VW shares up 54 % on Porsche move

Quote from makloda:

Volkswagen +75% @ 825 EUR. Went from 200 to 800 in a couple of days.

FDAX +7%.

This is madness.
More...

Deutsche Börse is a joke, they should have stopped VW trading days ago. No ETF / Index tracker can follow Dax index now any more, impossible.
 
Quote from makloda:

Volkswagen +75% @ 825 EUR. Went from 200 to 800 in a couple of days.

FDAX +7%.

This is madness.
More...

Read the Porsche statement :

Porsche has decided to make this announcement after it became clear that there are by far more short positions in the market than expected. The disclosure should give so called short sellers — meaning financial institutions which have betted or are still betting on a falling share price in Volkswagen — the opportunity to settle their relevant positions without rush and without facing major risks.

Ha, ha, ha ! Great Stuff ! :D :) :p :cool:
 
http://www.ft.com/cms/s/0/2ce144b0-a456-11dd-8104-000077b07658.html

free float is 5.8% of 291 million or about 16.87 million shares.

As of last Thursday, 12.9% loaned, or about 37.53 million shares.

******************

But the sudden disclosure meant there was a free float of only 5.8 per cent – the state of Lower Saxony owns 20.1 per cent – sparking panic among hedge funds. Many had bet on VW’s share price falling and the rise on Monday led to estimated losses among them of €10bn-€15bn ($12.5bn-$18.8bn).

As of last Thursday, according to consultancy Data Explorers, 12.9 per cent of VW’s shares were on loan for investors to go short and bet on them falling – the highest percentage of any German company.

Shares in VW closed up €309.15 at €520, giving it a market capitalisation of €153bn, more than all the other US and European carmakers put together.

http://www.ft.com/cms/s/0/03012d40-a45b-11dd-8104-000077b07658,s01=1.html

VW is a very tightly held stock because, alongside Porsche, the German state of Lower Saxony owns 20.1 per cent, leaving a very small free float of less than 6 per cent. Yet, as of October 23, about 12.9 per cent of VW’s ordinary shares were on loan for short sales – representing the highest proportion for any company on Germany’s 30-member benchmark Dax index.

Worse, index-tracking funds also hold stakes in VW and must retain their holdings so long as VW is a member of the Dax index.

With the short interest now almost twice the free float, it leaves hardly any shares for the hedge funds to buy back and close their positions.
 
Makloda and anyone else

I am short VOW right now. Average price is somewhere about 880 euros.

Aiming to cover at about 500 euros or so at this stage.

Given this great 'efficient' market now, is it a good hedge to go long Porsche, just in case this squeeze continues?

Related question: Why isn't Porsche up more? Looks like a free arb for anyone who can get a locate for VOW




Quote from makloda:

Efficient market hypothesis anyone? :cool:

Volkswagen Overtakes Exxon as World's Most Valuable Company

http://www.bloomberg.com/apps/news?pid=20601087&sid=aA7K2PJ47n5M&refer=home

Volkswagen has risen more than sixfold this year, valuing it at 294 billion euros ($367 billion), more than Exxon Mobil Corp.'s $343 billion market value at yesterday's close, according to data compiled by Bloomberg.
More...
 
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.
 
VW: 291 million shares @ 900 euros = 261.9 billion euros.

Porsche: 87 million shares @ 45 euros = 3.9 billion euros

So VW is "worth" about 60 times more, yet Porsche controls 74% of VW.

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

http://markets.ft.com/tearsheets/performance.asp?s=PORX,:GER

http://www.bloomberg.com/apps/quote?ticker=PAH3:GY

http://markets.ft.com/tearsheets/performance.asp?s=de:VOW

http://www.bloomberg.com/apps/quote?ticker=VOW:GY
 
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