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Porschadenfreude

The chickens have come home to roost for a number of hedge funds who had been short selling Volkswagen shares as Porsche announced that in addition to the 44% of shares it already had in the company it had secured 31% through cash-settled call options.

News like this would normally be only a minor problem for the short sellers however since the German state of Lower Saxony holds just over 20% of VW, Porsche’s disclosure meant that, in fact, there were only 5% of VW’s shares left on the market, whereas traders were shorting for about 13% of those shares! [via]

All day yesterday, the panic to get out compounded the situation: at one stage, VW temporarily became the world’s biggest company by market value.

As the losses have grown, so has the indignation. The hedge funds feel unfairly caught out. VW has been a popular “short”.

This news brought a little smile to my face.

By Matt Wharton

Matt Wharton is a dad, vlogger and IT Infrastructure Consultant. He was also in a former life a cinema manager.

Blogging here and at mattwharton.co.uk

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