Family members knew something was very wrong when Adolf Merckle, who guided a family holding company, VEM Verm gensverwaltung GmbH, through dozens of successful investments, left the house one day in January 2009 and never returned. That night, their fears were confirmed when the German railway worker's body is near Merckle line commuter train near his hometown of Blaubeuren, about a hundred miles to the west of Munich. It is not a secret that the recent financial crisis took effect on investment in Merckle. He was known in Germany as an experienced investor, but has lost hundreds of millions of euros, after being caught on the wrong side of a short squeeze of epic proportions involving Volkswagen shares. It was not only the big bet against the shares of this company. Number of hedge funds, including Greenlight Capital, SAC Capital, Glenview Capital, Tiger Asia, Perry Capital, lost billions of euros in a few hours, depending on their large short positions in Volkswagen stock after the news of October 26, 2008, which Porsche AG has received a large synthetic long position in the stock Volkswagen through cash-settled options. Over the next two days, it is a short squeeze is a fivefold increase share price Volkswagen, as the demand for the shares from hedge funds exceeded supply borrowable shares. "Hide
by David P. Stowell, Theron McLarty Source: Kellogg School Management 10 pages. Publication Date: June 3, 2009. Prod. #: KEL417-PDF-ENG
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