Hindenburg makes its profits by identifying “man-made disasters floating around in the market”. It bets on the stock falling, then publicises …
Oh, how human! And this place is filled with yelling shareholders!
Yesterday’s online Hindenburg searches by investors might have led them to that legendary newsreel account of the 1937 zeppelin disaster. Although renowned short-seller Hindenburg Research targeted the numerous businesses of Indian conglomerate Adani Enterprises, owned by Asia’s richest man Gautam Adani, it is too early to know whether calamity will befall them. (An amusing aside: Adani just revealed a new project in the hydrogen fuel industry.)
Every Shell Company owned by the President
Nathan Anderson, the founder of Hindenburg, has established a reputation as the incredibly level-headed antagonist of deceit, fraud, and extravagant claims made to please shareholders. In particular, his company was among the first to point out that upstart EV truck manufacturer Nikola, once valued at $20 billion on the public market, was founded on a “ocean of falsehoods” concealing the fact that its automobiles could hardly even be said to drive. Travis Milton, the company’s founder, was found guilty of securities fraud shortly after a prominent short sale of Nikola’s shares and the publication of a thorough investigation report outlining Nikola’s dubious business practises. As a result of Nikola’s stock falling, Hindenburg made a little profit.
The seven listed firms that make up the Adani empire are now the subject of Hindenburg’s largest wager since Nikola’s crash, along with yet another report that will have doubt make Woodward and Bernstein cringe. Hindenburg claims that Adani is “Pulling The Largest Con In Corporate History” as the share price of its flagship Enterprise company has increased by around 1,400% over the previous three years and its business reaches into everything from energy to ports to data to defence. The conglomerate is depicted in the study as a house of cards due to a broad range of questionable practises:
According to Hindenburg, the company relies on a murky network of at least 38 shell companies with headquarters in the Caribbean, Cypress, the UAE, and other locations to facilitate stock parking, stock manipulation, and money laundering so as to improve the balance sheets of its publicly traded companies. This is allegedly done through Vinod Adani, the older brother of Gautam Adani.
Additionally, significant shareholders and promoters in Adani’s listed companies have pledged a sizable amount of their equity as collateral for loans, which worries Anderson and co.
30 for 30: According to Bloomberg, Hindenburg has wagered against about 30 companies since 2020. The outlet estimates that the targets as a whole will lose an average of 15% the following day and 26% over the course of six months. Following Hindenburg’s statement, Adani’s publicly traded companies had an average decline of 5%, losing over $10 billion in value.
Overall: Hindenburg claims Adani’s “major listed companies have 85% downside merely on a basic basis owing to sky-high valuations,” fraud accusations aside. The red ink, oh my!