BC BUSINESS
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The Mother of All Squeezes

How Volkswagen went from being on the brink of bankruptcy to the most valuable company in the world in two days

/THREAD/

 1/ At the peak of the 2008 financial crisis, Volkswagen was considered a very likely candidate for bankruptcy.

Heavily indebted and already financially struggling before 2008, with car sales expected to plummet due to the ongoing global crisis.
2/ With GM and Chrysler filing for bankruptcy in 2009, shorting the VW stock would seem a safe bet.

If you are not familiar with stock shorts and short squeezes check my thread below.

https://t.co/ABGshetm9x
3/ On October 26, 2008, Porsche announced it had increased its stake at VW from 30% to 74%.

This was a surprise to many who were led to believe that Porsche wasn't planning a takeover of VW, based on the company's announcements.
4/ Before the announcement, the short interest was approximately 13% of the outstanding shares, a number considered relatively low.

Porsche had a 30% stake, the Lower Saxony government fund held 20% of the shares, and another 5% was held by index funds.
5/ Due to VW's high weighting in the German index (DAX), the VW stock comprised 17% of the total index at the time.

This left 45% of the available shares to cover for the 13% of short shares.

However, with Porsche acquiring an additional 44% the outstanding shares were only 1%.
6/ Porsche in their statement said that they “decided to make this announcement after it became clear that there are by far more short positions in the market than expected.”
7/ They added that “the disclosure should give so-called short-sellers, meaning financial institutions which have betted or are still betting on a falling share price in Volkswagen, the opportunity to settle their relevant positions without rush and without facing major risks.”.
8/ This triggered a panic among short-sellers trying to rush to the exits, after Porsche's announcement on a Sunday with markets closed.

Due to the short squeeze, VW's stock rose 66% on Monday and skyrocketed to more than $1,000 on Tuesday.
9/ At that moment, VW was valued at a market cap exceeding $420 billion, surpassing Exxon Mobil and Microsoft.

In a single day, it became the most valuable company in the world.
10/ However, on Wednesday, Porsche provided 5% of its shares to the short-sellers, bringing the price down by 50%.

By December, it had returned to its normal levels, in the mid-200s.
11/ This trade shouldn't surprise anyone familiar with Porsche's activities.

The company was basically a hedge fund selling luxurious cars on the side.

In 2007, 3/4 of the company's profits were from trading derivatives and the rest from selling cars.
12/ From the 2008 VW squeeze, Porsche profited by more than $8 billion, with its CEO, Wendelin Wiedeking, pocketing a $100 million bonus.

The hedge funds that were involved in shorting the VW stock incurred collective losses exceeding $30 billion.

/END/
If you liked this thread click below and retweet the first tweet, and follow to stay updated.

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For more educational threads on financial independence and investing for beginners see below for a collection of threads 👇👇👇

https://t.co/eRwAf5k7oe

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Kostas \U0001f468\u200d\U0001f4bc \U0001f4c8 \U0001f4b8
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@itsKostasWithK
Companies to AVOID

/THREAD/

Some tips by Peter Lynch, one of the most successful investors of all time, on which companies to avoid investing in


1. Hottest stock in the hottest industry, with nothing but hope and thin air to support them (MJ stocks in 2017, internet stocks in 2000, electric vehicles in 2020)

Deteriorating balance sheet.

When analysts predict double-digit growth forever, the industry goes into decline.

2. Product/service, not protected by patent or niche, easy to be replicated by competitors, especially in a high-growth industry.

3. The "Next Something"

Everyone wants the next $TSLA, $AMZN, $GOOG

Most likely you won't find a company to replicate their business with that success.

4. Diversification = companies wasting capital on foolish acquisitions, in new sectors they do not understand, and in companies that are overvalued.
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Kostas \U0001f468\u200d\U0001f4bc \U0001f4c8 \U0001f4b8
Kostas 👨‍💼 📈 💸...
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This year I started writing daily on Twitter about finance and investing and gained more than 500 followers in 2 weeks

Here are the main things I learned on Twitter growth

1. Brand
2. Content
3. Engagement
4. Networking
5. Tools

/THREAD/

1. Brand
You need to find a niche you are interested in and focus on it
E.g. finance, fashion, travel, etc.

Adjust your profile by adding a profile picture and banner that will show someone what your profile is about and why they should follow you.

Add a linktree that will have all the links for your blog, website, newsletter, etc.

2. Content
Don't wait to gain followers before posting. Nobody will follow you if they see an empty feed.

Start posting daily focusing more on single tweets or threads that provide insights on a topic people in your niche might be interested in.

At first, it will feel like talking to a mirror.

Have a pinned tweet, which will be your best one that will catch the attention of someone visiting your profile.
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Kostas \U0001f468\u200d\U0001f4bc \U0001f4c8 \U0001f4b8
Kostas 👨‍💼 📈 💸...
@itsKostasWithK
The British Railway Mania

How a disruptive technology created the biggest speculative bubble in the history of England

/THREAD/


1/ Railways were the most disruptive technology of the 19th century, known as the "railway age", transforming England from an agricultural to an industrialized nation.

2/ The development of railway infrastructure and locomotives started at the end of the 18th century but experienced immense growth after 1830.


3/ Hundreds of railway related bills were passed every year with proposed rails totaling 10,000 miles, a third of which was never built due to poor financial planning, competition, or fraud.

4/ In the mid-1840s, the Bank of England cut interest rates rendering government bonds unattractive, and investors more willing to rush in the railway investments.
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Charles Ponzi and the Postal Service

The story of the man who put the 'Ponzi' in 'Ponzi scheme'

/THREAD/


1/ Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi, a.k.a. Charles Ponzi, was an italian swindler and con-artist.

Born in 1882 in Italy, he became notorious for his money-making fraudulent schemes in North America in the 1920s.


2/ He arrived in Boston in late 1903 with $2.50 in his pocket.

After many professional failures, he moved to Montreal in 1907 and started working as a bank teller at Banco Zarossi, where he rose to the position of bank manager.


3/ This is where he first witnessed the bank's scheme, where Zarossi was funding interest payments using deposits from newly opened accounts instead of investment profits.

4/ Ponzi served 3 years in jail for check forgery and returned to the US after his release.

However, he got involved in smuggling illegal immigrants into the country landing in prison for another 2 years, moving back to Boston after that.
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Kostas Kosmidis \U0001f468\u200d\U0001f4bc \U0001f4c8 \U0001f4b8
Kostas Kosmidis 👨‍💼 📈 ...
@itsKostasWithK
Isaac Newton: A brilliant scientist, a terrible investor

How Issac Newton lost $4 million due to the first stock market bubble in history and insider trading

/THREAD/


1/ Sir Isaac Newton is considered one of the most influential scientists of all time and a key figure in the scientific revolution.

He was a mathematician, physicist, astronomer, theologian, and author.

2/ The most prominent part of his work was the formulation of the laws of motion and the law of gravity.

However, his most prominent failure was losing an entire fortune in the first stock market bubble in history, the South Sea Company in 1720.


3/ Newton was usually a cautious investor.

Before 1720 most of his investments were in safe and reliable securities, various government bonds that delivered a regular stream of income, and shares in a few of the larger companies on the exchange, including South Sea Co.

4/ Newton began in 1720 with stocks and bonds worth approximately £32,000 (close to $6-million in current U.S. dollars).
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There are so many #HotTakes on the future of news and tech and digital this week. Now nearly half a year distant (and what a year - 2020, ugh!) from CEO and board @mcclatchy, I'd like to add a few thoughts: 1/


As @jbenton said in @NiemanReports : @mcclatchy transformation shows it STILL is possible NOW 'to be operationally profitable while still doing good journalism.' Not easy; Covid made it harder. But POSSIBLE and DONE by the great team in 2020 @mcclatchy. 2/

As @jbenton wrote: the #DIGITALTRANSFORMATION @mcclatchy 'shows a company that has managed the digital transition better than most; at last public count, it was making nearly half its ad revenue in digital and digital subscriptions were up 45% year-over-year.' Such focus 3/

On the future is digital is the SOLE way the still-powerful brands of local news and information will be able to have a business in the inevitable 'printless' future (Not today, not tomorrow, but printless someday) 4/

And the crisis in local news is relentless, unabating and by most measures WORSENING. More titles going dark; huge losses to our communities, because solely a blend of new digital startups AND existing footprint offer the scale 5/
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Sarad Pawar was a director in a shell company, which have done transaction of 7 Lakh crore in cash in UK.
Company Name was SGFX FINANCIALS CO UK LIMITED. (What could be full Name of SG? Any Guess?)
Thread


According to the UK company filing database, Mr Pawar was appointed as board member of SGFX Financials Co on 13 December 2010 and left the company on 5 January 2011. The filing also notes Mr Pawar's occupation as Minister, Government of India.

This company was incorporated on 13 December 2010 and dissolved on 27 November 2012. Nature of business was ‘Other business activities’!


There were two more directors when company was incorporated
1 is Mr Sarvesh Narendra Gade and 2nd is Mrs Shahanaz Ashraf Bharde


But when this details came out in 2015, Sarad Pawar has filed a case against this couple for using his name without his knowledge! Like really?
Please see below document, which have clearly mentioned that it was authenticated!
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Cory Doctorow #BLM
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The early Disney company had several near-death experiences, some due to exogenous shocks and some self-inflicted (bad labor practices, weird technology choices), and all through it, a power struggle between "Roy people" (finance) and "Walt people" (tech/art).

1/


After WWII, the company was transformed, with Roy ascendant and financial discipline the order of the day. Walt - who struggled with depression - sought desperately for an escape from the company.

2/

He came up with plans to outfit a train with traveling exhibits that he would drive around the country, putting thousands of miles between him and his brother.

3/

Another plan called for Walt to build an ambitious model train system and transform his role in the company to showing people around his trains.

4/

In 1953, Walt came up with the plan that stuck: a park called "Disneyland" that would be his own fiefdom, a commercial project that would justify the kinds of R&D and experimentation that Walt doted on and Roy looked on as high-risk, potentially ruinous follies.

5/
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THREAD: The story of the week in finance is how a group of retail traders at @wallstreetbets, with assists from @ElonMusk and @Chamath, took down the establishment short sellers at GameStop.

A thread on the underlying mechanics of the $GME saga...


1/ First, for those unfamiliar with the business, GameStop is a videogame and merchandise retailer.

It has >5,000 stores, primarily in malls, across North America, Europe, and Australia.

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3/ @ryancohen summarized his case, stating:

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4/ At the time of that statement on January 11, $GME stock was trading at about ~$20 per share.

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There is a lot of bad advice floating around online when it comes to real estate investing.

Time for a stiff drink and some stuff you might not want to hear.

A thread 👇

Most real estate influencers spend 99% of their time trying to sound smart.

They purposely make things too complicated.

When you do this for a while you can tell if a property is worth buying with a napkin and 30 seconds.

The problem with being a big real estate PE firm:

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It’s a hamster wheel making others wealthy.

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Buying real estate that doesn’t cashflow well because values have risen 10% / yr for 10 yrs while wages have risen 3% / yr for 10 yrs is very risky.

I don’t care how long your interest rate is “fixed” for.

Markets are cyclical. Trends change. Bankruptcy is real.

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