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Hedge funds fear bankruptcy after Porsche squeeze(Deutsche Bank also hit hard)
Times of London ^ | 10/30/08 | Helen Power, Tom Bawden and Christine Seib

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.

/snip

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 ...


TOPICS: Business/Economy; Extended News; Foreign Affairs; News/Current Events
KEYWORDS: hedgefund; porsche; shortsqueeze; volkswagen

1 posted on 10/29/2008 10:20:15 PM PDT by TigerLikesRooster
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To: TigerLikesRooster; PAR35; bamahead; AndyJackson; Thane_Banquo; nicksaunt; MadLibDisease; ...

Ping!


2 posted on 10/29/2008 10:20:49 PM PDT by TigerLikesRooster (kim jong-il, chia head, ppogri, In Grim Reaper we trust)
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To: TigerLikesRooster

Casino Capitalism. Making bets with all your money can pay very well but sometimes you lose, big.


3 posted on 10/29/2008 10:22:27 PM PDT by Eyes Unclouded (We won't ever free our guns but be sure we'll let them triggers go....)
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To: TigerLikesRooster

Looks like the smart boys are not doing too well.


4 posted on 10/29/2008 10:23:04 PM PDT by Mike Darancette (Vote Obama: Get more stuff!)
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To: TigerLikesRooster

I’d like to see all the short selling hedge funds be wiped out.


5 posted on 10/29/2008 10:23:26 PM PDT by Mad_Tom_Rackham ("The land of the Free...Because of the Brave")
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To: Mike Darancette; durasell

Expect plenty of property in Greenwich, CT. to be up for sale soon.


6 posted on 10/29/2008 10:23:45 PM PDT by Clemenza (PRIVATIZE FANNIE AND FREDDIE! NO MORE BAILOUTS!)
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To: Mad_Tom_Rackham

Why???


7 posted on 10/29/2008 10:28:12 PM PDT by USFRIENDINVICTORIA
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To: USFRIENDINVICTORIA
Why?

Schadenfreude.

8 posted on 10/29/2008 10:31:00 PM PDT by Clemenza (PRIVATIZE FANNIE AND FREDDIE! NO MORE BAILOUTS!)
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To: Clemenza

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.


9 posted on 10/29/2008 10:31:36 PM PDT by durasell
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To: Clemenza

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.


10 posted on 10/29/2008 10:31:50 PM PDT by patton (cuiquam in sua arte credendum)
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To: TigerLikesRooster

If this takes a bite out of George Soros’ bum, then I say, “Yippee!”


11 posted on 10/29/2008 10:36:53 PM PDT by Army Air Corps (Four fried chickens and a coke)
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To: Mike Darancette
Looks like the smart boys are not doing too well.

They can fire their quants and get some better ones from the newly jobless Wall Streeters
12 posted on 10/29/2008 10:40:46 PM PDT by dennisw (Never bet on Islam! ::::: Never bet on a false prophet!)
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To: Army Air Corps

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.


13 posted on 10/29/2008 10:43:29 PM PDT by johnnycap
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To: TigerLikesRooster

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


14 posted on 10/29/2008 10:44:22 PM PDT by dennisw (Never bet on Islam! ::::: Never bet on a false prophet!)
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To: dennisw
They should be mandated to work on sewers, road and rail construction for the rest of their lives in exchange for 3 humble meals a day.

long-term employment for very minimal fixed income(automatically guaranteed to be very low return.) Something they are not used to.

15 posted on 10/29/2008 10:54:17 PM PDT by TigerLikesRooster (kim jong-il, chia head, ppogri, In Grim Reaper we trust)
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To: TigerLikesRooster

That would give them a long time to think about their stupid anarchy. They played with matches and burnt down their own house.


16 posted on 10/29/2008 11:10:07 PM PDT by dennisw (Never bet on Islam! ::::: Never bet on a false prophet!)
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To: patton

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!!

philomath


17 posted on 10/29/2008 11:13:16 PM PDT by philomath (from the state of Franklin)
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To: TigerLikesRooster
F-'EM! These short sellers caused a lot of this mess. I hope the Germans let the SOB's tank!

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.

18 posted on 10/30/2008 4:04:59 AM PDT by Jimmy Valentine (DemocRATS - when they speak, they lie; when they are silent, they are stealing the American Dream)
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