VW shares up 54 % on Porsche move

Correction:

When share price was 520 EUR, VW weight in DAX was 16.67%
(VW market cap was 151 billion, but 68 billion value assigned in DAX or 45% of shares out or 131 million shares).

and also 1/6 = 16.67%

so one-sixth of the VW price movement is the contribution it makes to the DAX.

Currently VW +30% and DAX +5.4%. So the DAX is up by about 0.40%, if VW was unchanged


Quote from m22au:

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)
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Even at 500 euros, the market cap is a crazy

291 million * 500 = 145.50 billion EUR or about 181 billion USD.

So even though shorting at 880 and covering at 500 is a nice trade, I am thinking that I could set the buy to close order at lower than 500, if anything.

However I still have to keep in mind the crazy situation with the free float.

Maybe a buy stop at 600? I am still thinking about it.

Quote from JamesJ:

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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For what it's worth, 500 is:

(1) near today's low of today
(2) near today's open
(3) near yesterday's close
(4) a nice round number


Quote from JamesJ:

just bought some 50 long at 625, we might see another nice run up.
stop 600
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update:

People catching on to the arb situation a little bit.

Porsche now up 15% to 48 EUR and near high of day which was 48.49 EUR




Quote from m22au:

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
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w w w .marketwatch.com/news/story/porsche-raises-its-stake-vw/story.aspx?guid=%7BAD0405DA-5914-4879-81B3-CB1E2E47EFCD%7D&tool=1&dist=bigcharts&

Quote from SCNinvestor:

this link is impossible to be opened... :(
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