So how many hedgies did Porsche really kill?

Difficult to say, of course, but we’d be sellers of the €30bn figure being banded about by newspapers as they struggle to explain how speculators borrowed shares in Volkswagen, not knowing they belonged to Porsche, sold them, and then seemingly had to buy them back (from Porsche) at five times the price, before giving them to Porsche. (We won’t address the pref side of the trade!)

The €30bn figure would seem to come from taking the raw “borrowed stock” position in VW from Data Explorers (12.9 per cent), subtracting the notional freefloat in VW (5.9 per cent) , multiplying the resultant number of shares by €1,000 - and then adding €10bn to please the news desk.

It’s the financial media equivalent of a crime reporter - charged with providing colour on the scene of a domestic murder - looking in a local estate agency window, finding the most expensive property in the locale and then doubling the price for effect.

In reality, exchange data suggests something like 22m shares in VW have actually changed hands at prices ranging from €210 to €1005. Without getting too VWAP-ish about this, stripping out double counting, that points to maybe €6bn of business conducted at the “wrong” price. Slap a random €200-a-share price tag on VW and the realised losses come in at maybe €4bn.

Painful for those funds caught in the mire, yes - but far from fatal for the global hedge industry.

The damage to Germany’s financial markets, meanwhile, is unquantifiable.

http://ftalphaville.ft.com/blog/2008/10/29/17585/so-how-many-hedgies-did-porsche-really-kill/

 

Not enough

 

How come these geniuses aren't on CNBC anymore?

Wait till you boys see the damage. Gone, baby, they are gone.

 

A common theme on ET, reveling in the destruction of others. Maybe one day it will be you.

 

If I go down, it'll be because I made an honest mistake, not because I intentionally drove companies out of business, and one time, got my ass in a sling.

Tell me. Where is the "value added" of Einhorn, Ackman, Cohen et. al. now????

 

You know, your diatribes get old. How can you criticize someone for seeing an overvalued asset and wanting to sell it. These companies have a negative/future negative book value and the market is a forward pricing mechanism (albeit slow/poor).

 

Porsche execs phones ringing off the hooks from other company execs wanting emergency assistance in 'extracting value' from their shares.


...Me too. Harry met Sally...'I'll have what she's having.'

 

You don't know who is being taken out on the Volkswagen trade. Most likely nobody that you have a personal vendetta against. Volkswagen is just showing the inefficiencies in the German stock market. Some people's lives are forever changed because of the trade, for no rational reason.

 

David Einshit was short Volkswagon, see http://dealbreaker.com/images/thumbs/Greenlight Capital Letter (1-Oct-08).pdf

 

In this game, you have winners and losers. I really don't feel bad for the participants that lose, because had they won, the counter-party would have lost.

If you have too much compassion for people losing their money, you should not play this game I guess.

I personally don't mind seeing some of the big boys take their lumps, as they have kicked a lot of people's asses in their time as well.