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Surprise! On the stock market “Porsche is not the same as Porsche”

Saturday 26 September 2015

Following the sharp fall in the price of the VW shares we are often asked whether we should buy the shares Porsche in the "ME Fund - Special Values". It is true, Porsche is also listed on the stock exchange and the share price has fallen sharply as well. However, it is better to be careful! Appearances in the stock market can be deceptive. The situation with Porsche involves different aspects.

It is fairly simple. With the sports car manufacturer Porsche, you are no longer directly involved as a shareholder. Porsche is wholly owned and a part of the Volkswagen Group and belongs for 100% to Wolfsburgers. Porsche is a subsidiary just like Skoda and Seat. The situation at Audi AG. is different. There are still shareholders, and direct owners of Audi while Audi shares are also traded on the exchange.


What about those Porsche shares traded on the stock exchange? They are shares from Porsche Automobil Holding SE. This is just a holding company which owns 50.73% of the ordinary shares of the Volkswagen Group. Furthermore the holding company is planning investments in the technology sector, with emphasis on vehicle and mobility related applications. To date, a 10% stake has been placed with a US company.


The main event for Porsche Automobil Holding is: an annual dividend payment from Volkswagen. More than half of the total dividend accruing to Porsche Holdings is derived from the ordinary shares of VW. If, due to the current debacle, the dividends from VW are cancelled, this will not be good news for the shares of Porsche Automobil Holding....


Coming back to Porsche Holding: There are ordinary shares and non-voting preference shares of Porsche Automobil Holding. Since 2011 100% of the ordinary shares are held by the Porsche and Piech families. Previously Qatar had a 10% stake. Those shares were acquired by the family. The non-voting preferred

shares of Porsche Holding are traded on the stock market. The shares are currently trading around € 41, - per share. In May 2015, they stood above the EUR 90, -. So it does not come as a surprise that the shares are mirroring the price of Volkswagen shares.


The Porsche and Piech families therefore have full control over the ordinary shares of Porsche Automobil Holding SE as a part of the VW Group. Anyone interested in the preference shares of listed Porsche Automobil Holding, is therefore only participating in just three things:

  1. The majority of vote at the VW Group, with Piëch-Porsche acting as "delegates" or "Agents".
  1. The VW dividend equal to half of VW ordinary shares.
  1. The entrepreneurial talent of the Piech-Porsche family, with reinvestment of VW dividends.


It is up to each investor to choose how he wants to approach the VW issue. Ordinary shares of VW, the preference shares or the VW Porsche Automobil Holding SE. Shares.

What is now, however, decisive for all three options, is what will now happen to the Volkswagen Group.

The way to own the actual shares of the carmaker Porsche is now closed for the investor in the stock market.

The Porsche sports car brand is now part and parcel of VW.


In the current bear market especially: It is a pity for the investor. Once again proof that extremely complicated organisational structures, particularly with ordinary and preference shares, are of no help to the shareholder in a crisis. I therefore stressed for a long time, to focus on the need for extremely lean and simple corporate structures. Let's see how the "Porsche" and "Audi" brands will survive as the Volkswagen crisis comes at an end. From a value investors point of view I can only say: Why not? What is wrong with that?