Instead, shares of the big German auto maker soared 82% Tuesday. The funds are expected to face billions of dollars in losses, according to prime brokers familiar with the positions, because they were wagering that VW shares would fall.Hedge funds around the world absorbed a punishing blow Tuesday, as soaring shares in Germany's Volkswagen AG created one of the biggest losses from a single bet in recent memory.But that's ok, our tax payer money will make sure they offset any losses at the banks. If you see so many of your customers in on a trade - I doubt as a prime broker your trading desk is NOT piggy backing. Goldman Sachs ( GS ) and Morgan Stanley ( MS ) both denied they were involved in this but their stock prices were hammered Tuesday before the denials - somehow I think where there is smoke, there is fire especially with Government Sachs. Live by the sword, die by the sword I suppose. It is really amazing to see these same names in so many stories of similar ilk - SAC and Highside are among the largest and Greenlight is run by a respected value guy who is supposed to be conservative. again some of the "best of the best" in hedge fund world are getting blown up on this trade. Some of the names involved on the short side The stake sale could lead to profits of roughly 1.5 billion euros, Commerzbank analysts said, estimating that Porsche's strike price was 100 euros and that the VW shares are sold at 200 euros each.Porsche shares vaulted higher, rallying 35% as the luxury automaker's market capitalization reflects just a fraction of the valuation of its VW holding.The scramble for Volkswagen shares, already apparent during the last two months, intensified when Porsche over the weekend revealed that it had increased its equity stake in VW to 42.6% from about 35%, and more crucially, that it had options to buy another 31.5%.The move's designed "to avoid further market distortions and the resulting consequences for those involved," Porsche said - but laid the blame for this week's massive rise in VW shares squarely with the short sellers themselves.Porsche Automobil Holding ( OTCPK:POAHF) on Wednesday said it would sell up to 5% of its stake in Volkswagen AG to meet unprecedented demand for the Wolfsburg automaker's stock after arguably the biggest short squeeze in stock-market history.Already their investment might go down as one of the greatest ever at the prices they are going to be able to sell at. We are obviously not involved with this " greatest short squeeze in history" as Volkswagen (VLKAY.PK) is on a German exchange and I wouldn't touch something this random and crazy with your 10 foot pole but some interesting developments - first Porsche (which is trying to buy shares of Volkswagen) agreed to sell 5% of their stake to let some shorts cover.
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