US short sellers go head to head with Asia’s richest man after targeting Nikola and Twitter

(Bloomberg) – U.S. short-seller Hindenburg Research LLC is targeting Asia’s richest man on accusations of market manipulation and fraud following a series of often successful bets against the companies, from electric vehicle maker Nikola Corp. to Twitter Inc.

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The company run by Nate Anderson published a nearly 100-page report on Gautam Adani’s Adani Group, sending shares of Indian conglomerate companies lower on Wednesday. Hindenburg said it was Adani securities shorted through U.S.-traded derivatives and bonds. Adani Group dismissed the allegations as “baseless” and “selective disinformation”.

Hindenburg has targeted about 30 companies since 2020, and their shares average about 15% loss the next day, according to Bloomberg News calculations. The average stock fell 26% six months later.

Even if Adani denies the allegations, some fund managers are likely to pull out of Adani’s stock because of its intense focus on environmental, social and governance criteria.

Guillermo Hernandez Sampere, head of trading at asset manager MPPM GmbH, said: “Given Hindenburg’s reputation, one can assume these allegations have been well-researched.

With this campaign, Hindenburg is taking on its biggest goal to date and breaking into Indian stocks, which is rare for short sellers in the United States. Anderson’s most famous short attack was directed at electric car maker Nikola, whom he accused of being “a sea of ​​lies”.

Anderson’s firm follows the standard procedure for so-called activist short selling: After researching a potential target, Hindenburg bets the stock will fall, then makes his research public, Use social media to convey messages. Hindenburg’s Twitter account has more than 259,000 followers, while Anderson’s personal account has another 26,500.

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Short-selling activists see themselves as watchdogs that protect investors from accounting and regulatory misconduct, while the companies they target often accuse them of market manipulation school.

According to people with knowledge of the matter, regulators often push back against short sellers, and the US Department of Justice by 2021 has collected information on dozens of investment firms and investors. study as part of an intense hunt for potential trading abuses by short sellers. No charges have been announced from the investigation.

Hindenburg was not immediately available to comment on its track record. The Adani Group’s chief financial officer said the study was a “malicious combination of selective misinformation and stale, baseless and discredited allegations.”

Here are some notable short goals of Hindenburg:

Run an electric car

• Anderson became interested in Nikola after Bloomberg News published a story about how founder Trevor Milton exaggerated the capabilities of his debut pickup truck. Nikola, which at one time had a market value of $34 billion, is now worth $1.3 billion, and a jury in October found Milton defrauding investors. Shares have fallen more than 94% since the short seller’s report.

• Hindenburg also targeted Lordstown Motors Corp. for misleading investors about their needs and production capabilities. The company later confirmed it had disclosed incorrect information about interest from potential customers. The company, once valued at more than $5 billion, is now valued at less than $260 million. Its market share has fallen by more than 90% since Hindenburg’s report.

• The July 2020 short seller questioned the “huge” market value of another electric vehicle company, Workhorse Group Inc., and said it was more likely to win the mail truck contract. United States Postal Service. It did not win the contract. The company’s market value has dropped to $332 million from $1.5 billion since Hindenburg issued the warning on Twitter.

Twitter: First short, then long

• Hindenburg also bets on both the decline and rise in the price of Twitter stock as it undergoes dizzying swings before Elon Musk completes his acquisition of the company. Twitter fell from $49.80 in the trading session before Hindenburg announced the short sale to $37.39 on May 16. The next day, Anderson tweeted that Hindenburg was closed. In mid-July, when Twitter’s stock price was at the lowest point in Musk’s deal story, Hindenburg announced that it had taken what it called a substantial long position.

Targeting SPACs

• DraftKings Inc. and Clover Health Investments Corp. are some of Anderson’s famous bets against companies listing shares through special purpose acquisitions. The short seller said in June 2021 that insiders at DraftKings had profited from announcing a deal with a white-checking company, among other allegations. Shares have fallen more than 70% since then. The sports betting company, which denies wrongdoing, received a subpoena from the US Securities and Exchange Commission in July 2021 to request documents related to those allegations.

• Clover Health, backed by venture capitalist and SPAC mogul Chamath Palihapitiya, has fallen more than 90% since Hindenburg released a report in February 2021 alleging the company misled investors. The SEC has begun an investigation following the report, which the company said contained many inaccuracies.

Here are some stocks for which Hindenburg has been reporting short sellers since 2020:

–With support from PR Sanjai, Jan-Patrick Barnert, Ksenia Galouchko and Abhishek Vishnoi.

(Updated to add basics of Hindenburg short positions)

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