Funds Hub
Money managers under the microscope
VW drops as hedge funds move in
Volkswagen ordinary shares are down today after yesterday’s report of increased short positions.
Stock out on loan, a good indication of shorting, has doubled over the past month to 2 pct of total issuance, according to figures from Dataexplorers.
When the freefloat is only roughly 10 pct, then this is a significant position.
It was only in October that hedge funds shorting VW ords were caught in the mother of all short squeezes, when Porsche said it had effective control of 74.1 pct of VW, leaving less than 6 percent tradeable in the market and hedge funds scrambling to cover their positions.
VW ords quadrupled, VW briefly became the biggest company in the world by market cap, and managers were looking at what was described at the time as the biggest loss in hedge fund history, although in reality some of the losses may have been borne elsewhere.
Caught short
Short-sellers have taken a lot of flak during the credit crisis, particularly last year when the slump in banks’ share prices eventually prompted the FSA and other regulators to temporarily halt the practice among financial stocks.
However, it is worth remembering that for all the headlines of huge profits made by John Paulson and others, the practice is not a guaranteed winner and can result in painful losses.
from DealZone:
Deals du jour
AIG plans to float its Asian crown jewel, Volkswagen halts talks with Porsche, Nomura hires for a massive push in U.S. equities, and more. Here are the latest deal-related stories:
AIG to launch IPO for Asia crown jewel
Volkswagen halts tie-up talks with Porsche
Nomura hires for massive U.S. equity push
Cubs' offer won't be voted on next week: sources
Babcock & Brown infrastructure fund gets acquired
China pension fund plans foreign PE deals: sources
China government OKs Minmetals' OZ Minerals deal
Daiwa SMBC to buy unit of Britain's Close Brothers
Whitehaven says to drop merger deal with Gloucester
Metro to present Karstadt deal outline: sources
And in Europe's morning papers:
* Hedge fund manager Noam Gottesman, co-chief executive of GLG Partners Inc (GLG.N), plans to move to New York from London to build up the fund's U.S. assets, the Daily Telegraph said.
