Why ANALysts Are Useless For Individual Investors: Sirius XM Radio Inc (SIRI) & Apple Inc. (AAPL)
Posted by timothysykes on Sat 23rd of Aug, 2008 06:00:50 PM
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I rag on ANALysts quite a bit, probly cuz their track records uniformly suck and yet they still get paid some decently to suck. More importantly, many people actually listen to these people who suck (Is that why they’re called suckers?)
Check out this example of typical shoddy ANALyst work:
Sirius XM Radio Inc (SIRI) TARGET $6.50 by Citi
AAPL Stream Underscores New Opportunity
Value is in the Content — Reports of a new internet streaming application that
would allow SIRI users to get content on their iPhones and other portable
devices are now emerging and highlight that SIRI’s value lies in its content and
not its hardware or infrastructure. We maintain that SIRI will continue to gain
share in the audio entertainment industry as it offers long tail content that is
proprietary, unique, fresh, and simple. The fact that about 50% of new OEM
customers still elect to pay for satellite radio despite the challenging macro
environment supports this view.
A Little Help from AAPL — While AAPL is generally perceived as a competitor
to satellite radio, the streaming application underscores that it may
complement and help satellite radio as the new application would: 1) eliminate
SIRI radio costs; 2) help generate new subs at a lower cost (albeit with a higher
royalty rate given the internet streaming); and 3) likely improve the ability to
purchase tracks from AAPL.
It’s Not Black and White — SIRI bears argue that AAPL’s products will take
share from SIRI, but we disagree as both MP3 players and satellite radio have
unique advantages that leads us to believe both will co-exist. New satellite
radio plans create a greater opportunity for synergies between the two.
Buy SIRI — The stock has been hurt by the difficult macro backdrop and auto
production slowdown; however, we believe SIRI is massively undervalued as
investors fail to appreciate the size of merger synergies, the opportunity for top
line improvement with new plans, and the benefits of greater OEM penetration.
Tony Wible, CFA
+1-212-816-3732
w.a.wible@citi.com
Leo Kulp, CFA
leo.kulp@citi.com
Albert Lui
albert.lui@citi.com
See Appendix A-1 for Analyst Certification and important disclosures.
Buy/Speculative 1S
Price (13 Aug 08) US$1.38
Target price US$6.50
Expected share price return 371.0%
Expected dividend yield 0.0%
Expected total return 371.0%
Market Cap US$4,384M
Price Performance (RIC: SIRI.O, BB: SIRI US)
It’s hilarious to me that these guys have actually laid out models for why SIRI will more than triple in price. I’m not saying it can’t happen, but there’s absolutely no reason to buy this piece of crap stock cuz its proven itself to be a disaster and no matter what anybody says, track records do matter. Especially when the company in question has issued BILLIONS of shares to finance their expansion. That’s why there’s millions of bitter shareholders. That’s why it’s nearly impossible for it to ever go up much, let alone double or triple.
To be confident in my thesis, I don’t have to do any business research whatsoever–I’ve got all the variables–not the variables these ANALysts mistakenly believe matter–biz developments, revenue growth, profit, etc.–on my side and worst comes to worst, if the stock does somehow start to uptrend–I’ll use technical analysis as my guide. Forget about $6.50, forget about even $5, $3-4 has tonsssssssss of resistance, barring a miracle/takeover, that congestion will hold this stock down for years, if not decades, if not forever.
Using simple technical analysis–moreso on less covered/talked about/debated-to-death stocks aka inefficient–I can be right 90-95% of the time and ANALysts are stuck waaaay under 50%. Obviously their stuff is waaaay more scalable/mainstream so they’ll continue getting paid to put out these ridiculous price targets based on “business prospects” with companies like AAPL, but it’s totally irrelevant to you, as I’m guessing you’re not a mutual fund manager so there’s a greater chance of you outperforming a simple index like the S&P 500 cuz you can enter and exit your positions easily.
Long story short, there’s really no need to resort to listening to some hail-Mary like what you read above…ever.
Now you can Twitter any questions/comments to TIMhelp and obviously you can follow TIM on twitter too!
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TIM Alerts
View All| Date | Stock | Position | Ideal Exit | % Gain |
|---|---|---|---|---|
| Nov 24 | KVHI | Short | $3.70 | 18% |
| Nov 20 | STSX | Short | $3.10 | 11% |
| Nov 18 | PERY | Short | $3.75 | 25% |
| Nov 11 | IIJI | Short | $2.80 | 5% |
| Nov 6 | CVI | Short | $4 | 15% |
| Nov 5 | MECA | Short | $1.95 | 51% |
| Nov 4 | CVI | Short | $4.81 | 4% |
| Nov 3 | NAK | Short | $3.20 | 5% |
| Oct 29 | EVC | Short | $2 | 26% |
| Oct 28 | HSNI | Short | $6.80 | 7% |
| Oct 28 | HSNI | Short | $5.75 | 4% |
November: 9 alerts, 15% avg gain
October: 11 alerts, 14% avg gain
What is the first step you take?
What tools do you use?
What and were should I be? or doing to prepair for next week. Should I just wait for the tim alert. Do you use TOS stkhacker? Sorry man ordered the dvd yesterday and the book on tape ( back ordered ) I am new just eager.
staycalm, watch the dvd a few times so u can understand the variables…also read through all my old blog posts, education is all here, u just gotta put in the time to learn it
Education, there is no education there is no magic formula, just follow the trend, that’s it, you tim dont have the formula, those crooks control the market, no matter what your system does.IMO
there are lessons and rules u can implement to better your odds…thats is what i do
Tim, don’t speak out of your ass. Technical analysis and bitter shareholders would mean nothing if SIRI had blowout earnings. If they could report $0.05 in quarterly earnings their stock could easily double and possibly quadruple. Do i think they’ll do that? No, because their business plan sucks and because they are incompetent. But technical analysis becomes pointless if there are huge fundamental developments.
yes, blowout earnings are fine, but it would only take the stock to $2 or $2.50…then maybe a gradual runup to 3-3.50…what i’m saying is that to predict a 300% rise is not only ridiculous, its irresponsible…ignore all analysts, wait for those earnings reports/catalysts to present themselves, guessing games are vegas
Agreed that Analysts are dumb and irresponsible. The whole idea of target prices is dumb, too. The only intelligent way to do it would be to present a range of current ‘fair’ values for a company. For a company like SIRI that could either end up in bankruptcy or do okay, such a range would be huge.
I’m glad you’re enjoying your vacation, Tim. I’ve had a good week off (even had some good Sushi, though not as good as yours I suppose) and am looking forward to getting back to trading this coming week.
That has to be the biggest load of BS I have seen out of anyone, let alone an ANALyst. I have a friend who has A lot invested in Sirius stock and I told him every time he was buying it not to! He kept saying he bought it because he likes and uses the product…I tried to tell him…but what can you do, some people just don’t get it.
Also, beware the latest hype/pump stock from Vista Partners. Just got a mailer for GTXO.
Well, not data, no reason other than the most obvious negatives. Why bother reading this stuff, it will not help you reach any decision. This is the best advertisement for doing your own research.
ANALysts and brokers belong to the same Mafia.
After 18 years in the Swiss Banking industry ; its a clear conclusion …….
An account that sleeps is not good for business ….
Brokers use ANALyst comments to trigger buy/sell orders ; thus inciting clients to act….
Brokers are Pimps
ANALysts are the whores ….
The Johns ? mmmm the clients ……
how a typical trader thinks:
http://www.timothysykes.com/ti.....er-thinks/
Agree analyst are useless.