Hedge funds hit and run by Porsche

This was a great story from last week: http://flipchartfairytales.wordpress.com/2008/10/29/hedge-fund-managers-run-over-by-porsche/ also covered at the BBC

Those so-hated hedge funds have had their comeuppance in a brilliant move by Porsche. In their takeover attempt of Volkswagen they ended up controlling so many of the VW shares that the hedge funds that had gone short on VW shares ended up losing huge sums of money.

What seems to have happened is that many hedge funds borrowed shares from Porsche to sell on the market and sold those shares to Porsche. When the time came to close out their position they are then forced to buy back these same shares from Porsche at a huge loss. Brilliant.

It doesn’t put the German market in a particularly good light – but you’ve got to admire the chutzpah of a company fighting back against the hedgies.

2 thoughts on “Hedge funds hit and run by Porsche

  1. No it couldn’t. As they say in Germany “Schadenfreude ist die beste Freude”.

    It’s a shame that the German market comes out of this looking mickey mouse – I think companies should be empowered to fight back against the markets like this, it levels the playing field. Why should hedge funds be able to drive a company to bankruptcy, but be immune themselves?

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