VW and Porsche
Discussion
http://news.bbc.co.uk/1/hi/business/7695607.stm
Looks like Porsche played a bit of a blinder.
It did raise a smile. Although my pension is probably invested with these hedge funds knowing my luck!
Looks like Porsche played a bit of a blinder.
It did raise a smile. Although my pension is probably invested with these hedge funds knowing my luck!
G'kar said:
BBC said:
As an indication of how silly the market valuation is..
Silly?Is that the best the British Broadcasting Corporation could come up with?
Reads like a child wrote it.
Busa_Rush said:
G'kar said:
BBC said:
As an indication of how silly the market valuation is..
Silly?Is that the best the British Broadcasting Corporation could come up with?
Reads like a child wrote it.
Short-selling.
I don't get it.
Why would someone who has invested their hard-earned funds in some shares, lend them to someone else keen to drive the price down, before having them returned? Which shareholder would want their stock to be worth less?
Do pension fund managers lend their share portfolios to short-sellers?
I don't get it.
Why would someone who has invested their hard-earned funds in some shares, lend them to someone else keen to drive the price down, before having them returned? Which shareholder would want their stock to be worth less?
Do pension fund managers lend their share portfolios to short-sellers?
V8mate said:
Short-selling.
I don't get it.
Why would someone who has invested their hard-earned funds in some shares, lend them to someone else keen to drive the price down, before having them returned? Which shareholder would want their stock to be worth less?
Do pension fund managers lend their share portfolios to short-sellers?
Shorting does not drive the price down. It is a gamble that the price will drop.I don't get it.
Why would someone who has invested their hard-earned funds in some shares, lend them to someone else keen to drive the price down, before having them returned? Which shareholder would want their stock to be worth less?
Do pension fund managers lend their share portfolios to short-sellers?
If you are an institutional investor, you may be holding the stock long term, with no intention of selling.
If the price is going to drop, it's going to wether you lend the stock or not. But if you do, you get the rent on your shares.
Simplistic explanation.
This is amazing in the same way that the BMW rape of VW over RR was amazing.
I pressume that porsche are selling back some of the sahres at >1000 euro to the hedge funds to allow them (the hedge funds) to cover their positions and avoid legal action. Meahwhile Pork are pissing themselves with laughter knowing in a few weeks time they can buy these shares back again at a fraction of the price.
The irony is magnificent.
Forget pwned. The hedge funds have been porkd.
I pressume that porsche are selling back some of the sahres at >1000 euro to the hedge funds to allow them (the hedge funds) to cover their positions and avoid legal action. Meahwhile Pork are pissing themselves with laughter knowing in a few weeks time they can buy these shares back again at a fraction of the price.
The irony is magnificent.
Forget pwned. The hedge funds have been porkd.
Edited by Olf on Wednesday 29th October 09:47
anonymous said:
[redacted]
Tonker - this is beneath you.The valuation of VW is severely out of whack. Shorting the stock makes sense because (as long as you can hold on to that short) it will return to a realistic valuation once the Pork/VW/Saxony issue is resolved.
If a hedge fund put on a short without checking the German regs I would be astonished.
Help! I don't 'do' hedging but feel I have a basic grasp of how it - and in particular shorting - works. However my attempt to explain short selling to my (intelligent) g/f has met with a very blank look followed by an arguement. Could one of the experts on here explain - preferably concisely, with no jargen and using illustrative figs. - how money is made (or not!) from betting on share prices falling. I'm rather hoping this will then lead to me saying 'see, that's what I said' or something similar. 
Pugsey said:
Help! I don't 'do' hedging but feel I have a basic grasp of how it - and in particular shorting - works. However my attempt to explain short selling to my (intelligent) g/f has met with a very blank look followed by an arguement. Could one of the experts on here explain - preferably concisely, with no jargen and using illustrative figs. - how money is made (or not!) from betting on share prices falling. I'm rather hoping this will then lead to me saying 'see, that's what I said' or something similar.
I suppose it's like betting on a horse to lose. If it loses, you win, and if it wins, you lose.Except in this case you get to play with somebody's else's money, so if you lose it doesn't really matter...
Simpo Two said:
Pugsey said:
Help! I don't 'do' hedging but feel I have a basic grasp of how it - and in particular shorting - works. However my attempt to explain short selling to my (intelligent) g/f has met with a very blank look followed by an arguement. Could one of the experts on here explain - preferably concisely, with no jargen and using illustrative figs. - how money is made (or not!) from betting on share prices falling. I'm rather hoping this will then lead to me saying 'see, that's what I said' or something similar.
I suppose it's like betting on a horse to lose. If it loses, you win, and if it wins, you lose.Except in this case you get to play with somebody's else's money, so if you lose it doesn't really matter...
But how do the mechanics of it actually work?It has been going on for a few weeks.
The analysts have been waiting for it to blow,,,,,,here is a guideline to how the game worked..
http://ftalphaville.ft.com/blog/2008/10/17/17150/p...
The sums reported in the media for hedge fund losses appear greatly exaggerated, unusual for journalists to make a mistake?
The nub of squeezing the shorts is that, they have to borrow in the short term to stay in the trade hoping for the price to come down to buy back at a profit...if you are in a position to control the borrowing (as in not lending) they will have to buy back their short obligations at the prevailing market price....simply short term supply/demand inbalance where the supply of stock was resticted.....Porsche ,selling 5% of VW today to ease the strin a little,,,,then they can continue to increase theor holding of VW at lower prices!
At one pint yesterday, VW was the largest company in the world (by capitalisation)....not bad when you consider the current woes of other major automobile producers.
The analysts have been waiting for it to blow,,,,,,here is a guideline to how the game worked..
http://ftalphaville.ft.com/blog/2008/10/17/17150/p...
The sums reported in the media for hedge fund losses appear greatly exaggerated, unusual for journalists to make a mistake?
The nub of squeezing the shorts is that, they have to borrow in the short term to stay in the trade hoping for the price to come down to buy back at a profit...if you are in a position to control the borrowing (as in not lending) they will have to buy back their short obligations at the prevailing market price....simply short term supply/demand inbalance where the supply of stock was resticted.....Porsche ,selling 5% of VW today to ease the strin a little,,,,then they can continue to increase theor holding of VW at lower prices!
At one pint yesterday, VW was the largest company in the world (by capitalisation)....not bad when you consider the current woes of other major automobile producers.
It's being reported that the Hedge funds lost £13 Billion in two days. Holy s
t!
http://news.bbc.co.uk/1/hi/business/7697082.stm
t!http://news.bbc.co.uk/1/hi/business/7697082.stm
Nick_F said:
Haven't Porsche been making clear their intention to up their stake in VW to 70% plus for several months? Doesn't seem too bright to bet on the value dropping under those circumstances - in effect there is no realistic market in VW shares.
According to the german papers here this morning there are only about 6% of all VW shares in private hands ATM. So Porsche are looking to buy these ASAP and a lot of investors in Germany are looking for a safe investment, thus the bound in value. (from what little I know of shares)Porsche played a blinder and are forcing the "illegal" law (VW Law which gives Nordrhein Westfalen a blocking minority of when owning only 20% shares) through court again, so that they can at last gain control of the board from waster NRW politicians and trade unionists.
from what I can understand:
1. Hedge fund managers wanted to make a quick buck.
2. Traders borrowed stock from investors.
3. Traders dump stock to drive price down and buy back on the cheap. (pocket the difference due to a higher selling price and lower buying price)
4. Porsche buys up all the shares. (smart vultures)
5. Traders dont have enough stock to buyback to return borrowed stock to investors.
6. price goes up due to low available stock.
7. Traders get WHIPPED!
1. Hedge fund managers wanted to make a quick buck.
2. Traders borrowed stock from investors.
3. Traders dump stock to drive price down and buy back on the cheap. (pocket the difference due to a higher selling price and lower buying price)
4. Porsche buys up all the shares. (smart vultures)
5. Traders dont have enough stock to buyback to return borrowed stock to investors.
6. price goes up due to low available stock.
7. Traders get WHIPPED!
Pugsey said:
However my attempt to explain short selling to my (intelligent) g/f has met with a very blank look followed by an arguement. Could one of the experts on here explain - preferably concisely, with no jargen and using illustrative figs. - how money is made (or not!) from betting on share prices falling. I'm rather hoping this will then lead to me saying 'see, that's what I said' or something similar.
Lets say you "rent" a $100 share for $2 per week. You sell the share and get $100. A week later the shares value has dropped 10% so you buy back the share for $90 and give it back to whoever you rented it from with a $2 extra ($92 total value). You get to keep $100-$92=$8Does that explain it?
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