Hindenburg Research’s bruised report accuses Adani Group of withdrawing”biggest scam in company history” has rattled the Indian stock market.
24, the New York-based forensic financial research firm disclosed its short positions in Adani’s companies, citing alleged accounting fraud and “manipulation.” blatant stock manipulation” for decades. This sent the company’s stock down to one dark red area in the past two days. To date, its seven listed entities have lost $39.4 billion in value.
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The Hindenburg Research has a track record of exposing corporate misconduct, including those of electric truck manufacturer Nikola Corporationand of bet wisely on short and long investmentsas happened with Twitter in the social media company era long takeover movie with Elon Musk.
Hindenburg’s latest report. The group’s director, Indian industrialist Gautam Adani, is Asia’s richest man, with a net worth of around $120 billion.
The group’s head of legal, Jatin Jalundhwala, in a statement on January 26, said the company was “deeply disturbed” by the “deliberate and reckless” attempt to tarnish Adani’s reputation in the past. there. a subsequent public offer opened today (January 27).
The extent of the damage caused by Hindenburg’s findings is of widespread importance in India, home to a number of public sector banks and national Life Insurance Corporation (LIC) trusts. hold a large stake in the company. If Adani collapses, it will be hugely damaging to taxpayers.
What is Hindenburg Research?
Nathan Anderson founded Hindenburg Research in 2017 to analyze the stock, credit and derivatives markets. The name Hindenburg is derived from The hot air balloon explosion in 1937 in New Jersey, killing 36 passengers.
The company said on its website that it was looking for “man-made disasters,” such as accounting irregularities, mismanagement and undisclosed related party transactions. revealed. Its stated purpose: to spot corporate disasters before they “attract more unsuspecting victims”.
Anderson’s company has targeted at least 16 companies so far. It employs 10 people, mostly former journalists and analysts, Bloomberg report.
Who was the founder of Hindenburg?
Anderson, 38, grew up in a small town in Connecticut and earned a degree in international business from the University of Connecticut.
Looking for a “diverse set of experiences”, as he puts it Financial Times 2021, he worked as a medical officer while studying abroad in Israel. His financial career began at the financial data company FactSet Research Systems. There, he worked with investment management firms and found that “the processes between them are mostly the same and not particularly obvious,” as he told the FT.
The fundraising efforts at Blue Heron Capital and Tangent Capital were Anderson’s first steps toward investigative research. His role involves researching hedge funds and investment opportunities for high net worth individuals, in his words. his LinkedIn profile.
His first big win was excavation fraud at hedge fund Platinum Partners. For this case, Anderson teamed up with another senior financial fraud investigator, whose mentor is Harry Markopolos, who is famous Pursuing Bernard Madoff’s Ponzi scheme.
Why are companies afraid of Anderson?
Short sellers are generally unwelcome in the corporate world, where short bets are often seen as a means to attack companies and stunt their growth.
Short sellers, who profit when the target stock falls in price, have been a part of the market since the stock was born. They create an important system of checks and balances in bubble-prone markets.
As reported by Hindenburg, the company has pooled its short positions in Adani’s companies through U.S.-traded bonds and derivatives that aren’t traded in India. It also highlights the huge debt on Adani’s books, which Hindenburg says has put the entire group in a “precarious financial position”.
By digits
100 billion USD: Gautam Adani’s net worth addition over the past three years due to a dizzying rise in stock prices
39.4 billion USD: Adani Group’s Asset Erosion Over a Two Day Trading Period
38: Number of shell entities identified by the Hindenburg Study believed to be controlled by Gautam Adani’s brother, Vinod Adani, or other close associates
17 billion USD: The total amount of alleged money laundering, theft of taxpayer funds and corruption was previously investigated by four government agencies that reviewed Adani’s holdings.
85%+: The extent of the decline Hindenburg sees for Adani’s listed companies is “entirely grounded in fundamentals”
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