Thursday, October 30, 2008

I have had hedge fund managers literally in tears on the phone

Porsche and VW share row: how Germany got revenge on the hedge fund 'locusts'

how financial predators became the prey in the audacious multi-billion takeover of VW by Porsche While "hedgies" bet on VW shares falling because of the global economic downturn, regarded by some as "the safest play in town", Porsche had been secretly building up a 74.1 per cent stake in VW through intermediaries. When Porsche showed its hand, it sent the VW share price rocketing and exposed the hedge funds to breathtaking losses. "I have had hedge fund managers literally in tears on the phone," said one London-based analyst yesterday. Others likened the Porsche disclosure to a "nuclear bomb going off in our faces", describing the resulting losses as "a bloodbath".

Posted by malct @ 11:28 AM (1801 views)
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24 thoughts on “I have had hedge fund managers literally in tears on the phone

  • Yes this is true and explains why the dax has been behaving a bit cr-a-z-i-ly. The hedge boys should know a bit better – there isnt that much free stock in play so only increases the volatility. Actual could the reason the fight is on between the 2 have anything to do with Ego?!?!? Ego Germans? Who’d thunk that!?!

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  • How many of them can afford Porsches now? haha.

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  • Radio 4 were talking about this last evening. Got to admit that I laughed my head off. If you play with fire………

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  • Within a day or two the shares doubled and then went back to their previous level. Now I know why I play the horses.

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  • Most of these people couldnt be trusted with a hedge trimmer never mind a hedge fund

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  • It was only a matter of time before those who can manipulate big time swatted those who manipulate on a comparably small scale.
    Speculative wealth is simply a gamble. It’s all down to control. Get too big,too powerful,become a threat and those who make the rules will extinguish the upstarts.

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  • yes this was great stuff. the german way of dealing with these parasites – very sweet.

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  • planning4acrash says:

    Bob Chapman of theinternationalforecaster.com, once the world’s largest gold dealer said that sheople will follow illuminist insider traders connected to Goldman’s and the Fed, EU al. to be sheared of all their wool, having failed to create a stock boom.

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  • I have always been an admirer of the Porsche Car Company not just because I have owned an old second hand 944 either. Their business brain is exceptional and this Coup is absolutely breathtaking!
    Black swan moment for the hedgies Ha Ha!!

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  • If these hedge fund managers were so clever, it was their job to know that German stock market regulation could allow such a situation to develop. If they didn’t know, they clearly weren’t worth the high fees they charge (usually 2% per annum plus 20% of any capital gains). They should have known their limitations and stuck to better-regulated markets.

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  • http://www.citywire.co.uk/selector/-/news/fund-manager-interviews/content.aspx?ID=319340&re=4058&ea=118560&Page=2

    Dr Jens Ehrhardt calls for legal shake-up after VW scandal
    By Philip Haddon | 11:47:45 | 30 October 2008

    In the wake of the Porsche and Volkswagen debacle, one of Germany’s best known fund managers, Dr Jens Ehrhardt, has told Citywire of his concerns about the effect it will have on attitudes towards the stockmarket.’I am very concerned about the reputation of the German stock market,’ he says.In 2002, Germany’s market for technology shares and other supposedly high-growth stocks, known as the Neuer Markt, was closed down after a wave of scandals and bankruptcies which destroyed its credibility and wiped out most of its value. The current fiasco surrounding Porsche and Volkswagen reminds Ehrhardt, who founded the Dr. Jens Ehrhardt Gruppe in 1974, of those times.
    ‘This reminds me of the Neuer Markt, where some fund managers could influence prices in extremely narrow markets because they owned more or less all the shares,’ he says. ‘Some people here were even reminded of the Hunt brothers when they cornered silver in 1979/80.’
    German regulator Bafin has announced it is to investigate accusations of market manipulation and veteran Ehrhardt has called for a radical shake up of regulations in Germany to restore the reputation of its stockmarket.’I think there should be some law – and I asked for that already regarding the Schaeffler/Continental deal- that requires buyers of options to publish their stakes similar to the rules where you have to publish your holdings of 3% and upwards in equity stakes,’ he says. ‘Porsche now can do with calls (and probably puts) whatever it wants by, at the same time, giving public comments regarding their attitude to buying and selling Volkswagen shares,’ Ehrhardt says.
    Ehrhardt has a small long position in Porsche in his portfolios, but overall he is still remaining cautious on equities and expects volatility to increase yet further. He does not expect a bottom for equities to be reached until 2009. I think sentiment indicators show that there is potential for a good technical reaction,’ he says. ‘But from the low we have seen already 20%, and my initial guess was a 30% recovery. But even in 1929/32 we had 50% recoveries. I don’t think this has been the bottom which we will probably reach next year. ‘Central banks try to solve the problems with even higher liquidity. This will lead to even higher volatility in stock markets, bond markets, raw materials and precious metals and currencies. In this extremely volatile and dangerous environment we try to be cautious and keep the main assets in short term European state bonds while investing small equity percentages, at 20-40% of the portfolio.’

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  • japanese uncle says:

    ‘literally in tears on the phone’
    ————————————————–
    These hedge fungus, if they are willing to conclude their worthless existence, must do that in a remote island or the Antarctic (No thanks for the Arctic, as polar bears will suffer nasty, most likely lethal syspepsia), rather than using railway tracks or high-rise. Only the last moments of their long, obscene and both disturbing and disturbed careers and lives, must not involve yet another annoyance and nuisance to their fellow human beings, please.

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  • It’s highly entertaining the way this is being fashioned as the ‘real, productive economy’ vs the ‘financial parasites’.

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  • When you add techieman’s point @1 (potential for volatility with so few shares in play) to monty’s point @9 (if this sort of thing can happen in Germany it’s up to investors to know about it) you get hedge fund managers whose hedges work only in the good times (i.e. they’re ultimately useless even on a purely technical level).

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  • 12. shipbuilder

    ‘real, productive economy’ vs the ‘financial parasites’.

    Or

    Germany vs England

    take your pick

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  • anyone seen this, it is incredible

    news.bbc.co.uk/1/hi/england/devon/7699112.stm

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  • This couldn’t have happened in the UK because all the inside traders would have been told that Porsche was buying and would have bought too.
    You see this before any take over in the UK.
    It looks like the Germans have tackled leaks and insider trading better than the UK. Does this make it a rigged market?

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  • george monsoon says:

    Just out of interest.. could OUR banks have been involved in this fiasco and lost millions.. again!!!

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  • george monsoon – no George this could never happen in the UK as Gordon set up a large single regulator in his days as C of E known as the FSA and all has been well ever since (LOL)

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  • just a thought in passing

    Porsche’s successful tactics bare a sharp resemblance to those of Nathan Recession – no not that one, the earlier model that made a big killing on govnmint bonds just after Waterloo.

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  • george monsoon says:

    For the first half of that sentence.. I was believing you.. right upton the point you mentioned FSA… hahaha..

    Watch the fallout.. I bet there are repercussions…. Long live VW and Porche!!

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  • mountain goat says:

    “In a bear market, money returns to its rightful owner.”

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  • Materialistic Weasle says:

    I’m surprised they don’t go crying to the glubberment asking them to cover their losses

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