After a suprise announcment from Porsche, the Volkswagen's share rose more than 140%. Porsche told the press that they had acquired more than 70% of Volkswagen shares and at the same time hedge funds were trying to cover there short positions from a small amount of available shares in the market.
Porsche used derivatives to increase its share from 35% to 74.1%, this ignited an outcry from other market players such as investors and analysist. Several analysist and experts explained that this was a huge embaressment for European regulators and goverments. It was a total disrespect for all corporate governance policy's and regulations set up by the markets, governance expert Christian Strenger said.
Many analysist and hedge funds were betting on a share price fall from Volkswagen, so the huge rise in price meant that the estimated loss were around $15bn and only 5.8% of the shares were still availabe to buy up.
Many hedge fund managers were sure this was a very secure bet but turned out to be a big bomb in investors pockets. Volkswagen had the highest percentage of shares on loan to investors in all of Germany. The value of the company grew on one day to be worth around $153bn, which is more than all EU and US carmakers put together.
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