On the left hand, the only stock on this planet which is rising to unprecedented levels. The crazy thing is it does so even in a manner reciprocal to the market, since as markets have crashed the in last weeks, VW has crashed to the upside by doubling it's stock price from 200 to 400. Perhaps the Porsche family knows about a secret - like perhaps they own the biggest hidden gold mine that no one else knows about or they are just insane. They definitely can make some money in this by screwing around in the options market, since they have cornered this stock a few times, forcing traders to cover shorts very expensively as it seems to be the case with Lehman holding positions but in the end this is a car producer with a gloomy outlook. Especially the conqueror Porsche is poised for really bad times, since the biggest client group are investment bankers who would rather will lose their jobs or do not see any bonus payments going forward. The same will be true for all high income jobs, since bonuses will not be as generous if at all. Porsche is desperate to change their income sources but the crazy thing is that had they let the natural gravity take it's course. They could have acquired VW shares really cheaply, far below 100 rather below 50 even, instead they choose to pay up to even more insane levels. They might have some smart traders sitting there making money buying short and squeezing the market but, at the end of the day, gravity will take it's course and if the trader did not make 300 EURO per share (absolutely not likely) profit, the losses will wipe them out. Except for one instance that they have found a secret value within that enterprise, which is beyond our knowledge, but that should be worth $150 bil. in real terms, since VW is valued as the No. 9, as you can see in the list below.
We have to admit that the VW management seems to do a good job since from Jan. - Aug. 2008, they delivered 4.24 cars, 4.1% more than last year and with exceptionally good presence in the BRIC states, since China alone counts for 686000 units (plus15.6%) and Brazil 438000 units (plus 21%). But if they did not hedge the real, which dropped sharply in the last 3 months, they will have deep losses in the Brazil operation. This theme might be big as VW has a huge emerging markets exposure and as the could profit from the boom of those countries and their rising currencies, they might have huge loses on currencies wiping out all margins at least. The strategy, which produced big profits, might turn now into a disaster going forward.
Global recession will diminish the output anyway, since they had in August already a decline of 3%, still better than their peers but the downtrend is set. E specially the upscale segments like Audi, which produced incredible gains, will be a weak spot going forward as well with Lamborghini and Bugatti. VW trades at 80 times earnings, thereby earnings are not sustainable, even might have dropped sharply due to currency turmoil.
Short Name Market Cap
1 EXXON MOBIL CORP 323,846,078,464
2 PETROCHINA CO-H 290,611,396,608
3 MICROSOFT CORP 206,892,433,408
4 GENERAL ELECTRIC 202,045,177,856
5 WAL-MART STORES 196,895,522,816
6 IND & COMM BK -A 190,632,968,192
7 CHINA MOBILE 187,131,363,328
8 PROCTER & GAMBLE 179,453,132,800
9 VOLKSWAGEN AG 178,757,140,480
10 BERKSHIRE HATH-A 175,911,714,816
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