40. How Porsche Made Hedge Funds Lose €20 billion in the VW Short Squeeze
40. How Porsche Made Hedge Funds Lose €20 billion in the VW Short Squeeze
Did you know that at one point Volkswagen (VW) became the most valuable company in the world? It was a surprising event that caught virtually everyone off guard.
You might be asking, “How the heck does a capital-intensive automaker become the #1 company in the world?”. Well, it’s a fascinating story that involves short sellers, hedge funds and a secret plan by the Porsche family to take over VW. It also resulted in short sellers getting burned to the tune of €20 billion. Whoa!
There’s a research paper that examined what happened. It was written by Professor Eric Nowak and his 3 colleagues. Professor Nowak and his team went through piles of court documents to get the raw data. They painstakingly put all the info together and analyzed it to figure out what actually went on.
A little about Professor Nowak: He’s Professor of Finance and Head of the Institute of Finance at the Università della Svizzera italiana. He’s also held visiting appointments at lots of leading universities including Stanford and the University of Chicago.
A huge thank you to Professor Eric Nowak for joining me on this episode.
VW Short Squeeze Research Paper:
Professor Nowak Bio/Contact info:
https://www.sfi.ch/en/people/eric-nowak
Other Papers by Professor Nowak:
https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=156698
Sources:
https://www.ft.com/content/0a58b63a-4294-3e07-8390-c3aabef39a26
https://internationalbanker.com/history-of-financial-crises/the-volkswagen-short-squeeze-2008/
https://newsroom.porsche.com/en/company/annual-sustainability-report-2020/brief-overview-2020.html
Music:
Podcast website:
Wall Street Vision Investing Podcast
Get in touch with Vlad:
Disclaimer:
This podcast is for entertainment purposes only and should not be relied upon as the basis for investment decisions. Before making any decisions, consult a professional. I may maintain positions in the securities discussed on this podcast. This show is copyrighted by the Wall Street Vision, written permission must be granted before syndication or rebroadcasting.