Porsche exacts a high price


ITS HARD to muster up much sympathy for short-sellers – investors (invariably described as “faceless”) who seek to profit from falling share prices – so the plight of two such investors who are suing sports car manufacturer Porsche is unlikely to tug at many heartstrings, but it should make for interesting reading this week.

A Swiss investment company and a German private investor are seeking compensation for losses that arose from short-selling Volkswagen shares. In 2008, Porsche tried, and failed, to take over VW. Investors claim that Porsche secretly built up a holding in the much larger German car manufacturer despite dismissing rumours of a takeover plan. When Porsche confirmed it held almost 75 per cent of VW, it sent the Wolfsburg-headquartered carmaker’s shares soaring and short-sellers running for cover. Porsche denies the allegations that it misled the market.

The regional court in Brunswick, northern Germany, is due to rule on both cases on Wednesday and the short-sellers may find they get short shrift, as the judge has already commented that it will be a “tough act” to prove Porsche breached legal standards.