'Masters of the Universe' brought down to earth?

scorza

scorza

scorza

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http://www.independent.co.uk/news/business/news/porsche-in-20bn-sting-976896.html

So basically, Porsche say "we're not going to buy VW", hedge funds take up massive short positions on VW, Porsche says "actually we now own 75% of VW", hedge funds lose billions as they have to buy shares now and there's hardly any available ones left :D

Although it's going to be bad with those who had pensions invested in these hedge funds (I thought hedge funds tended to be based around a small number of very wealthy investors though), it's nice to see that a traditional, manufacturing company has put one over on the bankers who seek to ruin companies for personal gain. The self declared masters of the universe have been made to look very human over this.
 
scorza said:
The self declared masters of the universe have been made to look very human over this.
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I've never know a hedge fund manager delcare himself 'master of the universe'. I don't understand why everyone is jumping on them. Even the BBC were being smug about it when they ran this story this morning.
 
Shock horror - someone loses out in a trade. Hedge funds are just as susceptible to the unpredictability of the market as you or I.
 
Well that's the kind of power you wield as an industry-leading company.

That is also why shorting on companies is a quick way to lose a lot of money if it goes wrong. It's easily possible to bankrupt a company with a bad short.
 
Muffin` said:
Why?
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That is such a ludicrously daft question. It was reckless of the hedge funds to predict the shares would fall further still, and was reckless of Porche not to announce the take over bid. Infact, they didn't just not announce it, they actively sought to keep it secret.
 
They didn't do a very good job of keeping it secret, mind. It was slightly obvious what was going on the moment they began to increase their stake in VW a while back. They specifically stated that they were taking an increased stake in VW in order to prevent hedge fund vultures dismantling the company (see this article from March '07).
 
[DOD]Asprilla;12791291 said:
It's possible to do the same with any bad investment.
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Except with short selling, your losses are potentially infinite. It should be too risky to work, the only reason it does work is the hedge funds working together to wield a massive, unfair influence on the market. Unfortunately for them, they got burnt this time.
 
Dj_Jestar said:
That is such a ludicrously daft question. It was reckless of the hedge funds to predict the shares would fall further still, and was reckless of Porche not to announce the take over bid. Infact, they didn't just not announce it, they actively sought to keep it secret.
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They're probably lucky not to be investigated for insider trading at this point, they were too secretive about the deal...
 
JRS said:
They specifically stated that they were taking an increased stake in VW in order to prevent hedge fund vultures dismantling the company (see this article from March '07).
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Hedge funds don't dismantle anything, they trade and have no interest, nor the skills to take control of a company and break it up. I think the quote is mixing up hedges with private equity and venture capital.
 
Dj_Jestar said:
That is such a ludicrously daft question. It was reckless of the hedge funds to predict the shares would fall further still, and was reckless of Porche not to announce the take over bid. Infact, they didn't just not announce it, they actively sought to keep it secret.
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Good old fashioned business practice. If they let it be known they were going to buy VW then they'd have to pay more for their VW shares. It's not like the Hedge funds aren't averse to not being truthful to strengthen their positions, so all is fair.
 
scorza said:
Except with short selling, your losses are potentially infinite. It should be too risky to work, the only reason it does work is the hedge funds working together to wield a massive, unfair influence on the market. Unfortunately for them, they got burnt this time.
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Thats just rubbish. It's simply a way of making profit on price drop, if you actually knew anything about the way hedge funds work then you'd understand why thats an essential part of their strategy, instead you seem to think they exist only to short stocks. And any collusion to influence the market would be illegal, but don't let that interrupt your conspiracy theories.
 
Seriously guys - how was this such a big secret???

October '05 Porsche buys an 18.53% stake in VW.
July '06 they take it above 25%.
March '07 they take it to 30.09%, saying that the move is designed to prevent hedge funds from dismantling the company.
March '08 they announce that they plan to take their stake up to 51% by the end of the year.
September '08, they take their stake up to 35%.
And now, in October '08, they announce that they have 42.6% of shares and a bunch of stock options as well.

So they announced back in March that they're going to buy up stock until they get a 51% stake by the end of the year. Why the hell is everyone now so surprised that they're getting close to that target?
 
bigredshark said:
Thats just rubbish. It's simply a way of making profit on price drop, if you actually knew anything about the way hedge funds work then you'd understand why thats an essential part of their strategy, instead you seem to think they exist only to short stocks. And any collusion to influence the market would be illegal, but don't let that interrupt your conspiracy theories.
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As he said already, short selling can lead to potentially infinite losses.
Unlike buying shares, where you can only lose the amount of money you invest, it is literally infinitely more risky.
 
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