Word: stockings
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...scale of the losses the short-sellers would have to absorb grew rapidly as they scrambled to acquire the shares necessary to cover their positions and cut their losses. The stock price soared as it became clear that there simply wasn't enough VW stock in the market to meet demand - short-selling investors had borrowed around 13% of VW's stock, but only 6% was trading freely, the remainder being held by Porsche and the state government of Lower Saxony...
...Although none are openly licking their wounds, the losses are believed to have affected a number of stalwart hedge funds. Commentators across the board blamed Porsche for causing chaos on the Frankfurt Stock Exchange this week. The daily Die Welt called Porsche the biggest German hedge fund, and criticized Germany's lax disclosure laws. Porsche has been stealthily building a stake in VW and it only retained the element of surprise because German law did not require disclosure of the positions that account for more than 30% of its stake in VW. "Only when it is no longer possible...
...Porsche denied any responsibility for the stock market tumult caused by its announcement. And it sought to assuage its critics by promising to sell shares totaling about 5% of VW back to the market to allow banks to close their positions - at a handsome profit, of course, because Porsche first started buying VW shares when they cost $45. No one in Germany is crying any tears for the hedge fund losses, of course, but the episode has alerted many to the fact that casino capitalism isn't confined to Wall Street. And presumably some badly burned high rollers...
Click here for images of fear on global stock markets...
...beautiful while it lasted: Impressive growth rates, speedy development, and a strong and diversified financial services industry put miniscule Iceland on the economic map. But it wouldn’t last forever. In the past month, all three major Icelandic banks have been effectively nationalized, the stock market has crashed, and the International Monetary Fund (IMF) has been called in to calm international investors and prevent the country’s bankruptcy. As the global financial crisis claims its first sovereign victim, it is important to understand that every party involved would have benefited from more coordinated international regulation...