Without some big event or monolithic development coming down the road, there’s no reason for investors to care about these tiny companies.

You see, the majority of investors are only interested in making 5%–10% per year. That’s pretty much the maximum you can expect to gain if you are investing in blue chips. Here at Penny Sleuth, we view the stock market a little differently.

We want the money multipliers — double-, triple-, even quadruple-digit gains. For that to happen, we need some kind of spark to set our penny stocks apart from the rest. After all, there are currently over 6,000 to choose from.

So, what kind of catalysts can make a penny stock pop? Let’s look at a couple big ones:

• Commercialization — After years of research and development, and sometimes painstakingly long clinical trials and efficacy tests, there comes a time in any successful start up company’s life when it needs to actually manufacture and sell its products or services. Just take a look at what happened to Tata Motors Ltd. (NYSE: TTM)…

As you might already know, this was the growth story of last year, and it continues to today. Tata is the Indian car giant that made its mark on the global economy, when it released the world’s cheapest car.

In March of this year, the company commercialized a new product. It started selling the Tata Nano in India. Investors were so excited by this car design, they started buying enormous amounts of Tata stock. Since the company started pre-selling the car, shares are up 165%.

• Buyout Candidates — Sometimes, it’s as simple as waiting for a larger competitor to buy the penny stock. When one company buys another, they agree on a price. Many times, that price is much higher than what the soon-to-be-purchased company’s share price is currently trading. This gives those shareholders an instant gain.

A few weeks ago, I discussed the consolidation of the soda industry. Both PepsiCo Inc. (NYSE: PEP) and Coca-Cola Inc. (NYSE: KO) are buying out their bottling operations to save on expenses and double spending.

Pepsi is in the process of buying its two largest bottlers: PepsiAmericas and Pepsi Bottling Group. Shares of both of these companies popped more than 22% the day it was announced. From their March lows, PepsiAmericas is up 67% and Pepsi Bottling Group is up 94%.

• Legal Battles — The last of the major catalysts is court rulings. In many cases, a simple ruling can make or break a penny stock. Hardly any company has been entrenched in the courtroom like TiVo Inc. (NASDAQ: TIVO).

We wrote about TiVo back in December 2007. Its revolutionary digital recording technology is both a huge moneymaker and a legal nightmare. You see, plenty of other competitors claim rights to certain patents TiVo profits from.

It takes a tech geek to decipher the differences between most of its intellectual properties, which isn’t usually a prerequisite for a judge. For the last five years, TiVo has been tied up in court with its competitor EchoStar Communications Corp (NASDAQ:SATS), now part of Dish Network Corp. (NASDAQ:DISH), over a patent dispute. The court finally ruled in favor of TiVo, rewarding the company $103 million plus interest.

Upon the day of the ruling, shares of TiVo jumped 53%. This gain sent TiVo’s stock over $11 per share and out of penny stock land. That just a drop in the bucket of what a lawsuit ruling can do for a company. Imagine what $103-plus can do for an even smaller company…

These are just four types of things to consider when thinking about buying a penny stock. But even if you do have the perfect catalyst lined up, that’s only the beginning.

Sincerely,
Jim Nelson

Source: How to Tell When a Penny Stock Will Pop

The deal also marks another chapter in an ongoing saga featuring John Malone, Liberty’s CEO, and rival Charles Ergen, the satellite-TV pioneer behind Dish Network Corp. (DISH) and sister firm Echostar Corp. (SATS).  The two have occasionally worked together but are major competitors in satellite, as they were when Malone controlled cable-television company Tele-Communications Inc.

“Sometimes they play nicely together in the sandbox, but sometimes they are good, old-fashioned rivals,” satellite analyst April Horace of Denver-based Janco Partners told the Denver Post. Both companies are headquartered in Englewood, Colorado.

Under terms of the agreement, Liberty would provide a $280 million senior secured loan   to help Sirius repay $171.6 million in convertible notes due yesterday (Tuesday), which are owned by Ergen.  At a later date, Liberty would provide another $150 million loan to XM Satellite Radio, Sirius XM’s wholly owned subsidiary, and purchase up to $100 million of XM’s credit facilities, according to Bloomberg News.

The loan will pay Liberty a whopping 15% interest rate and mature in December 2012. When the second loan is completed, Liberty will get 12.5 million shares of preferred stock convertible into 40% of Sirius XM common stock.

The deal allows Sirius to avoid bankruptcy and a major shuffle of talent. A bankruptcy filing could have threatened contracts with such luminaries as Martha Stewart and Bob Dylan, as well as the company’s five-year, $500 million pact with Howard Stern.

Sirius has never been profitable, mainly because it was burdened with massive interest payments on its debt. After acquiring rival XM in July, it was hit hard by the credit crunch and poor auto sales – its main distribution channel.  Sirius XM has about $3.25 billion in total debt.

“Sirius is in the process of getting out of the woods because Liberty is putting up a lot of money,” David Joyce, an analyst with Miller Tabak & Co., told Bloomberg News. “It shows that Sirius will be around for a long time.”

Malone and Ergen, who have been fierce rivals over the decades, were again pitted against one another by Sirius Chief Executive Mel Karmazin to save the company he formed just seven months earlier.

In 2003, Ergen abandoned a bid for DirecTV’s then-parent company, Hughes Electronics Corp. because he couldn’t get regulatory approval. Malone gained control of DirecTV last year after buying out Rupert Murdoch’s News Corp.’s (NWSA) stake. Ergen’s Dish Network had 13.8 million customers as of Sept. 30, trailing DirecTV’s 17.3 million.

The Liberty deal came after recent efforts by Ergen to acquire control of Sirius by purchasing its maturing debt, following an unsuccessful takeover bid in December, according to the sources cited by Bloomberg.

Ergen, a former professional gambler, bought the majority of a $300 million batch of discounted Sirius bonds that came due Tuesday. The company, said Feb. 13 it might have to file for bankruptcy if it couldn’t reach an agreement to restructure the debt.

Ergen offered to restructure the debt and invest several hundred million dollars into Sirius in exchange for control of the company.  That plan was scuttled by Liberty’s “white knight” move, which allows Karmazin to keep his job as CEO.

Liberty’s plans for Sirius are unclear.

“We think that John Malone and Charlie Ergen’s strategies are different,” Thomas Eagan, an analyst at Collins Stewart told Reuters. “We think that Charlie Ergen’s strategy may have been more about creating a broader strategic play in wireless services as he has attempted mobile video before. For John Malone it’s more of a financial investment. He had this venture fund with cash available and he figured this was a worthwhile investment.”

Whatever his motives, Ergen’s strong personality and previous clashes with Karmazin may have presented obstacles impossible to overcome.

The two locked horns in 2004 when Karmazin was head of media giant Viacom. When talks broke down over rate hikes imposed by Viacom for the rights to carry certain channels, Ergen published Karmazin’s home number and told subscribers to call him.

“I can’t imagine Ergen and Mel Karmazin working that well together,” said Matthew Harrigan, an analyst at Wunderlich Securities.

Source: Sirius Business – Liberty Injects $530 Million into Satellite Radio Provider

All betting is closed. The news is out and Sirius XM Satellite (NASDAQ:SIRI) shareholders are losing big. Shares of the shaky-at-best company are getting closer and closer to becoming worthless. Bankruptcy is now in sight. Who could have imagined?

Oh my, shares of Sirius XM Satellite (NASDAQ:SIRI) are plunging today on news of a possible bankruptcy filing. Who would have ever been smart enough to foresee such a horrible event coming? The company only had a billion dollars in debt due over the next year. That’s nothing compared to the banks.

Uncle Sam could easily step in and erase a few of those zeroes, right?

Putting all sarcasm aside, I do not feel even the slightest bit sorry for investors wasting their money on this company. Analysts and experts have been screaming for months it was a dangerous crap shoot that would cost investors dearly, yet wildcat investors continued to aim for the fences.

It looks like they are about to strike out.

Shares of Sirius are down by about 40% (from $0.11 to $0.07) at the moment on news the company’s officials are mulling a bankruptcy filing. Whether the rumor is merely a back-handed ploy to get Charles Ergen and his EchoStar (NASDAQ:SATS) to step to the plate or if a bankruptcy truly is pending is beside the point. What matters is shareholders are about to get the rug pulled out from under them.

Short sellers are getting the news they yearned for. Only one other stock, Ford (NYSE:F) has more shares sold short. But you can bet with shares plunging ever closer to the critical zero level most sensible investors have been predicting, those shorts are going to lock in their profits and run. In fact, their buying to cover their positions is likely the only thing keeping shares from all-out devastation today.

Read the full article here  at TFN: Sirius investors: You get what you deserve

This from Andrew:

Sirius XM Satellite (NASDAQ:SIRI) investors have their hands full once again. After a wannabe rally last week, shares have been on the decline ever since. Even more shareholder wealth will be destroyed this week.

It is a stock that will tease and trick you out of your hard-earned cash. It is sexy and alluring, yet it will take you out without a second thought. It is responsible for billions of dollars of destroyed wealth.

I sure hope you were not one of the folks buying shares of Sirius XM Satellite (NASDAQ:SIRI) last week on the news that an outsider was buying up the company’s soon-to-mature debt.

If you followed my advice, you sold your shares and ran from this dangerously speculative company. But if you went rogue and bought into the rally, you are sitting on some sizeable losses this week. Even worse, it looks like the losses will continue to multiply.

So far today, shares have lost over 7% of their value and are hovering at the $0.12 mark.

Today’s decline comes on the news that Sirius turned down an unsolicited deal made by EchoStar (NASDAQ:SATS) late last year. According to sources, the proposal would have been enough to pull Sirius out of its debt issues. Of course, it would have a new owner.

With just a week or so left until the company has its first round of debt obligations come due, Sirius has very few options if it cannot find a quick solution. According to the company’s controversial CEO, Mel Karmazin, Sirius has two options, bankruptcy or make a deal with EchoStar. That is not the kind of news a shareholder wants to hear.

Either way, they will lose money.

This is going to be an incredibly volatile week for Sirius, with speculators trying to pull share price in every direction. Rumors will be all over the place.

With expected price swings of 10% or more in the next few days, it is tempting to try to “trade” the company’s shares. But Sirius is so volatile and so unpredictable, you would have better odds betting on the ponies.

Shares of Sirius should not be traded on a stock exchange. They should be traded in Vegas.

Source: Sirius: Cheaper than a scratch-off and just about the same odds