PORSCHE JUST MADE BIILLIONS ON Volkswagon stock

[Baron]

In the past week PORSCHE MADE BIILLIONS ON Volkswagon stock. Volkswagen stock went from two hundred Euros to over a One Thousand (1000) Euros in a matter of a few days.

It's now hovering at around 500 Euros and it caught ALL of the speculators with their pants down The speculators were trying to "make a corner" on the stock.

Porsche owned ~ 35% of Volkswagen with a desire to gain majority control. Volkswagen had a very small percentage, roughly 6%, of it's outstanding shares as a true free 'float'. Certain market participants decided to short Volkswagen shares, about 12% of the shares outstanding. Unbeknown to said market participants Porsche held 'calls' on Volkswagen shares to increase it's holdings to 75%. Yesterday Porsche announced that fact.

Lo and behold. Shorts scrambled to cover but could not find the shares. Volkswagen shares rallied from ~ EU 210 to a high of EU 1005...a 400% increase in a single day....

AWESOME

[Bummler]

OCTOBER 31, 2008
VW Earnings Buck Auto-Industry Trend
Profit Increases 27%, and '09 Market Share Is Expected to Rise
By CHRISTOPH RAUWALD

In contrast to many rivals, Volkswagen AG posted solid earnings Thursday, stuck to its full-year outlook and said it expects to boost its market share next year.

Volkswagen, Europe's biggest auto maker by sales, has managed to weather the global economic storm relatively well, thanks to strong sales in emerging markets such as China and Brazil. It is the only major European auto maker that hasn't issued a profit warning for the year or revised its sales targets.
[VW] Associated Press

VW is Europe's only big auto maker that hasn't issued a profit warning or revised its sales targets.

In the three months ended Sept. 30, Volkswagen said its net profit rose 27% to €1.21 billion ($1.57 billion) from €947 million a year earlier. Sales were up 11% to €28.93 billion from €26.11 billion.

In the first nine months of the year, VW's net increased 30% to €3.78 billion from €2.91 billion, partly boosted by a gain of €231 million related to currency hedging transactions, compared with a loss of €264 million in the year-earlier nine months. Revenue rose 5.5% to €85.43 billion from €80.96 billion.

Chief Financial Officer Hans Dieter Pötsch said Volkswagen expects to take market share from rivals as the weak trends in the global auto market continue in the fourth quarter and through next year.

The company's market share in Western Europe rose to 20% in September from 17.9% a year earlier, according to the European Automobile Manufacturers Association.

Speaking in a conference call with reporters, Mr. Pötsch confirmed that Porsche Automobil Holding SE -- which has built up a 42.6% stake in VW shares and secured options to control a further 31.5% -- won't be able to enforce a "domination agreement" that would give it full access to VW's cash flows as long as Germany's so-called Volkswagen law is in place and as long as the German federal state of Lower Saxony opposes such a move.
[vw]

The VW law sets the threshold for enforcing a so-called domination agreement at 80% control, rather than 75%, which is common for German companies. Lower Saxony has a stake of just over 20% in Volkswagen, giving it the power to veto any domination agreement.

VW's share price has fluctuated wildly this week after short sellers, who had bet the stock would fall, exited from their positions in the wake of Porsche's announcement that it was raising its stake in VW, sending the shares up 348% over Monday and Tuesday.

Shrinking demand for new cars in major markets along with high raw-material costs and unfavorable exchange rates have eaten into earnings of European auto makers, and industry executives have been reluctant to make concrete forecasts for 2009.

VW said its cost management, together with its expected growth in unit sales, "will help lift our operating profit for 2008 above the previous year's figure." In 2007, operating profit after items came in at €6.15 billion and revenue totaled €108.9 billion. The targets for 2008 exclude effects from the acquisition of a stake in Swedish truck maker Scania AB.

Meanwhile, German truck maker and engineering company MAN AG, in which VW is the biggest single shareholder, with a 29.9% stake, said Thursday its third-quarter profit jumped 34%, lifted by strong sales of trucks, diesel engines and turbo machinery. However, the company cut its full-year sales and order-intake outlook, as demand for trucks is slowing.

Truck demand in Western Europe and the U.S. is shrinking after several years of strong growth. European truck makers Scania and Volvo AB last week reported sharp slowdowns in earnings growth and gave gloomy outlooks.
—Hilde Arends contributed to this article.

Write to Christoph Rauwald at christoph.rauwald@dowjones.com

Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved

[Fidalgo911]

I read this story in the WSJ yesterday. Very interesting article.