The new Mitsuoka Galue S50 Limousine has been launched. But don’t expect this car to spark a new Japanese trend-craze.
First off is a price tag a little on the hefty side considering what lies underneath this ambitious design. For a car based on the Infiniti M, taking that car’s chassis and attaching a new body, this automotive creature will cost between 8 million and 9.3 million Yen, or about 68,000 to 80,000 euros. The Galue S50 also comes with Infiniti M power plants - a modest 223 hp 2.5 liter and a more muscular 3.5 liter with 313 hp and also available in all-wheel-drive.
Next would be the styling. Mitsuoka is a very small, very specialized Japanese carmaker whose designs consist of an odd blend of traditional Japanese styling and an aspiration towards British luxury. That is, they look like Rolls Royces built by Toyota in the 1950s.
Mitsouka’s most understated-styled car is the Orochi, a sportscar which makes the carmaker’s designs look downright mainstream.
VOLKSWAGEN has become a laughing stock. The tenfold increase in the German car-maker's share price over little more than a day is ridiculous, and symptomatic of the surreal distortions in VW's stock resulting from a creeping take- over by smaller rival Porsche.
Porsche said on Monday that it had 43 per cent of VW's shares, and options relating to a further 32 per cent. That sowed panic among hedge funds who had sold the stock short. As they desperately tried to buy shares to cover their position, the price shot up as high as 1,000 euros - 20 times most analysts' target.
The squeeze leaves many with red faces. Start with the short sellers. They may have reckoned Porsche would pause on its buying campaign, leaving the shares to deflate for a while. But VW's limited free float made that a risky bet - akin to picking up pennies in front of a steamroller.
German market overseers too look inept. Porsche doesn't have to disclose its activities in the options market, even if those options would in practice enable it to lay its hands on the underlying shares. That leaves other investors largely in the dark.
Then there are the rule-setters for the DAX index. They include all of VW, not just its free float. That's foolish, especially as index tracker funds are foolish enough to follow the index mechanically. The demand for a limited supply of VW shares increases as tracker funds grow.
There may yet prove less to this story than meets the eye. Porsche hasn't said what options it owns, and whether these really give it a path to buying the underlying shares. It said only six months ago that in practice, building up a 75 per cent stake in VW in the market would be all but impossible.
But Porsche may not rush to dismiss such chatter. It's thought that Porsche has sold huge numbers of put options into the market. When VW's shares were sliding over the summer, the paper losses would have been large, with margin calls a distinct possibility. A higher VW share price would temporarily neutralise both problems.
Still, there's one other person who has the opportunity to look smart: Christian Wulff, the premier of Lower Saxony. His state holds a 20 per cent block of VW shares, which he has used to fight Porsche's stealth takeover. That block of shares is now worth 59 billion euros (S$111 billion) - almost a third of the state's GDP. With hedge funds on the hook, Mr Wulff could turn a seller - and probably name his price.
Porsche to sell some VW shares to meet short demand
By Steve Goldstein Oct. 29, 2008
LONDON (MarketWatch) -- Porsche Automobil Holding on Wednesday said it would sell up to 5% of its stake in Volkswagen AG to meet unprecedented demand for the Wolfsburg automaker's stock after arguably the biggest short squeeze in stock-market history.
The move's designed "to avoid further market distortions and the resulting consequences for those involved," Porsche said -- but laid the blame for this week's massive rise in VW shares squarely with the short sellers themselves.
"Porsche denies all responsibility for these market distortions and for the resulting risks to which the short sellers have exposed themselves," the company said in a statement.
"Porsche wishes to point out that the applicable capital-markets law provisions have been complied with at all times. Porsche has not been active in the market during this share price movement."
Porsche said it alerted the German Federal Agency for Financial Services Supervision, or BaFin, prior to taking the step.
Volkswagen on Tuesday briefly became the world's largest company by market capitalization -- valued at more than all the other publicly traded automakers combined -- as part of a two-day, 348% surge.
The scramble for Volkswagen shares, already apparent during the last two months, intensified when Porsche over the weekend revealed that it had increased its equity stake in VW to 42.6% from about 35%, and more crucially, that it had options to buy another 31.5%.
Porsche had previously indicated it was looking to take a stake of more than 50% in VW but had not previously said it was going after three-quarters control. Porsche on Wednesday reiterated its commitment to going after a 75% stake "at prices which are economically justifiable."
The scramble for VW stock was intense in part because there were so few shares available: Porsche has effective control over 74% of VW, and the Lower State of Saxony, which is fighting both Porsche and the European Union to preserve a blocking stake, has another 20%.
Banks including Goldman Sachs and Societe Generale have been hurt by speculation of involvement in the VW short squeeze.
A Wednesday report in The Wall Street Journal, citing people familiar with the funds, named some of the most famous hedge-fund managers as being caught in the VW short squeeze: Greenlight Capital, SAC Capital, Glenview Capital, Marshall Wace, Tiger Asia, Perry Capital and Highside Capital.
Volkswagen's shares came back down to earth, a bit at midweek, dropping 41% to 553 euros in Frankfurt.
It was Porsche shares that vaulted higher, rallying 35% as the luxury automaker's market capitalization reflects just a fraction of the valuation of its VW holding.
The stake sale could lead to profits of roughly 1.5 billion euros, Commerzbank analysts said, estimating that Porsche's strike price was 100 euros and that the VW shares are sold at 200 euros each.
Meanwhile, index compilers moved to reduce the Volkswagen impact as well.
Deutsche Boerse said it will reduce the weighting of Volkswagen shares on its DAX index to 10%. The weighting had reached 27% at Tuesday's close.
Separately, Stoxx said Volkswagen's free-float factor will be reduced to 0.3732 from 0.4963.
The Commerzbank analysts said the index compilers' moves will also free up stock as index trackers won't need to hold as many VW shares. They estimated that 2% of VW's free float will be released by the move.
Stoxx is a joint venture of the Deutsche Boerse, the Swiss Exchange and Dow Jones & Co. MarketWatch, the publisher of this report, is a unit of Dow Jones.
3 comments:
The new Mitsuoka Galue S50 Limousine has been launched. But don’t expect this car to spark a new Japanese trend-craze.
First off is a price tag a little on the hefty side considering what lies underneath this ambitious design. For a car based on the Infiniti M, taking that car’s chassis and attaching a new body, this automotive creature will cost between 8 million and 9.3 million Yen, or about 68,000 to 80,000 euros. The Galue S50 also comes with Infiniti M power plants - a modest 223 hp 2.5 liter and a more muscular 3.5 liter with 313 hp and also available in all-wheel-drive.
Next would be the styling. Mitsuoka is a very small, very specialized Japanese carmaker whose designs consist of an odd blend of traditional Japanese styling and an aspiration towards British luxury. That is, they look like Rolls Royces built by Toyota in the 1950s.
Mitsouka’s most understated-styled car is the Orochi, a sportscar which makes the carmaker’s designs look downright mainstream.
The laughing stock of Germany
By JOHN FOLEY
October 29, 2008
VOLKSWAGEN has become a laughing stock. The tenfold increase in the German car-maker's share price over little more than a day is ridiculous, and symptomatic of the surreal distortions in VW's stock resulting from a creeping take- over by smaller rival Porsche.
Porsche said on Monday that it had 43 per cent of VW's shares, and options relating to a further 32 per cent. That sowed panic among hedge funds who had sold the stock short. As they desperately tried to buy shares to cover their position, the price shot up as high as 1,000 euros - 20 times most analysts' target.
The squeeze leaves many with red faces. Start with the short sellers. They may have reckoned Porsche would pause on its buying campaign, leaving the shares to deflate for a while. But VW's limited free float made that a risky bet - akin to picking up pennies in front of a steamroller.
German market overseers too look inept. Porsche doesn't have to disclose its activities in the options market, even if those options would in practice enable it to lay its hands on the underlying shares. That leaves other investors largely in the dark.
Then there are the rule-setters for the DAX index. They include all of VW, not just its free float. That's foolish, especially as index tracker funds are foolish enough to follow the index mechanically. The demand for a limited supply of VW shares increases as tracker funds grow.
There may yet prove less to this story than meets the eye. Porsche hasn't said what options it owns, and whether these really give it a path to buying the underlying shares. It said only six months ago that in practice, building up a 75 per cent stake in VW in the market would be all but impossible.
But Porsche may not rush to dismiss such chatter. It's thought that Porsche has sold huge numbers of put options into the market. When VW's shares were sliding over the summer, the paper losses would have been large, with margin calls a distinct possibility. A higher VW share price would temporarily neutralise both problems.
Still, there's one other person who has the opportunity to look smart: Christian Wulff, the premier of Lower Saxony. His state holds a 20 per cent block of VW shares, which he has used to fight Porsche's stealth takeover. That block of shares is now worth 59 billion euros (S$111 billion) - almost a third of the state's GDP. With hedge funds on the hook, Mr Wulff could turn a seller - and probably name his price.
Porsche to sell some VW shares to meet short demand
By Steve Goldstein
Oct. 29, 2008
LONDON (MarketWatch) -- Porsche Automobil Holding on Wednesday said it would sell up to 5% of its stake in Volkswagen AG to meet unprecedented demand for the Wolfsburg automaker's stock after arguably the biggest short squeeze in stock-market history.
The move's designed "to avoid further market distortions and the resulting consequences for those involved," Porsche said -- but laid the blame for this week's massive rise in VW shares squarely with the short sellers themselves.
"Porsche denies all responsibility for these market distortions and for the resulting risks to which the short sellers have exposed themselves," the company said in a statement.
"Porsche wishes to point out that the applicable capital-markets law provisions have been complied with at all times. Porsche has not been active in the market during this share price movement."
Porsche said it alerted the German Federal Agency for Financial Services Supervision, or BaFin, prior to taking the step.
Volkswagen on Tuesday briefly became the world's largest company by market capitalization -- valued at more than all the other publicly traded automakers combined -- as part of a two-day, 348% surge.
The scramble for Volkswagen shares, already apparent during the last two months, intensified when Porsche over the weekend revealed that it had increased its equity stake in VW to 42.6% from about 35%, and more crucially, that it had options to buy another 31.5%.
Porsche had previously indicated it was looking to take a stake of more than 50% in VW but had not previously said it was going after three-quarters control. Porsche on Wednesday reiterated its commitment to going after a 75% stake "at prices which are economically justifiable."
The scramble for VW stock was intense in part because there were so few shares available: Porsche has effective control over 74% of VW, and the Lower State of Saxony, which is fighting both Porsche and the European Union to preserve a blocking stake, has another 20%.
Banks including Goldman Sachs and Societe Generale have been hurt by speculation of involvement in the VW short squeeze.
A Wednesday report in The Wall Street Journal, citing people familiar with the funds, named some of the most famous hedge-fund managers as being caught in the VW short squeeze: Greenlight Capital, SAC Capital, Glenview Capital, Marshall Wace, Tiger Asia, Perry Capital and Highside Capital.
Volkswagen's shares came back down to earth, a bit at midweek, dropping 41% to 553 euros in Frankfurt.
It was Porsche shares that vaulted higher, rallying 35% as the luxury automaker's market capitalization reflects just a fraction of the valuation of its VW holding.
The stake sale could lead to profits of roughly 1.5 billion euros, Commerzbank analysts said, estimating that Porsche's strike price was 100 euros and that the VW shares are sold at 200 euros each.
Meanwhile, index compilers moved to reduce the Volkswagen impact as well.
Deutsche Boerse said it will reduce the weighting of Volkswagen shares on its DAX index to 10%. The weighting had reached 27% at Tuesday's close.
Separately, Stoxx said Volkswagen's free-float factor will be reduced to 0.3732 from 0.4963.
The Commerzbank analysts said the index compilers' moves will also free up stock as index trackers won't need to hold as many VW shares. They estimated that 2% of VW's free float will be released by the move.
Stoxx is a joint venture of the Deutsche Boerse, the Swiss Exchange and Dow Jones & Co. MarketWatch, the publisher of this report, is a unit of Dow Jones.
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