The jury is still out on whether or not Sirius Satellite Radio (SIRI) got itself a good deal when it signed Howard Stern to a 5-year, $500 million deal in 2004. Shareholders though, have to question if it was smart to offer Stern and his agent shares of stock, in addition to $100 million a year for his show.

Massive dilution is nothing new to Sirius, as they give stock out without a second thought. CEO Mel Karmazin got $14 million of stock in 2004 alone. This trend explains, in part, why the company is valued at $8.5 billion despite only a $6+ stock price. There are more than 1.3 billion shares outstanding today, and that isn't even a fully diluted number.

For those keeping track at home, the 34,375,000 share allotment to Howard and his agent, to be delivered on Monday, will be worth $220 million, or 2.6% of the company's current market value.

PERIDOT'S PERFORMANCE

I would like to take a moment and thank all of Peridot Capital's clients for their business in 2005. This past year was a very successful one despite the fact that the S&P 500 index only returned 3.0% for the year. Peridot was able to book average gains of 10.7% for our equity+fixed income accounts and we look forward to another profitable year in 2006. Shortly I will be mailing out our Annual Letter and will be posting a copy here online as well.

THE BLOG'S FIRST 15 MONTHS

This blog has now been in operation for 15 months and I would like to thank all of our readers for your support in this endeavor. I recently completed an analysis of my investment opinions that have been posted here since late 2004. I was curious to see how they have performed compared with the market as a whole.

Although actively managed accounts should exceed the investment advice given here (mainly because most of my picks on this blog are never updated when an outlook has shifted, whereas active portfolio managers take immediate action as news develops) I was still hoping to find that the analysis provides some value to our readers. Sure enough, it did.

From November 2004 through December 2005, investment recommendations from this site have averaged an 11% gain. The S&P 500, meanwhile, has risen only 7% during that time. The spreadsheet I created for the analysis can be found here. Since many stocks have been mentioned multiple times on this site, I only used the initial mention to calculate performance figures. While it would have boosted the numbers to count every positive mention of Google shares throughout the time period, I don't feel like that is an accurate measure of how well our "average" pick (or pan) performed.

PERIDOT'S 2006 SELECT LIST

As mentioned late last year, I will be publishing a 2006 Select list shortly (hopefully it will be ready on Tuesday). The list will comprise 10 stocks Peridot feels will outperform in 2006. To maintain a fully diversified group, one company will be chosen from each of the 10 major sectors of the S&P 500; technology, telecommunications, financial services, consumer discretionary, consumer staples, healthcare products, energy, materials, industrials, and utilities.

The list, to be made available for purchase online via PayPal, will cost $20.06 and will be emailed to you directly in Adobe Acrobat format after payment has been received. I will make a blog entry with a link for those of you who are interested when the list is completed.

*****

Thanks again to both clients and readers of this blog for your support of Peridot Capital Management and have a very prosperous 2006.

Regards,

Chad