Liberty SiriusXM (NASDAQ:LSXMA) is a tracking stock, with its principal asset being Liberty Media’s 67% ownership of satellite radio operator SiriusXM. Thanks to the continued strength of new car sales in the U.S., SiriusXM has enjoyed very robust operating results in recent quarters, as 75% of all new cars sold feature a satellite radio built directly into the dashboard. New car buyers are offered a free trial of the service and typically convert to paying subscribers at a healthy rate. Recently, SiriusXM has opened a new channel for customer growth by partnering with used car dealers as well as service providers to offer trial subscriptions. Although we don’t anticipate these trials will convert at the same rate as those associated with new car sales, we believe it provides an excellent opportunity to remarket to existing car radios as well as lessen the company’s reliance on the cyclical new car market. Shares of Liberty SiriusXM mirrored most of SiriusXM stock price gain of the prior twelve months but still trades at a discount to our intrinsic value of standalone SiriusXM.
From Weitz Value Fund first quarter 2017 commentary.
