When Porsche ruined short sellers

Posted Sep 21, 2022, 6:50 AMUpdated on Sep 21, 2022 at 6:57 am

The hedge fund Millennium has defied the taboos. He is the first to dare to sell short Porsche SE, Volkswagen’s holding company. A “short” position which concerns 0.6% of the securities, or 126 million euros, according to Breakout POINT. Selling short is like betting on a falling stock. The hedge fund borrows a security which it sells immediately. He will repay it later, by buying it back on the market.

The majority shareholder Porsche-Piëche family has decided to list its subsidiary Porsche AG, a separate business from Porsche SE. Millenium did not explain its motivations. One possibility is that the hedge fund is anticipating the failure of the IPO by starting to short sell Porsche SE stock – which has already lost 20% this year. The correlation between its price and that of the future listed company Porsche AG should be high, but not 100%. Another hypothesis, the fund subscribed to the introduction of the subsidiary but it limits its risks by short selling the holding company.

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