Porsche's Body Count: Got Goldman?
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?
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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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.
Memo to congress. Porsche is the auto company to invest in. Not GM. Or Chrysler. Ask Cerebus to explain it to you.
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.
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.