How much did SAC lose on Volkswagen?
- Thread starter mingsphinx
- Start date
Actions speak louder than words, SAC is raising money. Why would a fund which had claimed to be sitting mostly on cash and that has had quite a bit of trouble in recent years getting good returns because of its size seek to raise funds in this environment? SAC¡¯s capital raising was painted as a demonstration of strength, but it should properly be seen as a sign of desperation.
A lot of firms have come out to either affirm or deny losses from Volkswagen. The public statements are necessary as it is obvious that a very large amount was lost by a relatively small group of speculators; some of whom will have to shut down. Thus far, SAC has said nothing. Despite having been named as one of the losers, SAC refuses to affirm the losses. Instead they are plugging ahead with this odd effort to raise money. Why is SAC silent about a potential material adverse change in its operating condition and seeking new capital at the same time?
My suspicions are that this was a trade directed personally by Steve after the group had gone into cash at the bottom of the market. And it was a decision that had been made only in October. Because they were sitting on so much cash, there must have been quite a temptation to do something significant so as to claw back the year¡¯s losses; hence the Volkswagen trade. Good short targets were hard to find at that point because markets had already fallen so dramatically. Initially it looked like the short attack had worked and they must have really ploughed into the trade when the price of Volkswagen shares fell below EUR 250. How hard can it be? Just look at a relative value analysis between VW and the rest of the automakers and it becomes obvious that Volkswagen is grossly overvalued. It would not surprise me to learn that SAC was responsible for 10-20% of the short position in Volkswagen. Steve¡¯s ego alone would have required him to take a large, lead dog position.
I think SAC¡¯s kitty is now dry, all their cash is gone and they may even have had to put up their illiquid assets as margin to forestall a blowup. They need to raise money alright but no one in their right minds would give them a penny without taking a good hard look at the books. The telltale sign of trouble would be if they offered investors in on favorable terms but insist on providing information up until end of the third quarter only. It is a developing story, would appreciate information from anyone with an inside look though.
A lot of firms have come out to either affirm or deny losses from Volkswagen. The public statements are necessary as it is obvious that a very large amount was lost by a relatively small group of speculators; some of whom will have to shut down. Thus far, SAC has said nothing. Despite having been named as one of the losers, SAC refuses to affirm the losses. Instead they are plugging ahead with this odd effort to raise money. Why is SAC silent about a potential material adverse change in its operating condition and seeking new capital at the same time?
My suspicions are that this was a trade directed personally by Steve after the group had gone into cash at the bottom of the market. And it was a decision that had been made only in October. Because they were sitting on so much cash, there must have been quite a temptation to do something significant so as to claw back the year¡¯s losses; hence the Volkswagen trade. Good short targets were hard to find at that point because markets had already fallen so dramatically. Initially it looked like the short attack had worked and they must have really ploughed into the trade when the price of Volkswagen shares fell below EUR 250. How hard can it be? Just look at a relative value analysis between VW and the rest of the automakers and it becomes obvious that Volkswagen is grossly overvalued. It would not surprise me to learn that SAC was responsible for 10-20% of the short position in Volkswagen. Steve¡¯s ego alone would have required him to take a large, lead dog position.
I think SAC¡¯s kitty is now dry, all their cash is gone and they may even have had to put up their illiquid assets as margin to forestall a blowup. They need to raise money alright but no one in their right minds would give them a penny without taking a good hard look at the books. The telltale sign of trouble would be if they offered investors in on favorable terms but insist on providing information up until end of the third quarter only. It is a developing story, would appreciate information from anyone with an inside look though.
Having read every single 13F and 13g filing that all the main funds and sub funds have produced (sec.gov edgar) - you'll note that their long side risk is so diversified that you wonder how they make those returns.... but my point is that if they are so diverse on the long side, you'd assume similar risk controls are in place on the short side, and the funds are ok.
as much as I wonder what if any of the "big guns" in HF world
will shut down more than they have in recent weeks
I tend to think it is more important for an individual trader
to focus on how to make money ( and not lose money )
in these volatile times
than worry or gloat about some gazillionaire's problems
( even if secretly we all want to be like them )
will shut down more than they have in recent weeks
I tend to think it is more important for an individual trader
to focus on how to make money ( and not lose money )
in these volatile times
than worry or gloat about some gazillionaire's problems
( even if secretly we all want to be like them )
Quote from SethArb:
( even if secretly we all want to be like them )
I don't want to 'secretly be like him." I want them to stop fucking me, putting people out of work, bribing people, bullshitting idiots in the public sector,a nd attracting pension money that will not be there for retirement of the citizenry, etc. etc.
It's done with mirrors!!!! Those returns are done with chicanery. You've read for years the business was overpopulated with ner do wells and there wasn't that much difference. And walla!!!! The ultimate crowded trade.
Why do you think they fought so hard to avoid regulation???? The scam might have been uncovered. Well, the laws of probability did that. Can you understand???? Look at the Penson blowup in Canada. Do you understand that was a fail that blew up? Now, anybody with Penson is at risk. Figure it out. They risked everybody, and everything.
No, I don't want to secretly be like them. I have too much self respect.