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Friday, August 25, 2006

Wall St Shorts Make Opposite Bets On XM And Sirius

Stocks: (SIRI)(XMSR)

The short community raised its position in Sirius Satellite Radio by nearly 19 million shares, the largest single increase for any stock traded on the NASDAQ. The total short position in the company now stands at 129 million.

The short interest in XM Satellite Radio, on the other hand, dropped over 8 million to just under 29 million. After the drop in Microsoft's shares short, XM has the second largest drop of any stock traded on NASDAQ.

Bear Stearns did recently raise its rateing on XM from "underperform" to "outperform", a very big "two grade" bump. The brokerage said that many of XM's problems with its product reviews initiated by the FCC were probably behind it. The company may be able to get these SkyFi2 ratios back online for the holiday season. Bear Stearns also pointed out the XM's line of portable radios was larger that the comparable products at Siruis.

XM has dropped its forecast for year end subsribers to the 7.7 to 8.2 million range, still far ahead of Siruis.

Wall St may also be betting that the Howard Stern hallow effect that the shock jock has had on building Sirius subscribers may be paying off, and that its weaker balance sheet and larger loses could impede it in its competition with XM

Sentiment does seem to be moving toward XM. In the last three days its stock has gone from $11.25 to as high as $13.50. Siruis has gone from slight under $4 to about $4.10 in the same period. Both stocks still trade near their lows, with Sirius down about 50% from its 52-week high.

After several months of Sirius being the favored stock, the pendulum appears to be swinging the other way.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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