As I said in the post immediately below, there was a lot going on in October 2008. Here's one of our link-posts from that month:
So how many hedgies did Porsche really kill?
It was a classic corner. My first thought was Northern Pacific 1901 where the stock went from under $100 to $1000 during the squeeze. Although the VW squeeze was only half the magnitude it had the same effect, the speculators sell everything else as they desperately try to locate stock to cover. First up, the headline story from FT Alphaville:Here's the latest via Cassandra Does Tokyo:
Difficult to say, of course, but we’d be sellers of the €30bn figure being banded about by newspapers as they struggle to explain how speculators borrowed shares in Volkswagen, not knowing they belonged to Porsche, sold them, and then seemingly had to buy them back (from Porsche) at five times the price, before giving them to Porsche. (We won’t address the pref side of the trade!)>>>MORENext, some truly pathetic whining from the hedge funds via the Telegraph:
How Porsche took the wind out of the hedge funds' sails
Shortly after 3pm on Sunday, Porsche slipped out its bombshell – in German. So it took a while for hedge fund managers to comprehend the significance....
...With Porsche already owning 42.6pc of VW and Lower Saxony 20pc, this additional 31.5pc left little more than 5pc of shares free to cover short positions that amounted to nearly 13pc of the company's stock. Porsche said it was letting the market know "to give short-sellers the opportunity to close their positions unhurriedly and without bigger risk''....
...As the losses have grown, so has the indignation. The hedge funds feel unfairly caught out. VW has been a popular "short"....MORE
I had a comment on MarketBeat's post "Bug Crushes Exxon":
Too funny.Comment by - October 28, 2008 at 10:41 am
League of Extraordinary Gentlemen
...All this makes Porsche's Volkswagen ummm.... errrrr....call it a pecadillo, all the more incredible, and the losses suffered by the investment equivalent of "The League of Extraordinary Gentlemen" all the more schaudenfraudelicious. Larry Robbins prescient Glenview, David Einhorn's wily Greenlight, Halvorsen's mighty Viking, Singer's calculating Elliot Associates, Carlson's swaggering Black Diamond, as well as SAC, Tiger Asia, and Perry, and another more than forty, well-snookered, plaintiffs all got smoked. There were undoubtedly many more, who, like the guy who tried to open a bottle of Champagne with a corkscrew, were too embarrassed to put their name in the lights.HT: FT Alphaville
Some think, and argue persuasively that Porsche is well-guilty of outright fraud. I am certainly not qualified to judge the legal merits, but as a detached observer, and one who tries hard NOT to be a hypocrite, I am amused that the guys who persistently pursue, and often obtain,The Edge (by hook and/or by crook) are suing because they were, on this occasion, on the very wrong side of The Edge....MORE
See also the prior lawsuit Dec. 2012:
"Porsche Wins Dismissal of Hedge Fund “Short Squeeze” Lawsuit"
One of the sweetest squeezes evah!
And one of closest-to-frivolous lawsuits the biz has seen in a while....
“Such situations as the famous 1901 corner in Northern Pacific are not likely to ever occur again under present regulations…”