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      01-12-2009, 07:36 PM   #1
1HungryMan
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How Porsche hacked the financial system and made a killing

Absolutely fascinating read:

http://radian.org/notebook/porsche

"Porsche’s ownership disclosure sent the hedge funds on such a flurry of purchases for any Volkswagen stock still in circulation that the VW share price jumped from below €200 to over €1000 at one point on October 28th, making Volkswagen for a brief time the world’s most valuable company by market cap.

On paper, Porsche made between €30-40 billion in the affair. Once all is said and done, the actual profit is closer to some €6-12 billion. To put those numbers in perspective, Porsche’s revenue for the whole year of 2006 was a bit over €7 billion."
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      01-12-2009, 09:14 PM   #2
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nicely done.... wish I could do something like that with my finance degree.
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      01-12-2009, 10:51 PM   #3
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It's pretty amazing what they did and is completely the fault of a market that is not regulated enough and greedy hedge funds and short sellers.

Porsche picked on people that nobody likes already so it'll be doubtful they will get nailed in any way.
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      01-13-2009, 09:41 AM   #4
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There was an article in the NY Times today about a German businessman who committed suicide because he apparently bet against the VW stock and got hammered by the Porsche trick. You're right about the lack of regulation, but I doubt they will do anything about it.
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      01-13-2009, 12:18 PM   #5
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Quote:
Originally Posted by warmtoes View Post
It's pretty amazing what they did and is completely the fault of a market that is not regulated enough and greedy hedge funds and short sellers.

Porsche picked on people that nobody likes already so it'll be doubtful they will get nailed in any way.
The truth is though, if this happened more often, more of the greedy hedge funds would either be broke, or more conservative, and that would be better than regulation.

I do agree with you that additional regulation would seem to be the answer at this point though.
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      01-13-2009, 01:25 PM   #6
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It's odd that there isn't something preventing this in Germany because there definitely is in Canada and the USA.
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      01-13-2009, 01:55 PM   #7
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Quote:
Originally Posted by Markoni View Post
Hedge funds aren't subject to regulations so the real problem will never really be addressed. As long as one sector of the finance world has free reign to do whatever it pleases, how can you expect fairness and good ethics? In any event, Porsche is under huge scrutiny for this and it appears that regulations will indeed be set to keep companies for pulling a stunt like this again.

I'm not really sure why it should be stopped though. The hedge funds are gamblers. If someone else is smarter than they are, why should they be prevented from taking them for all they're worth?

I don't really see why what Porsche did here is wrong. If you want to short stocks, you better damn sure know who's holding the trump cards or you're going to get raped.
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      01-13-2009, 06:57 PM   #8
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I wonder if you could have estimate Porsche AG's ownership in VW through its financial statement. Fact of life, sometime you win some time you lose. I am sure this ruse wasn't Porsche financial department's original plan, as explained by the article their goal was to protect national asset. Somewhere down the line, they spotted the opportunity and acted on it. Too many "what if" during the initial stage to be premediated. On the other hand if some one did planned it from the beginning I would want to meet him.
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      01-13-2009, 07:04 PM   #9
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Cha-Ching.
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