So, today involved Volkswagen becoming worth more than freaking Exxon Mobil because shorters of it's stock have experienced the most ultimate short squeeze EVER. In two days the VW stock went from ~250 USD to ~1000 USD/share.
From the Wall Street Journal:
http://online.wsj.com/article/SB122514645135973595.html
What's the German word for coincidence?
After plunging for days, Volkswagen shares closed Friday at €210.85 ($264.46).
Then, over the weekend, Porsche Automobil Holding, which has a large exposure to VW stock, put out a statement prompting a 150% rise in VW shares Monday.
Porsche said it had increased its effective holding of ordinary VW shares to 74.1% of the total. That is up from mid-September, when Porsche said its stake was 35.14%. VW is a heavily shorted stock, so when Porsche's announcement came out, implying that an already-small public float had shrunk further, the short bet immediately became riskier. That likely persuaded short-sellers to snap up VW shares to reduce or close their bets, leading to the rip-roaring rally.
As it turns out, the rally may have helped Porsche get out of a tough spot. Porsche had built up its VW position since the middle of September partly through put and call options. But VW's stock had started falling in mid-October. So Porsche may have been vulnerable to losses, especially if VW shares continued falling below Friday's closing price.
A Porsche spokesman said there were no losses as of Friday on its VW call options. The weekend news release wasn't "motivated by a desire to push up Volkswagen's share price."
No comments:
Post a Comment