VW shares up 54 % on Porsche move

http://en.wikipedia.org/wiki/DAX

http://deutsche-boerse.com/dbag/dis...ics_analytics/10_weighting_and_related_values

When market cap was 68 billion EUR, weighting was 16.67% and DAX market cap was 411 billion EUR

At share price of 800 euros, market cap is about 232 billion EUR. Assuming (to make calculation easy) no change in other components, DAX market cap is 411 + 232 - 68 = 575 billion EUR

So VW would be about 232 / 575 or 40% of the index.

There are some errors in the above calculations, but they should be close enough (hopefully)






Quote from m22au:

Alternative trade idea:

Instead of long Porsche and short VW (which is not working)

a trader can short DAX and then long another European stock index.

This is not an arb but rather a speculative trade based on the idea that if/when VW falls, it will drag the DAX down by a fair bit.
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Calculations in my earlier post suggest that DAX would be negative today (despite rally in S&P 500 futures) if it were not for the rise in VW.

Steve S on CNBC Europe reports that this is not just a short squeeze - there are some index funds that may be underweight VOW and may need to buy VOW and sell other DAX stocks in order to get closer to benchmark.

Using my rough calculations in the earlier post, a 70% rise in VOW is worth about an 18% rise in the DAX.

What a crazy situation.
 
thanks for that Top.

As you might be able to tell, I have never traded DAX futures before.

I think I will just stick with my short VOW trade for now.

Even at my target price of 500 euros, this gives VW a silly market cap of 145 billion EUR, which is *just* a little more than Porsche at 4 billion EUR

Quote from Topsurfi:

problem is that Dax Future is trading far below Cash-Dax.
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no more VOW available to short at IB.

they were available yesterday and this morning, but no more now.

made some nice trades in vow:

BOT 100 VOW false Stock (XETRA) 655.000 IBIS 09:16:40 29.00
SLD 50 VOW false Stock VW (VOW) 729.405 CHIXDE 09:18:34 29.00
SLD 25 VOW false Stock VW (VOW) 798.110 CHIXDE 09:22:27 19.95
SLD 25 VOW false Stock (XETRA) 808.610 IBIS 09:29:05 20.22
 
Quote from m22au:


The 74% Porsche stake is "worth" about 195.75 billion euros, or 190 billion euros more than the entire value of Porsche.

[[/url] [/B]
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I agree that VOW is crazy overvalued but careful with your numbers.

35% of their "ownership" is via derivatives so they do not actually own the shares - only the upside on their stirke price. Also, much of the original 40% that they do actually own will have been purchased with debt which needs to be offset against the value of their position.

That said, like I say, agrred that VOW looks overvalued. Your sell price looks ok as of right now (VOW 752)
 
Good trades James. I don't think I would have been able to make myself hit the buy button, even if I saw the chart setup.

I'm happy to sit on the short VW (and long Porsche as a hedge) and see if it comes in to 500 euros.

Even at that crazy price, the FT says it is worth more than the sum of all other auto companies.

Quote from JamesJ:

no more VOW available to short at IB.

they were available yesterday and this morning, but no more now.

made some nice trades in vow:

BOT 100 VOW false Stock (XETRA) 655.000 IBIS 09:16:40 29.00
SLD 50 VOW false Stock VW (VOW) 729.405 CHIXDE 09:18:34 29.00
SLD 25 VOW false Stock VW (VOW) 798.110 CHIXDE 09:22:27 19.95
SLD 25 VOW false Stock (XETRA) 808.610 IBIS 09:29:05 20.22
More...
 
Quote from m22au:

Good trades James. I don't think I would have been able to make myself hit the buy button, even if I saw the chart setup.

I'm happy to sit on the short VW (and long Porsche as a hedge) and see if it comes in to 500 euros.

Even at that crazy price, the FT says it is worth more than the sum of all other auto companies.
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yup you're right, was really hard to hit that buy button, but the very next second it was already up, and i had a very tight stop.

wasn't the only trade, but the only one i let run a long way.
also went short on the way down at 900 and closed part at 865 and 804 but most of it got stopped out when it went back up to the 900 area.



if you think, it's just crazy, and it moves the dax so badly...
and it could go to 2000 euro and nobody could do anything (if porsche and lower saxony keep their stakes)...
the huge shorts are just fucked.
 
Thanks for the comments CBuster.

***
FT:
VW shares rose 147 per cent after Porsche unexpectedly disclosed that through the use of derivatives it had increased its stake in VW from 35 to 74.1 per cent, sparking outcry among investors, analysts and corporate governance experts.
***

If we place a value of zero on the 39.1% and just assume that they own 35%.

Then 35% * 291 million = 101.85 million shares of VW owned by Porsche.

Porsche closed at 46.03 on Friday, and yet it fell (???) to 41.85 on Monday, despite VW gaining by a lot on Monday.

Then it is *only* up to 46.80 EUR today, despite another 60% surge in VW.

So at the time of writing, Porsche is nearly unchanged from Friday's close, despite its 100 million plus share stake in VW increasing in "value" by over 50 billion Euros. (100 million * over 500 euros)

edited for previously incorrect values of Porsche

http://finance.yahoo.com/q/hp?s=PAH3.DE

Quote from CBuster:

I agree that VOW is crazy overvalued but careful with your numbers.

35% of their "ownership" is via derivatives so they do not actually own the shares - only the upside on their stirke price. Also, much of the original 40% that they do actually own will have been purchased with debt which needs to be offset against the value of their position.

That said, like I say, agrred that VOW looks overvalued. Your sell price looks ok as of right now (VOW 752)
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Interesting comment about how it could go to 2000 euros.

I coulda shoulda woulda shorted more in the 800s and 900s, but that silly thing called 'risk management' stopped me from doing so.

If I was porsche and/or saxony I'd be busy trying to sell some now, and then buy back at lower prices if they arrive.


Quote from JamesJ:

yup you're right, was really hard to hit that buy button, but the very next second it was already up, and i had a very tight stop.

wasn't the only trade, but the only one i let run a long way.
also went short on the way down at 900 and closed part at 865 and 804 but most of it got stopped out when it went back up to the 900 area.



if you think, it's just crazy, and it moves the dax so badly...
and it could go to 2000 euro and nobody could do anything (if porsche and lower saxony keep their stakes)...
the huge shorts are just fucked.
More...
 
you are in a good situation now... you may put a stop at your entry, or somewhere to take profit...

already at 650, soon 500 (or back to 1000)
 
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