Skip to comments.Hedge funds fear bankruptcy after Porsche squeeze(Deutsche Bank also hit hard)
Posted on 10/29/2008 10:20:15 PM PDT by TigerLikesRooster
Hedge funds fear bankruptcy after Porsche squeeze
Helen Power, Tom Bawden and Christine Seib
Hedge funds were heading for a full-blown row with the German Government last night as it emerged that funds sitting on tens of billions of euro losses after short-selling Volkswagen could go bankrupt.
Porsche, VW's biggest shareholder, stands to pocket a quick 6billion (£4.7billion) profit from the short-selling.
The London-based Alternative Investment Management Association (Aima), the hedge fund trade body, said yesterday that it planned to ask the European Union to clamp down on a controversial German legal loophole that allowed Porsche secretly to take its VW stake to almost 75 per cent.
Andrew Baker, Aima deputy chief executive, said: This sounds somewhat irregular. If you tried that in this country, there would be a number of questions to be answered.
He said losses for hedge funds were likely to be less than a tenth of the forecast 20billion. There are funds hanging on by their fingertips because of redemptions for whom this could be the last straw, he said.
The casualty list of hedge funds hit by the Porsche squeeze on VW grew yesterday as it emerged that Steven Cohen's SAC Capital and Och Ziff, and Perry Capital, a key financier in Malcolm Glazer's takeover of Manchester United, were among the losers. Greenlight Capital, run by David Eindhorn, Marshall Wace, York Capital and Glenview Capital are also among about a hundred hedge funds thought to have made losses.
Deutsche Bank and Commerzbank have seen their shares plunge this week on claims they are exposed to the Porsche fallout. French bank Société Générale is also said to have held short positions.
(Excerpt) Read more at business.timesonline.co.uk ...
Casino Capitalism. Making bets with all your money can pay very well but sometimes you lose, big.
Looks like the smart boys are not doing too well.
I’d like to see all the short selling hedge funds be wiped out.
Expect plenty of property in Greenwich, CT. to be up for sale soon.
Don’t count on it. Those $10 and $20 mil bonuses will last a long time. I’ve met a number of young hedgies who stashed their money in the belief that the good times wouldn’t roll forever. At least that’s one thing they learned from the 1980s.
I am sorry, but this one makes me laugh.
They sold shares they didn’t own, then Porsche announced it owned 75% of VW.
So the funds went ... “uh, oh. busted”.
They then bid up VW to be the largest company in the world, by market cap, trying to cover the shares they sold, but never had, and didn’t even exist.
F’m. This is funny.
If this takes a bite out of George Soros’ bum, then I say, “Yippee!”
This is just piling on...if the funds were properly diversified, they wouldn’t have more than a 2% stake in the VW shorts...having any more was just stupid.
Die hedge funds! They cannot die soon enough. I would ban all derivatives and send unemployed hedgers out to the fields to work with the illegal aliens. Like what Mao did during the cultural revolution. Get these wise guys shoveling manure and hoeing cabbages
long-term employment for very minimal fixed income(automatically guaranteed to be very low return.) Something they are not used to.
That would give them a long time to think about their stupid anarchy. They played with matches and burnt down their own house.
Even more so about the actors: a bunch of engineers making purist cars Trojan horse using a larger automaker and judo the fundies..F’em squared!!
I also want the head of our Securities Excange Commission's on a pike. Unmargined short selling is illegal and he watched and did nothing.