It seems a few big players were bitten a bit harder than you would expect by the recent whip-saw action at Volkswagen. Funds including SAC, Och Ziff, Perry Capital, Greenlight Capital, Marshall Wace, Odey Asset Management, York Capital and Glenview Capital seem to have taken a slap or two, and, if the Times Online is to be believed, some funds out there are near bankruptcy because of the swing. (Sloppy risk management, that).
Perhaps the bigger losers are the prop-desks at big investment banks (what remain of their number). Deutsche Bank and Commerzbank have suffered from rumored exposure along with Société Générale. (Hah hah! Sorry, we couldn't help it. They're French).
Porsche, on the other hand, is sitting on something like EUR 6 billion in paper profits.
At issue is the German regulatory environment, which does not require the disclosure of large stakes in cash-settled options. As a result, Porsche could end up with effective control of Volkswagen without so much as a 13D filing.
Mongrel General: WRONG! Porsche. What is best in life?
Porsche: To crush your financial enemies. See der capital driven before you. Hear the lamentations of dee regulatory relations women.
Hedge funds fear bankruptcy after Porsche squeeze [Times Online]
Posted by guest , Oct 30, 2008 11:30AM
First. Achtung!
Posted by guest , Oct 30, 2008 11:31AM
Zwei!
Posted by guest , Oct 30, 2008 11:32AM
what is the rumored Commerzbank exposure?
Posted by guest , Oct 30, 2008 11:33AM
Zwei!
Posted by guest , Oct 30, 2008 11:34AM
Ein Zwei Polizei
Posted by guest , Oct 30, 2008 11:35AM
that is good
Posted by prgy , Oct 30, 2008 11:35AM
Sorry about the strange comments the last few days. I stopped taking my medication and that kind of blurrs my judgement.
Posted by guest , Oct 30, 2008 11:41AM
York and perry are finished.
Posted by cy , Oct 30, 2008 11:53AM
Yet another topic for the "black swan/mandelbrot motion 101" sllyabus.
Posted by guest , Oct 30, 2008 11:55AM
Best. EP. Post. Ever.
Posted by guest , Oct 30, 2008 12:02PM
@8
Based on what? Two or three weeks ago, which in this market could be two or three years, Perry’s drawdown was about 10% - a hurdle rate I think they can manage. Probably had some clients jet and unfortunately they laid off 20% of their workforce, so they’re probably better positioned then most of the hfs out there.
Posted by NotNasser , Oct 30, 2008 12:02PM
Apparently Porsche has heard the cries of "mercy! mercy!" and has decided to send an opiate solution to the hospital tent to soothe the dying.
http://www.marketwatch.com/news/story/Porsche-sell-part-its-VW/story.aspx?guid=%7BB2507535-B304-40C3-85BC-D227AFFE91B4%7D
Posted by guest , Oct 30, 2008 12:17PM
Nice hommage to CONAN
Posted by guest , Oct 30, 2008 12:17PM
@8
Based on what? No word on York, but two or three weeks ago, which in this market could be two or three years, Perry’s drawdown was about 10% - a hurdle rate I think they can manage. Probably had some clients jet and unfortunately had to lay off 20% of their workforce so they’re probably better positioned then most of the hfs out there.
Posted by guest , Oct 30, 2008 12:49PM
Porsche IS a fucking hedge fund!
They made 1 BN last year making Porsches and 3.1 BN on Option positions.
Nice work Hans. Especially when you're fucking your cousin Fritz.
Posted by guest , Oct 30, 2008 1:12PM
Why VW? Why did the HF's take such large short positions in just one company? WTF did they think they knew at the time? It's now obvious that they didn't really know WTF they were doing.
The Guy from Delaware
Posted by Anal_yst , Oct 30, 2008 1:33PM
@ TGFD
Thats a bit of an over-simplification, but your conclusion isn't too-far from the truth for some of them
Posted by guest , Oct 30, 2008 1:58PM
Anal_yst@#17...
Thank you for your response. I still can't understand why people will bet damn near their entire company on just one play. I guess it's easier when you're using OPM, but are these people sick or what?
The Guy from Delaware
Posted by guest , Oct 30, 2008 2:23PM
TGFD:
They also think they know more than everyone else, that they have the Revealed Truth.
So they see weak auto sales, a recession looming, no one is making auto loans, Germany's unions make it impossible to do layoffs, etc. etc. oooh boy - short VW!!! Put ALL the money to work there!
Then they're blindsided by Porsche and start complaining about the regulators being the ones at fault. Rather than admit that they didn't do all the analysis, or that they didn't have any effective diversification/risk control.
Posted by guest , Oct 30, 2008 3:27PM
http://bidsareontheleft.blogspot.com/2008/10/peace-love-and-short-covering.html
Posted by guest , Oct 30, 2008 6:33PM
Porsche's intent to take over VW has been in the market for at least 1-2 years. What's wrong with buying calls rather than paying big fat premium and having others chase them away? Funny though, that those who do not want to be regulated call for regulators now that they got caught short.
My read would be that P. got a friendly call from DB or the likes and were told, "If you still want to bank in G, you better sell back those calls". To those uninitiated about Porsche: Their last year's profit was more than their sales. How come? VW stake prior to the most recent stake increase via calls. If the bankers/HF wrote all the calls the could stomach, they obviously didn't do their homework!