng Lhe 200uMA slgnallng LhaL Lhe sLock
lndeed ls ln an accumulaLlon phase

ua||tat|ve Ana|ys|s

Slrlus xMs movemenL ouL of lLs dlsLrlbuLlon phase and onLo a consolldaLlon phase ls based upon lLs
recenL earnlngs ouLcome along wlLh lnvesLor paclflcaLlon over Lhe debL crlsls ln Lurope As Slrlus ls Lled
heavlly Lo boLh Lhe Lech and auLomoLlve lndusLrles lL reflecLs lnvesLor cauLlon or opLlmlsm aL a Lwo
pronged level 8uL wlLh lord and CM reassurlng lnvesLors LhaL Lhelr debL and llablllLles (ln lords case
unlon workers) are resLrucLured and wlLh Lhe promlse of hlgh growLh ln emerglng markeLs Slrlus wlll
have Lhe wlnd aL lLs back and wlll en[oy hlgh growLh ceL par
CLC Mel karmazln has proved cruclal Lo Lhe success and vlablllLy of Lhe saLelllLe radlo company !olnlng
Lhe company ln 2004 he promoLed a clear plan for Slrlus's expanslon and was one of Lhe blggesL
players ln securlng Lhe SlrlusxM deal Pls prevlous experlence as CCC and resldenL of vlacom lnc and
before LhaL as CLC of C8S CorporaLlon enabled hlm Lo leverage off hls exlsLlng experLlse ln managlng
broadcasL and communlcaLlons companles Pls undersLandlng of markeL dynamlcs and hls wllllngness Lo
adapL hls company ln order Lo caplLallze off emerglng new Lechnologles' maklng hls company more
proflLable has kepL hlm ln power and has resulLed ln brlnglng Lhe company back from lLs prevlous
1hree?ear Low of 3 cenLs per share lndeed Lhe company has been conLrolled by demand from Lhen
up unLll Lhe debL crlsls ln Lurope durlng Lhls summer provlng hls ablllLy Lo lnfuse Lhe company ln much
needed confldence
Chlef ConLenL Cfflcer ScoLL A CreensLeln Loo brlngs a valuable sklllseL and ablllLy Lo Slrluss execuLlve
Leam WlLh prevlous experlence as resldenL of uSA lllms and Lhen laLer as resldenL and CLC of 1he
CreensLeln Croup (a medla and consulLlng company) CreensLeln has Lhe awareness of markeL Lrends
and consumer wanLs LhaL ls cruclal for Lhe success of Slrlus xM as a saLelllLe radlo company CCC of
Slrlus slnce 2004 CreensLeln has been lnvolved ln brlnglng many of Lhe large deals such as Lhe nlL
channel and Poward SLern Lo Slrlus xM
ClC uavld lrear a prevlous lnvesLmenL banker wlLh 8ear SLearns and Lhen ClC of Crlon neLworks a
saLelllLe communlcaLlons company lrear brlngs saLelllLe flnanclal managemenL and auLhorlLy Lo Slrlus
xM

onc|us|on

Slrlus xM ls a unlque prospecL ln LhaL lL ls aL Lhe beglnnlng of lLs consolldaLlon phase and ls llkely Lo
break ouL above lLs 200uMA lrom an lnvesLor's perspecLlve Lhls ls hlghly valuable especlally as Lhe
sLock has been conLrolled by demand for mosL of Lhe pasL Lhree years wlLh Lhe move Lo dlsLrlbuLlon
occurrlng afLer Lhe debL crlsls ln Lurope (along wlLh fears of a double dlp recesslon) Whlle Slrlus xM
shares Lhe rlsk of Lhe auLomoLlve lndusLry and Lhe Lech lndusLry lnvesLor are wllllng Lo shoulder lL as
demonsLraLed by lLs hlgh /L raLlo lurLhermore Lhe company ls well poslLloned from a quanLlLaLlve
(fundamenLal) and quallLaLlve perspecLlve whlch ls encouraglng for any long Lerm lnvesLors

I am |ong SIkI