Volkswagen Squeeze Cost Hedge Funds

At the height of the 2008 financial crisis, debt-heavy Volkswagen looked like a bankruptcy candidate, making it a favorite target for short sellers. On October 26, Porsche revealed that its shares and options covered more than 74 percent of Volkswagen, leaving traders who had bet against the company fighting over a tiny pool of available stock. The panic sent Volkswagen shares above 1,000 euros and briefly made it the most valuable company in the world, ahead of Exxon Mobil. A company the market expected to fail had instead handed hedge funds an estimated $30 billion loss.

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