VW briefly world top company as shortsellers caughtVolkswagen briefly became the world's biggest company by market value Tuesday, as short sellers continued to pile into the stock on weekend news Porsche had bought up much of VW's remaining free float.
Shares in the German car maker hit an intraday high of 1,005.01 euros, valuing the company at 296.06 billion euros ($370.4 billion) based on ordinary stock, more than that of world number one company Exxon Mobil Corp's $343 billion market value at Monday's closing price.
The shares later eased back to stand 25.4 percent higher at 652.00 euros at 1103 GMT, after tripling in the previous session.
Porsche said Sunday it held over 74 percent of VW, prompting a panic among short sellers who had sold VW shares in the hope of buying them back at lower prices.
German regulator Bafin saud it was looking at the VW share movement to see if any insider trading or market manipulation had taken place.
"Each and any short seller in the world is trying to close up their position and there is no way they can do it except for trying to buy like mad," said FrankfurtFinanz analyst Heino Ruland.
"Someone is selling it at a rather interesting and rich price -- it is about 10 times as much as it should trade."
Analysts and traders said the stampede was historic for German large caps.
Porsche said Sunday it held stock and options equivalent to 74 percent of Europe's biggest carmaker and aimed to push through a domination agreement next year that would give it management control and capture VW's mighty cash flows.
This will almost certainly meet objections from VW's home state of Lower Saxony, which controls just over 20 percent.. In return for losing their dividend, minority investors would get an annual cash payout set by Porsche.
Analysts questioned Porsche's motives in announcing its holding, and suggested the company may have wanted to cash in one last big jackpot at the expense of unsuspecting investors.
Tim Schuldt, an analyst at Equinet, said Porsche's announcement seemed like an invitation for hedge funds to pile into the stock and cover their shorts. He said the problem was that there was only a free float of around 5.8 percent, and many of these free floating shares were actually held in index-tracking funds and other portfolios.
"For Porsche we don't know their real intentions ... it could be that if they managed to cash in at these levels obviously that would be extremely positive for their share price, for the value of their company," said Schuldt.
Shares in Porsche, who was not available for immediate comment, was up 6.8 percent.