How Porsche hacked the financial system and made a killing

1HungryMan · 01-12-2009, 07:36 PM

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."

BMWTT135i · 01-12-2009, 09:14 PM

nicely done.... wish I could do something like that with my finance degree.

warmtoes · 01-12-2009, 10:51 PM

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.

ptack · 01-13-2009, 09:41 AM

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.

jeremyc74 · 01-13-2009, 12:18 PM

Quote:

Originally Posted by warmtoes

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.

warmtoes · 01-13-2009, 01:25 PM

It's odd that there isn't something preventing this in Germany because there definitely is in Canada and the USA.

jeremyc74 · 01-13-2009, 01:55 PM

Quote:

Originally Posted by Markoni

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.

Robert · 01-13-2009, 06:57 PM

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.

BForbes · 01-13-2009, 07:04 PM

Cha-Ching.

01-12-2009, 07:36 PM	#1
1HungryMan Lieutenant 25 Rep 536 Posts Drives: 2008 128i Join Date: Mar 2008 Location: Toronto iTrader: (0)	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
BMWTT135i First Lieutenant 15 Rep 356 Posts Drives: BMW 135i MT Join Date: Jul 2008 Location: USA iTrader: (0)	nicely done.... wish I could do something like that with my finance degree.
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01-12-2009, 10:51 PM	#3
warmtoes Lieutenant Colonel 31 Rep 1,917 Posts Drives: EBII 435i xDrive Join Date: Apr 2008 Location: Vancouver iTrader: (1)	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. __________________ *2014 EBII 435i xDrive M-sport* Gone: 2011 TiAg F25 X3 xDrive35i M-sport Gone: 2008 TiAg w/Coral Red E88 135i Cab M-sport
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01-13-2009, 09:41 AM	#4
ptack Brigadier General 306 Rep 4,481 Posts Drives: 135i Join Date: May 2008 Location: NJ iTrader: (0) Garage List 2008 135i [6.50]	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. __________________ 135i, SGM, Coral, Sport Package, Auto, Premium Hifi, USB/ipod, Apex EC-7s, PPK Stage II
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01-13-2009, 01:25 PM	#6
warmtoes Lieutenant Colonel 31 Rep 1,917 Posts Drives: EBII 435i xDrive Join Date: Apr 2008 Location: Vancouver iTrader: (1)	It's odd that there isn't something preventing this in Germany because there definitely is in Canada and the USA. __________________ *2014 EBII 435i xDrive M-sport* Gone: 2011 TiAg F25 X3 xDrive35i M-sport Gone: 2008 TiAg w/Coral Red E88 135i Cab M-sport
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01-13-2009, 06:57 PM	#8
Robert Major General 438 Rep 6,967 Posts Drives: 135i -> is350 -> Tesla M3 perf Join Date: Aug 2005 Location: Socal iTrader: (1)	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. __________________ - There's nothing in my pocket other than knives and lint
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01-13-2009, 07:04 PM	#9
BForbes Moderator 591 Rep 4,240 Posts Drives: BSM 135i/AW E90 M3 Join Date: Feb 2007 Location: Orlando, FL iTrader: (0)	Cha-Ching. __________________ - 04 Honda S2000(gone)
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