Hedge funds hammered by short-selling VW shares

Betting that VW shares are likely to fall given the global economic downturn must have seemed like a cert for the short-selling hedge funds.

Unfortunately, Porsche, which has been gradually increasing its stake in VW over the past year or so announced on Sunday that it held options over an additional 30% of VW's shares, which would take their holding to 74% of VW's equity. With the other 20% held by the Lower Saxony regional government, that meant only 6% of their shares were available to be purchased...

The news came as a shock to the hedge funds, forcing them desperately to buy shares in the open market to cover the shares that they had loaned. Panic buying saw the VW share price rise 350% on Monday and Tuesday, and it is estimated that 22bn Euros have been lost by the hedge funds. Which funds are exposed to this have not yet been revealed.


The big bonus may be slightly smaller this year, but I'm guessing that a Porsche is not going to be on the wish-list.