Payback is A Bitch: Hedgies To Sue Porsche For Billions

Bertel Schmitt
by Bertel Schmitt
payback is a bitch hedgies to sue porsche for billions

In a report to appear Monday, the German magazine Der Spiegel will write that “several law firms are compiling material for lawsuits to hold Porsche liable. They are working for hedge funds which had lost billions of Euros.” That’s news to Porsche CFO Holger Härter. He says he hasn’t heard of anybody who wants revenge or restitution. “I don’t even know who might have been hurt.” On Sunday, FAZ will publish an interview with Härter. First question: “When will the hedge fund called Porsche close its sheet metal factory?” Härter’s answer: “Our core business is and remains the automobile.” Everybody knows: not true. Porsche made more profits than sales in the last fiscal year. Of €8.6b in profits, only €1b were generated in that sheet metal factory. €7.6b were generated with derivatives. That was in the last fiscal year, which ended July 31. God, Härter and Wiedeking only know how much the Porsche hedge fund generated in the months thereafter, when the VW stock went wilder than girls at Mardi Gras. Härter now says they didn’t really mean it. Here is Härter’s version:

When Porsche started to think about taking an interest in Volkswagen, Härter says, they did the same any prudent businessman would do: hedge a little. Take out some insurance against, god forbid, a rising VW stock. At that time, the VW stock traded at around €30– pretty much the same level as it did for many, many years before. Shortly after Porsche innocently took out insurance, the VW stock started to inexplicably climb. It doubled in 2006. Doubled again in 2007. It shot up to over €1000 in October.

Praise the Lord for insurance! Härter claims he doesn’t like these high stock prices at all. “If the stock would have stayed at the old levels, we would have had to pay much less taxes than now.” Yes, profits can be such a bear when the taxman cometh. Everybody will have sympathy.

While lawyers are sorting their paperwork, Härter is already preparing his defense. Härter to the FAZ: “These accusations are totally without merit. We deny any responsibility. We observed the law. We duped nobody.” We’ll see how that plays in court.

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  • Martin Schwoerer Martin Schwoerer on Dec 02, 2008

    Tireguy: thank you for your informative posts! In particular, thanks for sharing the background information about the cash settled options, etc.

  • Blowfish Blowfish on Dec 02, 2008

    Porsche had long ago notified that they owned more than 30%. Any shortseller knew that Porsche could add further 20% without further need of notification. Further anyone knew that Lower Saxony owned further 20% and would not let go. Finally, since the takover of Contiental any serious trader knows that companies can also try to get options on shares through so called “Cash settled option”, where usually the banks secure against their risk by buying the stock themselves. This happened here for about 30% of VW stock. Consequence: the Hedgies just were stupid and greedy. Does this not ring a bell? If u're going to short anything u need to know first if thats a strong co. Porsche or any of these German co. got loads of cash, unlike the penny stocks of Vancouver exchange in its heyday. Just about anybody can have a co. U can make your dog secretary & CEO, a couple of beat up Buicks a wood desk listed as assets. Sollt these folks mistaken the Iceberg as a beautiful beach that u can go full tilt to land on the beach thats all.

  • SCE to AUX @Matt Posky: This may surprise you, but I agree with your criticisms is this story.This vehicle has the look and weight of the Telluride, but without the right chops. A vehicle like this is intended to be a great highway cruiser loaded up with all the stuff one takes on a trip - not a 0-60 racer.My former Sedona (RIP, sniff) had a great blend of space, power, and towing capacity. It was lovely for countless road trips, but it was a ponderous commuter.The EV9 won't make a great road trip car due to its short range, and it is too hulking to make sense as a commuter. They should have fitted a 150 - 200 kWh battery so it could at least go some distance, and that might justify the bulk.No way I'd go in for ~$60k for this vehicle.
  • Jeff S I like the looks of this car and in today's dollars it might not be that bad a buy but my issues with this Genesis would be Hyundai's reliability in recent years has been below average and getting a car like this serviced at a Hyundai dealership. I do like the rear reclining rear seats and the massage settings. Beautiful car but I would take the safer option of a preowned Lexus which gives you better reliability and lower maintenance costs than the South Koreans and the Germans. Genesis is definitely a luxury car with the extras that are standard but it is still a Hyundai. These will depreciate a lot as do the German cars which once they get old a Pandora's box of issues crop up and they become expensive to maintain. Good write up.
  • Tylanner Cinnabon is the holy grail but Starbucks or Dunkin will do. I will only resort gas-station coffee in extraordinary circumstances.
  • Akear My Fusion is nearing the 200,000 miles mark. However, I do not want to replace it with an unreliable Escape, which could blow its engine by 60,000 miles. Ford has gone down hill since Fields was forced out. Both Hackett and Farley have made Ford the nation's recall king. What happened..................
  • Stuart de Baker Chris Tonn, having driven a G90, I thought your review was excellent, and I much enjoyed the humor. Being somewhat older than you are, I thought of it was a modern rendition of a 62 Cadillac and a '64 Lincoln I drove in 1970, a car that aimed to please in similar ways, but did a much, much better job of it. Your description truly captures that, when you said "It drives like a stable cloud."To be sure, it's not the car I'd buy if I had 100 Gs to spend on a car; nonetheless, I found I loved it when I drove it--and when I looked at it after having driven it--somewhat to my surprise.I haven't been reading TTAC much, but I'll be looking for your reviews.