CFO vs. Hedge Funds

Tue, Nov 11, 2008


In the right corner - Holger Haerter, Porsche’s “CFO extraordinaire”. One of the brightest stars in the automotive world; credited with keeping the German car manufacturer highly profitable in good times and bad (Cayman turned a profit on the very first unit sold!). Mr. Haerter also has a knack for derivatives trading. In the left corner - the world’s most prominent hedge funds.

Over the past few months, hedge fund managers were making a reasonable bet that Volkswagen was grossly overvalued, fueled by a pending Porsche takeover. Taking the global economic downturn and the state of auto manufacturers into account, particularly in America, shorting VW made perfect sense.

On October 26th short sellers were dumbfounded when Porsche announced it has secretly accumulated 32% of VW stock via derivative contracts, bringing its total stake to 75%, essentially wiping out all VW shares available for trading (the rest are held by government and index funds). Short sellers faced a prospect of a “short squeeze”. Rushing to buy stock at any price to cover bets and sending VW valuation into the stratosphere.

Briefly in October, Volkswagen became largest company in the world by market capitalization! To add insult to injury, all this time Porsche was making money lending its VW shares to hedge funds, whom were required to borrow one VW stock for each stock shortened. By some estimates Porsche netted $7.5 to $15 billion in a few days.

And a KO victory goes to Mr. Haerter from Germany!

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Starbucks Gets Bucked By Their CFO

Mon, Nov 10, 2008


Starbucks Chief Financial Officer, Pete Bocian, is bailing on the over-roasted and over-hyped coffee company. Things must be really going south.

Starbucks (SBUX) stock has sunk 59% from over $25 a share this time last year to just about $11. That’s over 20% worse than NASDAQ performance over the same period and over 30% worse than the DOW.

Starbucks may be starfucked…we’ll wait and see what Q3 brings (as of June 30, 2008, their 10Q reports having more than $350 million in cash and investments).

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Pelosi and Reid Are A Danger To Capitalism

Sun, Nov 9, 2008


Can you believe this shit?  The top two Democrats in Congress are urging Paulson to grant aid to the Big 3 auto manufacturers.   I don’t remember anyone asking the American public about this.  Where is the vote?  What gives Paulson, Reid or Pelosi any right to bail out individual businesses as they see fit?

The end of capitalism is nearing unless we do something.  Write your Congressional representative and threaten not to re-elect them if they support ANY measure to bail out the Big 3.  This is simply throwing good taxpayer dollars after bad.

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The Death Of GM

Fri, Nov 7, 2008


This might just be the first of our Big 3 American autos that will go under.  Bloomberg sites that GM has lost $73 billion since the end of 2004 and that it may run out of dinero by year-end without additional funding.

American auto manufacturers have been crapping out ugly looking and unreliable cars for the past 20 years and have let our Japanese auto rivals dominate the industry.

This is so embarrassing…

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