family knew something was wrong when Adolf Merckle, who had guided the family holding company, VEM Verm gensverwaltung GmbH, through dozens of successful investments, left the house one afternoon in January 2009 and n has failed to return. That night his fears were confirmed when a body worker Merckle German trains are near a commuter rail line near his hometown of Blaubeuren, a hundred kilometers west of Munich. It was no secret that the recent financial crisis has dented investment Merckle. He was known in Germany as an investor, but lost hundreds of millions of euros after being caught on the wrong end of a short squeeze of epic proportions involving shares of Volkswagen side. It was not the only big bet against the shares of the company. A number of hedge funds, including Greenlight Capital SAC Capital Glenview Capital Tiger Asia, Perry Capital, has lost billions of euros in a few hours, depending on your large short positions in Volkswagen shares after the news 26 October 2008, that Porsche AG has achieved a significant synthetic Volkswagen shares through cash-settled options long. In the next two days, this short squeeze produces a fivefold increase in the price of Volkswagen shares, as demand for the actions of hedge funds has exceeded the supply of loanable shares.
by
David P. Stowell,
Theron McLarty
Source: Kellogg School of Management
10 pages.
Release Date: June 3, 2009. Prod #: KEL417-PDF-ENG
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