tag:blogger.com,1999:blog-4815867514277794362.post897864434681682245..comments2024-03-08T06:18:28.125+11:00Comments on Bronte Capital: The only responsible trade...John Hemptonhttp://www.blogger.com/profile/03766274392122783128noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-4815867514277794362.post-69356348462124118192008-10-31T20:58:00.000+11:002008-10-31T20:58:00.000+11:00Carlomango,You are correct that the commission or ...Carlomango,<BR/><BR/>You are correct that the commission or a member state (forgot to mention that one! thanks for the reminder) can bring a case against Germany. However, they would have to establish that Germany violated EC-treaty obligations. I really don't see how Germany violated any obligations under the treaty. And Porsche, not being an EU member state, cannot be sued on this basis, only Germany.<BR/><BR/>There is also the political angle to consider. Trying to kill Porsche or annoy Germany in an effort to help evil hedgie shorts is going to be extremely unpopular so I really don't think any member state government or the commission is going to burn its fingers on that.<BR/><BR/>Last but not least, these proceedings would take many years and by then Porsche will have been sitting on the cash for a long time and the hedgies will be bust or have moved on.<BR/><BR/>Only the highest ranking national court is obligated to refer a case to the ECJ if there are questions concerning EU law. It would take years for a case to get that far and until then the national courts are in charge. <BR/><BR/>Also, EU directives have no "horizontal effect". Even if there were a blatant failure to implement them by Germany (I doubt it, the directives you mention leave plenty of leeway to the national authorities and as far as I can tell Germany did pass implementation legislation) this would have no effect on Porsche in it's relation with the hedgies. The hedgies would have to go for damages from the German government for its failure to implement the directives properly, but that seems an extreme long shot to me.<BR/><BR/>Last but not least, Deutsche Borse and its broker dealers might move against Porsche. Like anon. at oct. 31 mentions happened in an Ozzie case. <BR/><BR/>(anon. could you tell us more about what happened?)<BR/><BR/>Germany is a federal state and Porsche and VW are local champions. The prosecutor and courts in Stuttgart would probably have a blast having Deutsche Borse and broker-dealer directors arrested and their assets frozen at the slightest whiff of manipulation against Porsche.<BR/><BR/>John, I disagree on the trade here. If anyone insists on trading this, and I strongly recomment against it, this is insane speculation, I say go long Porsche. They will make a fortune and end up controlling VW for free making them a major carmaker at once. The stock price may not reflect that. But, as noted trading this kind of snake pit is just nuts.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-80139190457817788162008-10-31T13:08:00.000+11:002008-10-31T13:08:00.000+11:00Hi John,We had our own little corner down here in ...Hi John,<BR/><BR/>We had our own little corner down here in oz in the 80's.<BR/>A guy called Ian Murray ? from memory.<BR/>When he announced he had 95 % of the stock the brokers who ran the bourse declared "a disorderly market".<BR/>They turned the tables on him and he lost a fortune.<BR/>It seems the brokers do not liked to be beaten at their own game.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-56416272547391814722008-10-30T22:14:00.000+11:002008-10-30T22:14:00.000+11:00Anonymous October 30, 2008 4:15: "This is purely a...Anonymous October 30, 2008 4:15: "This is purely a matter of national law, not European and that means German courts rule on it, not European."<BR/><BR/>Porsche's actions in relation to its VW stockholding potentially raise questions of interpretation concerning several EU legal acts, especially the transparency directive, the take-over bids directive and the market abuse directive.<BR/><BR/>Remember that there are several ways for cases to reach the European Court of Justice (ECJ), inter alia:<BR/><BR/>- the Commission may bring a case against a Member State pursuant to Article 226 of the EC Treaty;<BR/><BR/>- a Member State may, subject to certain preliminary procedural requirements, bring a case against another Member State before the ECJ pursuant to Article 227;<BR/><BR/>- a national court may, and in some cases must, refer questions relating to the interpretation of EU law to the ECJ pursuant to Article 234.<BR/><BR/>The latter may be the most likely route through which Porsche could find itself pleading before the ECJ.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-37084152950886841172008-10-30T05:35:00.000+11:002008-10-30T05:35:00.000+11:00If some EU judge finds it in his interest to get p...If some EU judge finds it in his interest to get political on Porsche, maybe ordinary people (as in everyone who isn't a member of the banks and hedge funds) needs to get out their pitch forks and torches and tar and be a little political with that judge..... X-C<BR/><BR><BR><BR/>OK. Breathe. Maybe I'm getting a little too "internet" here. But the fact remains that Porsche has, as far as I know, not done anything illegal; the shorts are well aware that they risk losses of potentially infinite amounts for a potential gain of 100%. This is what happened here. As for manipulating stock prices, Porsche bought stock (nothing wrong in that). If anyone was manipulating the price of stock; it was other sellers putting on the squeeze (and this does set this apart from the example you used as Porsche still does not own more stock than exists), who in turn manipulated no more than short sellers usually do. I any case; the EU and its institutions have a reputation for being bureaucratic, corrupt and always siding with the biggest dog, but I think this is greatly exaggerated and I think they will not get far with a lawsuit. Or so I hope.....Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-21858885435401789002008-10-30T04:40:00.000+11:002008-10-30T04:40:00.000+11:00I agree with John on this. The smart trade may be ...I agree with John on this. The smart trade may be to buy the large DAX stocks - ie go the other way to all the index guys out there who are having to sell large cap DAX to re-weight VW. There is some precedence here ... I am told (by somebody much older than me) that a similar thing happened with the Northern Railroad Co in 1907 in the US, when 2 investors (Hill vs Harriman) got over 50% of the equity and created a huge short-squeeze which led to margin calls everywhere and consequent selling of the rest of the market - the lesson was, apparently, to buy those other stocks.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-68761194774477468792008-10-30T04:15:00.000+11:002008-10-30T04:15:00.000+11:00This is purely a matter of national law, not Europ...This is purely a matter of national law, not European and that means German courts rule on it, not European. Good luck if you're an evil hedgie short going up against an upstanding member of the community not to mention an icon of German industry...<BR/><BR/>The European commission might ordinarily try to intervene if shorts from other EU members get abused to badly. Not now though. The commission will be glad if the union can get through this mess without collapsing. Pissing of the Germans would be just the thing to make the latter happen.<BR/><BR/>On an anecdotal level, investors here, even those themselves caught short, seem to think Porsche played hard but smart and deserve their laurels. Continental Europe just never had the liking for bankers and speculators/investors that the US has and it tells.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-59746593531792804442008-10-30T03:58:00.000+11:002008-10-30T03:58:00.000+11:00Thanks for the interesting story. Regarding past N...Thanks for the interesting story. Regarding past New York Times articles, why don't you try the Google Archive Search -- it looks like there is a plenty from NYT from that time. Here is a link:<BR/><BR/>http://news.google.com/archivesearch?as_q=stutz+corner&num=10&btnG=Search+Archives&as_epq=&as_oq=&as_eq=&as_user_ldate=1920&as_user_hdate=1920&lr=&as_src=&as_price=p1&as_scoring=<BR/><BR/>Greetings from Germany!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-34000790080013829752008-10-29T23:23:00.000+11:002008-10-29T23:23:00.000+11:00I'd like to say thanks too for an excellent story ...I'd like to say thanks too for an excellent story and a continued excellent blog. Regards, Jonathan.Jonathanhttps://www.blogger.com/profile/00048064629377972968noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-46714814072136727272008-10-29T21:50:00.000+11:002008-10-29T21:50:00.000+11:00I agree with anon that Porsche's actions will play...I agree with anon that Porsche's actions will play OK in Germany. <BR/><BR/>But they might play a little less well in the European court when its another European country's bank being nationalised. <BR/><BR/>I really have NO IDEA how this will work out. None at all... <BR/><BR/>I do know that if I owned a Dax index fund I would sell it and buy every stock in the index except VW. But that is also a trade. VW might go to infinity... its down as I write this...John Hemptonhttps://www.blogger.com/profile/03766274392122783128noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-66230052941543914362008-10-29T20:34:00.000+11:002008-10-29T20:34:00.000+11:00Not to mention yesterday morning's sideshow on the...Not to mention yesterday morning's sideshow on the DAX as the hedge failed. Ex-VOW, the index was down 10%.Charles Butlerhttps://www.blogger.com/profile/00486529931043507880noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-66417561261877782362008-10-29T20:30:00.000+11:002008-10-29T20:30:00.000+11:00One crucial difference between Porsche and Stutz:S...One crucial difference between Porsche and Stutz:<BR/><BR/>Stutz screwed powerful people in his own country who could manipulate the stock exchange against him. Porsche screwed a bunch of mostly foreign hedgies and investment banks who are deeply hated. My bet is that Porsche will become folk hero's for this little stunt and they will be allowed to let the shorts settle at very favorable terms to Porsche. A price of E 911,-/share of VW sounds exactly right to me.<BR/><BR/>An indication of who is winning the popularity/power contest here is that the German authorities have announced that they will look into the events and investigate any wrongdoing -by the shorts-. Porsche is absolved in advance.<BR/><BR/>Oh, and thanks for the excellent story!Anonymousnoreply@blogger.com