Subject: Re: SIRI
One might reasonably say that the operations of the company are worth about $900m, and the $100m cash pile is worth... $100m.
...
That would be reasonable as long as the company actually produces at least $100m more current value of future cashflow from having that $100m. That is to say, its keeping the $100m cash because it needs to operate at peak efficiency and NOT just because it earned $100m cash and doesn't know what else to do with it.

I think it's a fair bit stronger than that. It doesn't matter all that much what is ultimately done with the cash--the mere presence of spare cash is given credit. The market generally values any company as [perceived value of operating business] plus [value of excess cash]. This isn't obvious because the first one is so variable, and there can be disagreement about how much cash is excess, but it really does work that way.

Consider a firm that had nothing except $100 per share in cash. Surely the shares are worth about $100 each. A little more if you think management is likely to do something smart with it, a little less if you think management is going to do something dumb with it, but presumably pretty close to $100. For example, the typical SPAC issued at $10 per share usually trades within cents of $10 a share until a deal is announced. (not quite a perfect analogy to the downside because of the now-common redemption option, but apt to the upside)

By extension, an operating business worth $X per share by itself is worth about $10 more per share if they also have $10 per share in unneeded cash. The market bears this out...market prices are pretty wild, but not always totally crazy. For example, when a company pays out a dividend, the share price drops by very close to the per share amount: that amount of the excess cash per share is no longer counting towards the perceived value of a share. You can even estimate the average tax rate paid on dividends by shareholders of a firm by seeing how much the option prices change on the ex-date of a regular (but not special) dividend.

Jim

Fun thought experiment: Say Mr Buffett completely retires next year and never again mentions Berkshire in public. He has time on his hands, so he launches a SPAC at $10 per share with (as legally required) no deal arranged. What would it trade at?