Confused? - I certainly am
29 October 2008, 02:37 PM
#1
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Confused? - I certainly am
BBC NEWS | Business | Hedge funds make £18bn loss on VW
How the hell do you make an £18bn loss by borrowing shares from a company then selling them back to the same company only to buy them back at a higher price.
No wonder the financial markets are screwed with muppets like these on the case
How the hell do you make an £18bn loss by borrowing shares from a company then selling them back to the same company only to buy them back at a higher price.
No wonder the financial markets are screwed with muppets like these on the case
29 October 2008, 02:47 PM
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In a nutshell.
Hedge funds sold Volkswagen shares.
Porsche then admitted a 74% holding in VW.
Hedge funds panicked, and bought their short positions back.
Net result - hedge funds flat, VW temporarily the biggest company in the world, and Porsche's reputation reinforced. Cost: $28bn. Ouch.
Hedge funds sold Volkswagen shares.
Porsche then admitted a 74% holding in VW.
Hedge funds panicked, and bought their short positions back.
Net result - hedge funds flat, VW temporarily the biggest company in the world, and Porsche's reputation reinforced. Cost: $28bn. Ouch.
Last edited by TelBoy; 29 October 2008 at 03:23 PM.
29 October 2008, 03:03 PM
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Then you had inside information!! A major stakeholder isn't the same as a 74% holder who can then practically do what they want! And when Porsche said they would "even out" prive movements in VW shares, hedge funds saw that as a clear sign that the price would not be allowed to fall further. So they trampled over each other in the rush to buy back their shorts, driving the price to ridiculous heights.
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29 October 2008, 03:08 PM
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29 October 2008, 03:08 PM
#9
you will find Porsche did...... i think it works such as.... Porsche released shares in VW, hedge fund bought them, the sold them to Porsche, hedge funds bought them back at a higher price and then gave them back to Porsche and then rebought them at a higher price again....... or something like that.
29 October 2008, 03:14 PM
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Whoever sold them to the hedge funds at EUR 1,005 each (at their peak)!!
That's the latest press release.
Oct. 29 (Bloomberg) -- BaFin, Germany's financial-market
regulator, opened a formal investigation into the trading of
Volkswagen AG, Europe's biggest carmaker.
The regulator is reviewing ``possible market manipulation,''
BaFin spokeswoman Anja Engelland said in an interview today.
Volkswagen shares rose almost fourfold in Frankfurt trading
this week after Porsche SE announced that it owns 42.6 percent
and has acquired options to increase its stake to 75 percent. The
announcement spurred short-sellers to buy from a shrinking pool
of stock to close their positions.
Porsche, the maker of the 911 sports car, said today it will
unwind options equivalent to as much as 5 percent of Volkswagen's
shares to ease the so-called short squeeze. It wants to stay
``close to'' its goal of building a 75 percent stake in
Volkswagen. Porsche rejects any allegations of market manipulation,
Frank Gaube, a spokesman for the Stuttgart, Germany-based company, said in an interview today.
regulator, opened a formal investigation into the trading of
Volkswagen AG, Europe's biggest carmaker.
The regulator is reviewing ``possible market manipulation,''
BaFin spokeswoman Anja Engelland said in an interview today.
Volkswagen shares rose almost fourfold in Frankfurt trading
this week after Porsche SE announced that it owns 42.6 percent
and has acquired options to increase its stake to 75 percent. The
announcement spurred short-sellers to buy from a shrinking pool
of stock to close their positions.
Porsche, the maker of the 911 sports car, said today it will
unwind options equivalent to as much as 5 percent of Volkswagen's
shares to ease the so-called short squeeze. It wants to stay
``close to'' its goal of building a 75 percent stake in
Volkswagen. Porsche rejects any allegations of market manipulation,
Frank Gaube, a spokesman for the Stuttgart, Germany-based company, said in an interview today.
That's the latest press release.
29 October 2008, 03:14 PM
#13
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Just people being generally clueless and uninformed about the major issues going on in the world around them, despite having more information at their finger tips than any other generation in human history. And from your posts on this topic, it is def aimed at but not exclusive to you...
29 October 2008, 03:21 PM
#14
Gonna be honest with you Nat.... I infracted you for that, 1st infraction I have ever given...... just because someone does not understand how the stock market works does not mean they are a 'weapon'.....
feel free to challenge it and if i have given it against the rules then I apologise in advance and will take the infraction myself.
feel free to challenge it and if i have given it against the rules then I apologise in advance and will take the infraction myself.
29 October 2008, 03:24 PM
#15
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I'm not bothered, infract away. I'd rather say what i feel than just say what everyone else expects me to say like the majority of posters on here do now because they're so scared of being infracted ON A MESSAGE BOARD ON THE INTERNET (OH MY GOD THE HORROR OF IT)
29 October 2008, 03:26 PM
#16
I agree with you 99% ... but on this one I was just trying to provide an answer to a SNetter..... if you knew better then you should of just told me I was incorrect and explained the correct reason.....
29 October 2008, 03:34 PM
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No. The only thing you can be certain of is that hedge funds lost that amount. And even then, the people who have "made" £18bn might only have done so on paper at the moment, they could well have sold shares they didn't actually own.
That's stock markets for you.
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