By on November 4, 2008

Goldman Sachs is preparing the public for horrific news: a possible loss in the fourth quarter. At least that’s what Merrill Lynch analyst Guy Moszkowski told Reuters. Since Goldman Sachs went public, they’ve never had a loss. Merrill’s Guy fingered the usual suspects: “large corporate private-equity portfolio, equity proprietary trading business and exposure to Chinese equities.” Yadda yadda yadda. Bloomberg said that “a Goldman Sachs Group Inc. fund has lost $990 million since it started in January.” Wall Street has been abuzz with speculation that Goldman Sachs and Morgan Stanley may have a large exposure to the Porsche/Volkswagen machinations. Last Wednesday, Morgan Stanley fell as much as 26 percent in New York trading; rival Goldman Sachs dropped as much as 11 percent “amid speculation a surge in Volkswagen AG shares may have saddled some banks with losses” as Bloomberg put it. When that hit the wire, CNBC called the usual “unidentified Goldman employees with knowledge of the situation,” and they said it’s all wrong: “No significant losses tied to Volkswagen.” Yeah right…

Goldman was deeply in love with Porsche. When Porsche supremo Wendelin Wiedeking bragged at the Frankfurt Auto Show in 2003 that “my CFO can make money even when we’re not selling cars,”analysts at Goldman Sachs cranked out a 48-page research report, praising Porsche CFO Holger Haerter’s complex web of currency plays. That love may have gone very sour. [NB: According to Reuters, Holger Haerter has a base salary of €30m, twice as much as Deutsche Bank’s CEO Josef Ackerman takes home.] The bloom is off the rose, ja?

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8 Comments on “Porsche’s Body Count: Got Goldman?...”


  • avatar
    Landcrusher

    Here is a good question. Now that Porsche has figured out how to make more money being a financial company than a car company will their cars still be desirable?

    The bloom is off the rose indeed.

  • avatar
    volvo

    I don’t know if any of this information on Porsche trading is true but for reasons I don’t fully understand I am enjoying the tale.

    It seems Porsche is not only successful at manufacturing cars but is also pretty good at the trading game.

    It would be pretty funny if the “Masters of the Universe” at Goldman Sachs were caught with their options down (so to speak). The closest most Wall Street traders ever come to hot metal and volatile chemicals is in an Upper East Side bistro where they retire after a hard day of moving numbers from one Excel spreadsheet cell to another. Nothing wrong with that though until your favorite caterer goes bankrupt or your gardener quits.

  • avatar
    tulsa_97sr5

    @volvo

    the only un-funny thing I can think about here is the possibility our tax dollars help cover those losses via the bailout. It’s all a little over my head, even after reading Bertel’s great editorial yesterday.

    So did we all help Porsche pay for VW?

  • avatar
    autonut

    We didn’t help Porsche acquire VW yet, but we will subsidize stupidity at Goldman.

  • avatar
    ihatetrees

    While Porsche deserves credit for the profit they pulled from assorted hedge fund hats, they shouldn’t gloat too much. They’ve used their superior knowledge of non-transparent German finance to make a nice killing.

    But this may be a one trick pony. In the future, everyone in finance will take a very long look before investing in Porsche (even if they’ve got a Cayman-S in the driveway). Good finance people have looooooooong memories.

  • avatar
    cleek

    Memo to congress. Porsche is the auto company to invest in. Not GM. Or Chrysler. Ask Cerebus to explain it to you.

  • avatar
    johnny ro

    I think good finance people should take a gooooood long look at anything they invest in.

    Nothing wrong with Porsche making money in finance. Good for them. Better than losing it like others.

    I did balk at paying for a porsche, its the maintenance, not the purchase price (which is also set too high for my appetite). but thats another story.

  • avatar
    John Horner

    If I were King of the Financial Markets I would not allow the bankers to also be gamblers in the very casinos they run. Trading for the house accounts became the primary money maker for firms which in theory exist in order to support the “real economy”, and not to be the world’s largest gamblers.


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