I wrote last December about the large gap in valuation per subscriber between XM (XMSR) and Sirius (SIRI), two satellite radio providers with stratospheric valuations, but with Sirius selling for 3x more than XM on a per subscriber basis. I proposed a simple hedging trade - short SIRI and go long XMSR. This morning, XM announced a particulally spectacular loss and Director Pierce J. Roberts resigned based on disagreement over the companies direction. His comments are best viewed in his resignation letter filed at the SEC.
Given current course and speed there is, in my view, a significant chance of a crisis on the horizon. Even absent a crisis, I believe that XM will inevitably serve its shareholders poorly without major changes now. It is clear to me that I cannot be part of the solution and I will not be part of the problem.
XMSR traded down steeply this morning,