Brentwood Group sources suggest that several large hedge fuHի taken heavy losses after wagers that stock in European car manufacturer, Volkswagen, would fall in the face of economic contraction in Europe.
The performance car maker Porsche revealed that it had built up a 71% holding in Volkswagen which saw the shares nearly quadruple in value in a day. This meant that hedge fund bets that the price of stock would fall had to be unwound.
One of the Brentwood Group sources suggested that Porsche’s clandestine acquisition of stock would not have been permitted in other markets outside Germany because of strict rules on disclosure. The hedge fund losses come as they face increasing difficulty in raising funds to meet obligations in the credit default swap markets.
Brentwood Group believe that the hedge fund community may be the next group of financial institutions to face bankruptcies on a large scale and that they are unlikely to be granted access to funding by central banks as they are not essential to the functioning of the global banking system.
