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Hedge Funds Always Knew There Was Some Shady Sh*t Going Down At VW

David Einhorn and Paul Singer were not surprised by the Germans' latest stunt.
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Well, isn't that interesting?

Surprised by the news that the Germans were screwing around with emissions results? David Einhorn and Paul Singer aren’t: According to their lengthy litigation, just seven years ago the treacherous Teutons were hiding something else, namely Porsche’s secret acquisition of a majority of Volkswagen shares as part of a failed bid to acquire the company that eventually led to VW buying Porsche so that VW could have a successor CEO in hand when the current scandal broke. Which secret led to a massive short squeeze and equally massive losses for Greenlight, Elliott and lots of other hedge funds, and about which the German courts could notcare less.

Which brings us to last week, and those hedge funds’ big chance to make it all back and really stick it to the Hun while he’s down. Alas, they were apparently a little too shell-shocked to risk getting burned again.

A measure known as utilization – the amount of VW’s shares that have been borrowed as a proportion of shares that are available to borrow – was less than 15% at the start of the week. That had jumped to 27% by Thursday, but by then the shares had already rebounded.

VW has not been a happy hunting ground for hedge funds, and their chastening experience seven years ago may help explain a reluctance to place bets.

Hedge Funds Frustrated By Volkswagen, Again [WSJ MoneyBeat blog]


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