Believe me, it crossed my mind. But I’m not going to bite here.
Part of that is because I have quite enough to contend with already in terms of volatility. But besides that, this isn’t a clear buy, even with the price of Volkswagen paper down 50%.
I tend to love playing the distressed buys, but my preferred environment is different than this. I make investments in names like Anadarko Petroleum following a major accident where I could reasonably conclude there were legal protections they could hide behind that the market wasn’t factoring in. Or in companies like Ruger after some kids get shot at school and investors vastly overestimated the influence of the anti-gun lobby to spin that straw into gold.
But here everything smells wrong. The company is down big for a reason; yes the idea that governments can mandate improvements in something like engineering is fucking stupid, but they took it a step too far.
Maybe they’re not the only ones either…
We need to let this shake out. And understand that with Volkswagen, there’s no front stage guy who’s going to get the blame. No legal barrier tap and dance that slips them out of harms way. No secret save coming here.
The German government will probably protect them to some extent, but this is a big blow to them. The Germans have been huge on this green crap, public sector financing of it and all. Now, their native sons have taken a piss on the front door.
Sit it out, grab a bag of popcorn, and watch the environmentalists desperately try and erase any lines drawn between this and their regulatory initiatives.
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The one thing they have going for them is their plant in Tennessee. The politicians there are already out in force trying to limit the punishment. If they didn’t have a plant in the US they’d really be screwed.
VW is the biggest fucking car company in Western civilization. Screw that Tennessee plant. The German govt is VW. They got it covered. For a pop to 30 no doubt.
Cain
is there news on HCLP? seems like it has fallen off a cliff. Is the dividend in jeopardy? this makes no sense.
It’s down on EMES news
I like to play overreactions to bad news as well, but I’m not convinced what’s happening at Volkswagen is an overreaction. This has both high probability of a massive fine as well as a blow to their brand and thus potential loss of sales from lower consumer confidence. The only thing that could really help them out here is for it to come out that other major car companies have been doing the same thing.
And well it might…