Shares of Sirius XM Holdings (NASDAQ: SIRI) were down 12.7% at 10:14 a.m. ET on Friday following a massive jump on Thursday that has pushed the share price up 40% over the last five trading days. 

Analysts at Pivotal Research Group and Deutsche Bank subsequently downgraded the stock to a sell rating, citing valuation concerns.  

The catalyst for the stock's jump this week appears to be a short squeeze, as investors were short the stock of Sirius XM and long shares of Liberty SiriusXM (NASDAQ: LSXMA) (NASDAQ: LSXMB) (NASDAQ: LSXMK) -- a tracking stock that owns 82.4% of SiriusXM and has traded at a large discount to the underlying value of its SiriusXM investment. It's a typical arbitrage trade in which shareholders hope to realize a profit as the stocks' relative values converge.

Continue reading

Source Fool.com