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General VW Discussion This is a place for General VW topics (the company, not your vehicle). General topics about a specific vehicle should be posted in the General TDI Dicussion Forum sections for that vehicle platform. A4, A3 & B4, B5, etc.

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Old October 27th, 2008, 14:15   #1
aja8888
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Default VW shares double today

http://www.forbes.com/feeds/ap/2008/...ap5609501.html

http://www.bloomberg.com/apps/news?p...D0U&refer=home

Ok, now what is next??
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Old October 27th, 2008, 20:29   #2
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Porsche owns 40% and has options on 34%... so only needs 1% more to gain "dominance". This is a typical short squeeze... except the shorts forgot that the state of Saxony owns 20%, leaving a "free float" of only 6% of the total shares. It's a risky game they played, and now they've lost.

The big issues seem to be, will Porsche have the same collegial relationship with the labor unions? And what will Porsche do with Audi?
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Old October 27th, 2008, 22:06   #3
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Quote:
Originally Posted by TornadoRed

The big issues seem to be, will Porsche have the same collegial relationship with the labor unions? And what will Porsche do with Audi?
one big happy family? i would hope
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Old October 27th, 2008, 23:27   #4
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With more oil burners ...since we are on the subject of hoping...
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Old October 28th, 2008, 05:22   #5
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VW has the highest market cap of any company in the world. It surpassed Exxon-Mobile this morning.
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Old October 28th, 2008, 05:24   #6
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Volkswagen AG shares (symbol VOW.XE on the Frankfurt exchange) opened at €500/share this morning, then rallied to €1005 before falling back to €675 -- up €156 from Monday's close. This was the quote at 1130 GMT, so not at the end of the trading day.

According to Dow Jones, VAG was for a brief time the largest capitalization company in the world, surpassing Exxon-Mobil.

Porsche owns 42.6% and has options for 31.5%, for a total of 74.1% of all VAG shares. Lower Saxony holds 20.1%, leaving a "float" of 5.8%. It is not clear how many shares were shorted, but those folks have to be pretty desperate to get out of their trades -- theoretically there is no upper limit on how much they might have to pay. But Porsche isn't going to sell them any shares, nor is Lower Saxony. (Though perhaps Lower Saxony ought to sell a few shares and cut taxes for its citizens. Those shares it owns aren't enough to give it leverage to block Porsche.)
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Old October 28th, 2008, 06:09   #7
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Now at €800, up 54% from yesterday. VAG is singlehandedly driving up the DAX stock market index.
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Old October 28th, 2008, 07:42   #8
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At least there is some good news in somebody's stock market (except for the VW shorts!). Now onto GM and Ford.

Tracinda Corp. (Kerkorian,et al) sold another 26.4 million Ford shares this morning. Hey, what's a few more $100 millions in losses to a 91 year old billionaire? T. Boone Pickens is down $2 Billion in his portfolio since oil fell.

The GM/Chrysler thing is going to get interesting.....this may be GM's chance to *close it up* and get rid of the legacy liabilities and high current costs. May take a few years, though.
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Old October 28th, 2008, 09:04   #9
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Quote:
Originally Posted by aja8888
At least there is some good news in somebody's stock market (except for the VW shorts!). Now onto GM and Ford.
...

The GM/Chrysler thing is going to get interesting.....this may be GM's chance to *close it up* and get rid of the legacy liabilities and high current costs. May take a few years, though.
That's one way to put it -
Report: GM, Chrysler want $10B in federal aid
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Old October 28th, 2008, 09:31   #10
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Quote:
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Besides going to the *new $$ well* (the Fed is becoming an owner of sorts), my point was related to one (or more) possible outcome of the possible merger, which was aimed at reducing long term liabilities through the formation of a new company (or even the future sale/shutdown of product lines). Not out of the picture here is a bankruptcy proceeding if the new venture does not fare well enough to stay afloat. Bankruptcy/reorganization will clear out a lot of financial clutter on the balance sheet...

Quite a difference from the VW/Porsche engagement.
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Old October 28th, 2008, 11:35   #11
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VAG closed at €945 Tuesday, up €425 on the day.

There is nothing to prevent the price from doubling or quadrupling in the next few days. Hedge funds that went short on VAG shares have losses, either realized or on paper, of over $30 billion.

What is interesting is that Porsche shares haven't been that strong, and it's not that big a company. Porsche's market cap is around $9 billion, while VAG is now more than 20 times larger. Note that Porsche borrowed money to buy VAG shares, so it's not exactly clear how it can acquire VAG or merge the two companies. Or at least not clear to me -- I'm sure the Porsche family has a plan.
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Old October 28th, 2008, 11:42   #12
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On a related note, Goldman Sachs and Morgan Stanley have taken a slight hit today because of a rumor that they are *involved* with VOWG.DE (VAG) stock on the short side. But Morgan says *NOT* and Goldman declines to comment.

Boy these markets are tough...
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Old October 28th, 2008, 11:56   #13
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From AutoNews
http://www.autonews.com/apps/pbcs.dl...maildailyANE04

"Porsche said on Sunday it held stock and options equivalent to 74 percent of Europe's biggest carmaker and aimed to push through a domination agreement next year that would give it management control and capture VW's mighty cash flows.

This will almost certainly meet objections from VW's home state of Lower Saxony, which controls just over 20 percent. In return for losing their dividend, minority investors would get an annual cash payout set by Porsche.

Porsche controls 31.5 percent of VW stock via cash-settled options and its counterparties are likely holding shares as insurance against price spikes. This means investors who sold borrowed VW shares in hope of buying them back at lower prices are scrambling to find the few remaining shares on the market.

Sanford Bernstein analyst Max Warburton questioned Porsche's motives in announcing its holding, and suggested the company may have wanted to cash in one last big jackpot at the expense of unsuspecting investors.

"To have shorted the stock, hedge funds must have inadvertently borrowed stock from Porsche," he told clients, citing the less than 6 percent of the shares in free float.

Warburton believes VW's daily trading volume consisted of speculators unknowingly selling these shares back to Porsche or its counterparties, running headlong into a trap.


Estimating the amount of short positions left to be closed at more than 15 percent of VW's total voting stock, Porsche and its banks could now "name their price.""



hehehe... it looks like Porsche will use the money they've scammed from the hedge funds and investment banks to pay for the VAG shares.
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Old October 29th, 2008, 10:16   #14
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A little update, from Auto News:
http://www.autonews.com/apps/pbcs.dl...maildailyANE04

(VAG common shares currently trading at 517 Euros, down 428 Euros, on the Frankfort exchange)

Shares in carmaker Volkswagen nearly halved on Wednesday after main shareholder Porsche took steps to ease a squeeze on shortsellers that more than quadrupled the stock in days.

On Sunday Porsche said it had indirect control of 74.1 percent of VW, leaving less than 6 percent in the market and prompting a shortcovering rush that vaulted VW's market value to 278 billion euros ($348 billion) and its shares to a record close of 945 euros on Tuesday, compared with its weekend close at 210.85 euros.

The stock fell as low as 491 euros in early Frankfurt trading on Wednesday, pulling Germany's blue-chip DAX index GDAXI down 2.2 percent, despite-double digit percentage gains on other stocks after Wall Street's second best gain on record.

"In order to avoid further market distortions and the resulting consequences for those involved, Porsche SE intends -- depending on the state of the market -- to settle hedging transactions in the amount of up to 5 percent of the Volkswagen ordinary shares," Porsche said in a statement.
"This may result in an increase in the liquidity of the Volkswagen ordinary shares," it added.

(snip)
Shortsellers who rushed to close their positions after Porsche's announcement on Sunday were paying virtually any price to get their hands on the few remaining shares, even though Porsche insisted its announcement would allow short sellers to unwind their positions "without haste and without greater risk".
(end of quote)

No one is going to admit a thing, but I think Porsche gave the short-sellers an ultimatum: fork over 500 Euros a share, or take a chance that the price could climb back above 1000 Euros or even higher.

Porsche shares were up 41% today. No wonder, they just made a huge profit skinning some hedge funds.

I love stories like this, they give me such a feeling of schadenfreude.
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Old October 29th, 2008, 11:29   #15
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Looks like Porsche is in the *Driver's Seat* and will get to 75% ownership next year (plus extorting cash out of the hedge funds along the way).
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