case W04C40

August 6, 2015

Hedging at Porsche

When Porsche made headlines, it was usually for the engineering of the latest edition of one of its famous
sports cars—not for complex financial engineering. But the results presented at the company’s annual press
conference on November 28, 2007, stunned the business world. While Porsche made a respectable profit
of around €1bni from manufacturing and selling cars, this number was dwarfed by the huge profits Porsche
made from transactions in financial derivatives. Porsche had undertaken large trades in the foreign exchange
options market that paid off handsomely as the U.S. dollar weakened. Moreover, Porsche had bought a
huge number of options on shares of Volkswagen, Europe’s biggest automaker. These trades together added
roughly €4 billion of profit to Porsche’s bottom line.1

Analysts were divided in their reaction when Holger Härter, Porsche’s CFO, presented these stunning
results. Some went as far as to describe Härter as a “financial genius.” Others questioned the wisdom of an
industrial company engaging in derivatives trades of this scale. Some analysts remarked wryly that Porsche
had become a “hedge fund.”2

Did Porsche simply earn the fruits of prudent and clever risk management? Or did these results indicate
that Porsche’s executives engaged in reckless financial policies that exposed the company to outsized risks?

Background
With headquarters in Stuttgart, Germany, Porsche was a manufacturer of performance sports cars. Its
product line in 2007 included the 911, Boxster, and Cayman sports cars, and the Cayenne sports utility
vehicle. The four-door Panamera was planned to be launched in 2009. The production of the 911 and Cayenne
vehicles took place at the company’s German plants in Stuttgart and Leipzig, while much of the assembly of
the Boxster and Cayman was outsourced to the Finnish company Valmet.3

The company’s sales were heavily dependent on the U.S. and German markets. Each one of these two
markets accounted for about a third of total sales in the fiscal year 2006/07.4
i The exchange rate at the end of November 2007 was 1.47 $ per €.
Published by WDI Publishing, a division of the William Davidson Institute (WDI) at the University of Michigan.
©2014 Stefan Nagel. This case was written by Stefan Nagel (Michael Stark Professor of Finance at the Ross School of Business) at
the University of Michigan to be the basis for class discussion rather than to illustrate either the effective or ineffective handling
of a situation. Secondary research was performed to accurately portray information about the featured organization. Company
representatives were not involved in the creation of this case.
Hedging at Porsche W04C40

In the early 1990s Porsche had been on the brink of bankruptcy. At the time, sales were heavily
dependent on a single product: the 911 sports car. As recession hit the United States and Germany, sales of
expensive sports cars slumped. Combined with the effects of a weak U.S. dollar, this had a devastating effect
on Porsche. Sales fell dramatically from more than 50,000 a year to 14,000 units in 1993.5

In 1993, then 40-year-old Wendelin Wiedeking was appointed as CEO to lead Porsche out of this
crisis. Under his leadership the company brought in former Toyota engineers from Japan to adopt lean
manufacturing techniques, and it focused on the development of the Boxster, a new entry-level model priced
considerably below the 911.6

In a relatively short time, Porsche completed a successful turnaround. Wiedeking was still CEO in 2007.
By that time Porsche had achieved the highest profit margins in the industry, earning itself the label “most
profitable car company in the world.”7

Porsche was essentially a privately held company. The company had two classes of shares: ordinary
shares with voting rights and preferred nonvoting shares. All of Porsche’s 8.75 million ordinary shares were
held by the Piëch and Porsche families. The 8.75 million (nonvoting) preferred shares were publicly traded
and the majority held by institutional investors.8

Risk Management Policy

Porsche’s risk management policy was strongly influenced by its experience of nearly going bankrupt in
the early 1990s. Its policy was grounded in several lessons Porsche’s executives learned from this period of
trouble.

First, Porsche aimed to have little leverage on its balance sheet and a cushion of ample liquidity. The
firm had little long-term debt. Its financial liabilities, which consisted mostly of bank loans and bonds,
accounted for only a small fraction of total assets. It also maintained a balance of cash and highly liquid
cash-equivalent assets of more than €2bn (see Appendix A). Instead of relying on credit lines provided by
banks, the company preferred to keep significant cash balances. This cautious policy also had its roots in
Porsche’s troubles in the early 1990s. When the crisis hit back then, the company struggled as banks became
unwilling to extend credit. As Porsche CFO Holger Härter put it, “We learned the hard way that banks are
there for you when you don’t need them, and when you do need them, they’re nowhere to be seen.”9

Second, Porsche aimed to hedge, to a large extent, its foreign exchange exposure. During the troubles of
the early 1990s Porsche was not well hedged against a falling U.S. dollar, which compounded the problems
the company faced at the time. Its German competitors BMW and Mercedes responded to this challenge by
establishing and expanding production facilities in the United States. By increasing their dollar-cost base,
they were trying to match dollar revenues with dollar costs. Porsche chose not to go down this route of
establishing such a “natural hedge.” Instead, it relied on foreign exchange derivatives to hedge its exposure
to foreign exchange risk.10

Foreign Exchange Hedging

Porsche’s foreign exchange hedging program made use of foreign exchange options. Options were used
to lock in a desired floor to the exchange rate. In particular, Porsche often used at-the-money optionsii to
lock in an exchange rate close to the current spot rate.11

ii An option is called an at-the-money option if the price of the underlying asset equals the strike price.
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For example, on November 30, 2007, the US$-€ exchange rate stood at a spot rate of 1.47 $ per € (see
Exhibit 1). If Porsche bought one-year put options on the U.S. dollar, at a strike of 1.45 $ per €, it obtained
the right, but not the obligation, to sell U.S. dollars one year from now at a predetermined exchange rate of
1.45 $ per €. In this way, the company locked in a minimum amount of euros it would obtain per U.S. dollar
when it converted U.S. dollar revenue from sales in the United States into euros.

Exhibit 1
Dollar/Euro Exchange Rate ($ Per €)

7/31/2007: 1.43$/€

7/31/2007: 1.37$/€

Note: The average $/€ rate during Porsche’s fiscal year 2006/07 (ending in July 31, 2007) was 1.31 $/€.
Source: DataStream.

Porsche designed its hedging program so that its forecast sales three years out would be fully hedged
(against adverse movements in the exchange rate). This involved buying and rolling over a portfolio of put
options with various maturities of up to three years. On July 31, 2007, Porsche held options with a notional
amount of €12 billion and a market value of about €0.5 billion (see Exhibit 2).12

Assuming a simple put-option hedge and that the entire position is a U.S. dollar hedge, a notional
amount of €12 bn would mean that if Porsche had exercised these put options on July 31, 2007, it would
have been able to sell about €12 billion worth of dollars at a pre-determined exchange rate given by the
strike of the put options. €12 billion is roughly three times Porsche’s annual sales outside of Europe (see
Exhibit 3, assuming some growth over the following three years) consistent with Porsche’s stated goal of
hedging exposure three years out.

Porsche believed that it should hedge its foreign exchange exposure largely irrespective of the views
about future exchange rate developments that management might have. As Henrik Hänche, Porsche’s
treasurer, explained: “We want to avoid the behavioral finance trap, where we act in a certain way because

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Hedging at Porsche W04C40

we think the current rate of $1.19 to the euro will be higher or lower one month from now. We are convinced
that it’s not possible to beat the market.”13

Exhibit 2
Notional amounts and market value of derivative financial instruments held by
Porsche (€ thousands)

Nominal Total market Nominal Total market

volume value volume value
T€ T€ T€ T€

Assets Currency hedge 12,198,361 466,268 8,276,098 389,003

Interest hedge 1,091,319 34,998 1,292,744 34,692
Stock options 10,553,364 5,055,224 2,628,055 870,437
23,843,044 5,556,490 12,196,897 1,294,132

Equity and Currency hedge 1,357,879 13,866 1,441,224 9,572

liabilities Interest hedge 902,830 27,118 886,812 34,818
Stock options 13,473,485 2,445,118 2,441,025 980,716
15,734,194 2,486,102 4,769,061 1,025,106

Source: Porsche, Annual Report 2006/2007. <http://www.porsche-se.com/pho/en/investorrelations/mandatorypublications/annualreport-14/download/>.

Exhibit 3
Sales and profit by region (€ millions)

Europe
North Rest of the
Germany without
America world
Germany

Sales 2,554 2,218 1,750 847

Profit before financial income and income tax 4,427 142 120 40

Source: Porsche, Annual Report 2006/2007. <http://www.porsche-se.com/pho/en/investorrelations/mandatorypublications/annualreport-14/download/>.

This approach was different from that taken by some of Porsche’s competitors. For example, after having
reaped considerable gains from U.S. dollar hedges as the euro rose against the dollar in the years before 2004,
BMW decided to largely abandon its hedge. In January 2004, The New York Times reported about an interview
with the head of BMW’s risk management, according to which BMW believed that at the current exchange
rate of $1.25 the euro was overvalued. The company’s computer models suggested that the currency’s correct
long-term value was around $1.10. Based on this estimate, BMW opted not to hedge heavily.14

The Volkswagen Stake

On September 26, 2005, Porsche stunned financial markets when it announced plans to acquire a 20%
stake in Volkswagen (VW), Europe’s biggest carmaker. While Porsche was a small, highly profitable niche
producer, VW was a mass producer struggling to improve its profitability. In addition to the VW brand, VW

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also owned the Audi and Skoda brands, among others.15 The two companies could hardly be more different.
Volkswagen sold more than 5 million vehicles per year, with sales approaching €100 billion, while Porsche
sold about 90,000 vehicles per year, yielding sales of about €7 billion.16

Porsche’s managers, however, believed that they had a good rationale for this unexpected move. They
explained that their main objective was to prevent hedge funds from taking over and breaking up VW.
Porsche argued that its bid for a VW stake was of critical importance because of Porsche’s dependence on VW
as its main supplier and as a partner in several joint projects. VW provided about 30% of the components
used in Porsche cars. Porsche’s Cayenne, VW’s Tuareg, and VW subsidiary Audi’s Q7 sports utility vehicles
shared a common platform. Porsche was also cooperating with VW in the development of the platform for the
Panamera, a four-door sports car to be introduced in 2009. The two companies were additionally cooperating
on the development of hybrid and fuel-cell models. As a small niche manufacturer, Porsche had difficulty
achieving sufficient economies of scale. It said that it needed VW as a reliable partner. A takeover or breakup
of VW by some third party would threaten this relationship.17

Critics maintained that this looked like a return to the old days of German “corporatism,” where
companies and banks had cross-holdings in each other, protecting one another from hostile takeovers and
shielding themselves from capital market pressures for improving profitability. Moreover, some critics saw
conflicts of interest in the fact that Ferdinand Piëch, who served as CEO of VW from 1993 to 2002 and as
the head of VW’s supervisory board, was also a member of Porsche’s supervisory board and owner of a large
fraction of Porsche’s voting shares.18

VW was a potential target for takeover and breakup, as it had been struggling for many years to achieve
and maintain a satisfactory level of profitability. Many analysts argued that the company suffered from large
inefficiencies. In particular, analysts criticized the apparent cross-subsidization from its successful and
profitable Audi subsidiary to less profitable parts of the company and concluded that VW’s breakup value was
considerably higher than its value as a combined company.19

For a long time, however, VW had been shielded by an arcane German law (the Volkswagen Act of 1960)
that limited the voting rights of any shareholder in VW to a maximum of 20% and gave the federal and
regional government seats on the supervisory board of the company. In 2005, at the time when Porsche
first announced its intention to buy a large stake in VW, the European Court was expected to mandate that
Germany repeal this law in the near future. The European Commission argued that the law conflicted with
European Union rules on free movement of capital within the single European market. And in October 2007
the European Court did indeed rule that the Volkswagen law illegally shielded VW from takeovers and it
required the German federal government to amend or repeal this law.20

Porsche had hoped for this outcome. In October 2006, it announced its intention to acquire a further
3.9% of VW, raising its stake from then 21.2% to 25.1%. It also announced that it had already bought a
sufficient number of call options on VW ordinary shares, so that it faced no price risk in this planned increase
in its stake in VW.21 On March 26, 2007, Porsche announced that it had exercised options for the acquisition
of a further 3.6% of the ordinary shares of VW, which increased its stake to 30.9%. 22

This increase of its stake above 30% triggered, by law, a requirement to make a mandatory offer for
the remaining VW shares. Porsche, however, offered only the minimum price required by the law, € 100.92
per ordinary share, which was about 14% below the prevailing market price at the time, so hardly any
shareholder took Porsche’s offer. At the time Porsche held 27.3% of VW’s ordinary shares and had options to
buy another 3.7%.23 The offer lapsed in May, and Porsche was now free to increase its stake to 50 percent,
if it wished to do so.24
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Porsche had made extensive use of call options on VW ordinary shares to build its stake in VW. Porsche
executives argued that this helped them to hedge against the risk that their attempt to buy VW shares would
cause VW’s stock price to rise. The exact nature of Porsche’s option positions remained undisclosed. Some
analysts believed that Porsche was holding options to another 60 million of VW shares in November 200725
(compared with 290.3 million ordinary VW shares outstanding).26

Is Porsche a Hedge Fund?

Porsche’s foreign exchange hedges and the acquisition of the VW stake had a dramatic impact on
Porsche’s bottom line in the fiscal year 2006/07. On sales of about €7.4 billion, Porsche reported pretax
profits of €5.9 billion, up from €2.1 billion in the previous year (see Appendix B). Profits from its VW stock
option trades accounted for €3.6 billion of these profits. A further €1.2 billion came from Porsche’s share
in VW’s profits, and thus “only” about €1.1 billion from its core business, although that still represented an
impressive profit margin by car industry standards. In other words, Porsche made three times as much profit
from trades in financial derivatives than from its business of manufacturing and selling cars.27

Moreover, the profit from its core business was also boosted by foreign exchange hedges that Porsche
had in place. These hedges contributed €250 million to Porsche’s bottom line in 2006/07, as the dollar
weakened against the euro.28

Porsche’s astonishing results drew praise, but also criticism from analysts and commentators. Some
journalists likened Porsche’s CFO, Härter, to a “financial genius,” or characterized him as “more of an options
trader than a CFO,” while others warned that Porsche had just been lucky, and that things might have turned
out differently at another time. Some even suggested that Porsche was more like a hedge fund than a car
company. A company spokesman replied by pointing out that “hedge funds don’t make cars the last time I
checked.”29

Conclusion

Porsche had earned a reputation for a cautious risk management. However, the company’s enormous
profits from transactions in financial derivatives led many to question whether this was still an accurate
description. Should a company such as Porsche engage in derivatives transactions on this scale? Was its
approach to building the Volkswagen stake consistent with sound risk management principles or an example
of reckless speculation with shareholders’ capital? (For additional insight, see Appendices C-G.)

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Appendices
Appendix A
Consolidated Balance Sheet of Porsche Group (€ thousands)
Notes July 31, 2007 July 31, 2006
T€ T€

Assets Intangible assets (15) 263,526 250,295

Property, plant and equipment (16) 1,378,435 1,178,352
Investments in associates (17) 7,059,333 3,263,733
Other financial assets (17) 67,584 27,755
Leased assets (18) 990,979 960,650
Trade receivables (20) 20,772 1,990
Receivables from financial services (21) 1,321,635 1,248,750
Other receivables and assets (22) 285,662 172,659
Receivables of taxes on income (23) 63,598 0
Securities (24) 1,014,573 713,072
Deferred tax assets (10) 75,114 152,930 *
Non-current assets 12,541,211 7,970,186 *

Inventories (19) 625,209 594,080

Trade receivables (20) 245,136 202,981
Receivables from financial services (21) 459,879 434,889
Other receivables and assets (22) 5,604,442 1,399,988 *
Receivables of taxes on income (23) 27,262 1,306 *
Securities (24) 1,419,185 2,048,521
Cash and cash equivalents (25) 2,410,066 1,988,550
Current assets 10,791,179 6,670,315
23,332,390 14,640,501 *

Equity and
liabilities Subscribed capital (26) 45,500 45,500
Capital reserves (26) 121,969 121,969
Revenue reserves (26) 8,507,292 4,362,342 *
Translation differences (26) – 3,712 – 1,821
Capital allocable to shareholders 8,671,049 4,527,990 *
Hybrid capital (26) 809,977 809,977
Minority interests (26) 0 0*
Equity 9,481,026 5,337,967 *

Pension provisions (27) 719,476 658,743

Other provisions (28) 624,234 628,512
Deferred tax liabilities (10) 612,826 181,764
Financial liabilities (29) 3,539,237 3,529,650
Trade payables (30) 7,480 3,875
Other liabilities (31) 67,007 51,219
Non-current provisions and liabilities 5,570,260 5,053,763

Tax provisions (28) 896,643 238,026

Other provisions (28) 1,161,098 1,012,522
Financial liabilities (29) 3,010,024 1,280,342 *
Trade payables (30) 505,183 478,942
Other liabilities (31) 2,708,156 1,238,939
Current provisions and liabilities 8,281,104 4,248,771 *
23,332,390 14,640,501 *

* adjusted

Source: Porsche, Annual Report 2006/2007.

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Appendix B
Consolidated Income Statement of Porsche Group (€ thousands)
Notes 2006/ 07 2005/ 06
T€ T€

Continuing operations
Sales (1) 7,367,876 7,122,667
Changes in inventories and
other own work capitalized (2) 162,217 172,967

Total operating performance 7,530,093 7,295,634

Other operating income (3) 7,264,416 1,045,127

Cost of materials (4) – 3,659,520 – 3,273,507
Personnel expenses (5) – 1,264,325 – 1,037,475
Amortization and
depreciation (15), (16), (18) – 531,712 – 488,758
Other operating expenses (6) – 4,600,099 – 1,709,318

Profit before financial income 4,738,853 1,831,703

Share of profit of associates (7) 1,223,164 203,357

Financial expenses (8) – 272,232 – 198,916 *
Financial income (9) 167,215 192,053 *
Financial result 1,118,147 196,494

Profit from ordinary activities

of continuing operations 5,857,000 2,028,197
Profit from ordinary activities
of discontinued operations 0 81,803
Profit from ordinary activities 5,857,000 2,110,000

Income taxes from continuing operations (10) – 1,615,000 – 713,578

Income taxes from discontinued operations (10) 0 – 3,422
Income taxes (10) – 1,615,000 – 717,000

Net profit from continuing operations 4,242,000 1,314,619

Net profit from discontinued operations (11) 0 78,381

Net profit 4,242,000 1,393,000

thereof profit allocable to minority shareholders (12) – 10,519 – 3,445

thereof profit allocable to hybrid capital investors (13) 55,556 28,451
thereof profit allocable to shareholders of Porsche AG (13) 4,196,963 1,367,994

Earnings per ordinary share from continiung operations

(diluted and basic) (13) 239.80 73.66
Earnings per ordinary share from discontinued operations
(diluted and basic) (13) 0.00 4.44
Earnings per preference share from continiung operations
(diluted and basic) (13) 239.86 73.72
Earnings per preference share from discontinued operations
(diluted and basic) (13) 0.00 4.50

* adjusted

Source: Porsche, Annual Report 2006/2007.

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Appendix C
Breakdown of Operating Income and Operating Expenses (€ Thousands)
(3) Other operating income
Other operating income breaks down as follows:

2006/07 2005/06
T€ T€

Income from stock options 6,926,751 767,169

Income from the reversal of imparments and provisions 72,988 47,538
Exchange rate gains 7,090 9,373
Sundry operating income 257,587 221,047
7,264,416 1,045,127

(6) Other operating expenses

Other operating expenses consist of:

2006/07 2005/06
T€ T€

Stock options 3,333,474 506,139

Advertising 252,994 249,089
Selling and general administrative expenses 157,642 159,079
Dues, charges, fees, legal and advisory costs 88,903 34,789
Exchange rate losses 73,736 66,413
Repairs and maintenance 65,255 68,425
Rent and leases 31,136 30,408
Sundry operating expenses 596,959 594,976
4,600,099 1,709,318

Source: Porsche, Annual Report 2006/2007.

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Appendix D
Breakdown of Noncurrent and Current Other Receivables and Assets (€ Thousands)
(22) Non-current and current other receivables and assets

July 31, 2007 July 31,2006 *

T€ T€

Derivative financial instruments 5,556,490 1,294,132

Other receivables 310,475 259,064
Prepaid expenses 23,139 19,451
5,890,104 1,572,647

thereof non-current 285,662 172,659

thereof current 5,604,442 1,399,988

Source: Porsche, Annual Report 2006/2007.

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Appendix E
Maturity of Derivative Financial Instruments Held by Porsche, July 31, 2007
(€ Thousands)

Nominal Due within Due within Due within

volume one year one to more than
five years five years
T€ T€ T€ T€

July 31, 2007

Assets Currency hedge 12,198,361 2,584,401 8,899,674 714,286
thereof purchase of foreign currencies 174,595 89,980 84,615 –
thereof sale of foreign currencies 12,023,766 2,494,421 8,815,059 714,286
Interest hedge 1,091,319 54,313 687,006 350,000
Stock options 10,553,364 10,553,364 – –
23,843,044 13,192,078 9,586,680 1,064,286

Equity and Currency hedge 1,357,879 1,287,065 70,814 –

liabilities thereof purchase of foreign currencies 718,647 718,647 – –
thereof sale of foreign currencies 639,232 568,418 70,814 –
Interest hedge 902,830 – 592,770 310,060
Stock options 13,473,485 13,473,485 – –
15,734,194 14,760,550 663,584 310,060

Source: Porsche, Annual Report 2006/2007.

Appendix F
Zero-Coupon Yield Curves on November 30, 2007

Maturity (years)
1 2 3 4 5 6 7 8 9 10
Euro (German Govt. Bonds) 3.94 3.81 3.80 3.84 3.90 3.96 4.03 4.09 4.15 4.21

US$ (US Treasuries) 3.19 3.04 3.08 3.23 3.43 3.62 3.80 3.97 4.10 4.21

Source: European Central Bank and Federal Reserve Board.

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Appendix G
Share Prices of Volkswagen and Porsche

July 31, 2007 November 30, 2007

Volkswagen
132.54 163.84
(ordinary shares)

Porsche
1341.00 1504.10
(preferred shares)

Volkswagen

6 Porsche

DAX

0
1/3/05

3/3/05

5/3/05

7/3/05

9/3/05

1/3/06

3/3/06

5/3/06

7/3/06

9/3/06

1/3/07

3/3/07

5/3/07

7/3/07

9/3/07
11/3/05

11/3/06

11/3/07

Note: Volkswagen ordinary shares, Porsche preferred shares, and DAX Index (German stock market index), all rebased to 1.00 at the start of 2005, and adjusted for dividends and splits.

Source: DataStream.

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Endnotes
1
Karaian, Jason. “All Hail Holger Härter.” CFO.com. 13 Nov. 2007. Web. Accessed 22 June 2015. <http://www.cfo.com/blogs/index.
cfm/l_detail/10127891>.
2
Milne, Richard. “Porsche profits by CFO’s hedges.” The Financial Times. 29 Nov. 2007. Web. Accessed 22 June 2015. <http://www.
ft.com/intl/cms/s/0/41abdcaa-9e1e-11dc-9f68-0000779fd2ac.html#axzz3dWQUKcFv>.
3
Porsche. Annual Report 2006/2007. Web. Accessed 22 June 2015. <http://www.porsche-se.com/pho/en/investorrelations/
mandatorypublications/annualreport-14/download/>.
4 Porsche. Annual Report 2006/2007.
5
Nash, Nathaniel C. “Putting Porsche in the Pink.” The New York Times. 20 Jan. 1996. Web, Accessed 22 June 2015. <http://www.
nytimes.com/1996/01/20/business/putting-porsche-in-the-pink.html>.
6 Nash, Nathaniel C.
7
Thomas, Chad, and Jeremy van Loon. “Porsche to Increase Volkswagen Stake Today, Make Takeover Bid.” Bloomberg. 26 March
2007. Web. Accessed 22 June 2015. <http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ah6QlAWK2pNo>.
8
FinanzNachrichten.de. “Porsche to Ask Shareholders to Approve Motion to Create Reserve Capital.” 12 July 2006. Web. Accessed
22 June 2015. <http://www.finanznachrichten.de/nachrichten-2006-12/7422271-porsche-to-ask-shareholders-to-approve-
motion-to-create-reserve-share-capital-020.htm>.
9 Karaian, Jason.
10
Landler, Mark. “As Exchange Rates Swing, Carmakers Try to Duck.” The New York Times. 17 Jan. 2004. Web. Accessed 22 June
2015. <http://www.nytimes.com/2004/01/17/business/as-exchange-rates-swing-carmakers-try-to-duck.html>.
11 Wood, Duncan. “Cautious Porsche.” Risk. April 2006.
12 Wood, Duncan.
13 Wood, Duncan.
14 Landler, Mark.
15
The Economist. “Keeping it in the Family.” 29 Sep. 2005. Web. Accessed 23 June 2015. <http://www.economist.com/
node/4462837>.
16 Milne, Richard. “Porsche Plans to Acquire 20% Stake in VW.” Financial Times. 26 Sep. 2005. Web. Accessed 23 June 2015.
<http://www.ft.com/intl/cms/s/0/d6a0b43e-2df0-11da-aa88-00000e2511c8.html#axzz3dWQUKcFv>.
17
The Economist. “Keeping it in the Family.”
18
The Economist. “Keeping it in the Family.”
19
The Economist. “Keeping it in the Family.”
20 Lander, Mark.
21
Porsche. “Porsche Requests Approval for an Increased Stake in VW.” 23 June 2006. Web. Accessed 23 June 2015. <http://www.
porsche.com/korea/ko/aboutporsche/pressreleases/pag/archive2006/quarter2/?pool=international-de&id=2006-06-23>.
22 Porsche. 26 March 2007. Web. Accessed 23 June 2015. “Porsche AG Exercises Option with Regard to Ordinary Shares of
Volkswagen AG—Stake in Ordinary Shares Increases to 30.9 Per Cent.” <http://www.porsche-se.com/pho/en/investorrelations/
mandatorypublications/adhocreleases/>.
23 Thomas, Chad, and Jeremy van Loon.
24
Reuters. “Porsche Mandatory Bid for VW Fails—As Planned.” 4 June 2007. Web. Accessed 23 June 2015. < http://www.reuters.
com/article/2007/06/04/idUSL0470400520070604>.
25 Milne, Richard.
26
Volkswagen AG Interim Report January—September 2007. Web. Accessed 23 June 2015. <http://www.volkswagenag.com/
content/vwcorp/info_center/en/publications/2007/10/Q3_Report_2007.bin.html/binarystorageitem/file/Q3_2007_e.pdf >.
27 Karaian, Jason.
28 Milne, Richard.
29 Karaian, Jason.

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Hedging at Porsche W04C40

Notes

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Hedging at Porsche W04C40

Notes

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 Established at the University of Michigan in 1992, the William Davidson Institute
(WDI) is an independent, non-profit research and educational organization focused on
providing private-sector solutions in emerging markets. Through a unique structure
that integrates research, field-based collaborations, education/training, publishing,
and University of Michigan student opportunities, WDI creates long-term value for
academic institutions, partner organizations, and donor agencies active in emerging
markets. WDI also provides a forum for academics, policy makers, business leaders, and
development experts to enhance their understanding of these economies. WDI is one
of the few institutions of higher learning in the United States that is fully dedicated to
understanding, testing, and implementing actionable, private-sector business models
addressing the challenges and opportunities in emerging markets.