Hedge fund managers who owned Volkswagen stock all collectively went out yesterday and kicked a dent in their 911 turbos. Porsche announced over the weekend that it bought enough stock and options that there was less than six percent of VW left to float on the open market. This caused a huge run on Volkswagen stock as all those who were trying to sell short (buying an option that the stock price will fall in the future) were now trying to reverse their position. The result: the price went so high (above €1,000 per share) that Volkswagen briefly became the world’s largest company.

The big problem was that this open five percent was being fought over by the short sellers, who amounted to about thirteen percent of ownership of VW stock. So it was like playing musical chairs where there are thirteen people and only five seats. Because Porsche wants to keep hedge fund and financial managers happy, it released five percent of its own VW stock onto the open market.

Porsche also cashes in big time on the five percent it released because it sold at a high point and will buy it back for likely a much smaller price. After the stock release today, VW’s price has tumbled to a more realistic €527.20 (down about 44%.)

So here’s the scorecard:

- Winner: Porsche

- Loser: Stock Jockeys

- No Change: Working class people who can’t afford stocks or Porsches

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