the story So Far: US-based short seller Hindenburg Research has hit back at the Gujarat-based Adani Group, accusing the group of “holding India’s future”. Adani Group shares fell last Wednesday after Hindenburg Research was published a report Topic Adani Group: How the world’s 3rd richest man is pulling off the biggest scam in corporate history After two years of investigation, and raised concerns about “enough credit, The financial researcher and short seller also accused the group of stock manipulation and fraud over decades.
Group CFO Jugeshinder Singh said in a statement, “The timing of the publication of the report clearly indicates an intention to malign the Adani Group with the main objective of damaging the upcoming Follow-on Public Offering (FPO) of Adani Enterprises.” it shows.” after the report was first published.
Following the report, Adani Group said it is considering legal action against Hindenburg Research Financial researcher welcomes the move,
On 29 January the group published a 413-page rebuttal to the allegations made by Hindenburg Research, which it claimed was a “planned attack on India”. “We will exercise our rights to pursue measures to protect our stakeholders before all appropriate authorities, and we reserve our rights to respond to any allegations or content of the Hindenburg Report,” the group said.
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In response, Hindenburg Research stated that the hoax could not be “obscured by nationalism”. “The Adani Group has tried to confuse its meteoric rise and the wealth of its chairman, Gautam Adani, with its success in India. We disagree. To be clear, we believe that India is a vibrant democracy and an emerging superpower with an exciting future,” the researcher said in a statement.
Shares of leading Adani Enterprises surged and increased by about 9.5% On January 30, however, other Adani group companies continued to fall, adding to their losses.
What is Hindenburg Research?
Hindenburg Research was founded in 2017 by Nate Anderson, a Chartered Financial Analyst and a Chartered Alternative Investment Analyst.
It describes itself as a forensic financial research company and “activist short seller”. It focuses on analyzing accounting irregularities, undisclosed transactions, illegal/unethical business or financial reporting practices. among other issues.
Hindenburg Research has in the past published reports about irregularities at companies such as entertainment company Genius Brands, and electric vehicle makers Nikola Corp and Mullen Automotive. It also bet on a drop in Twitter’s share price in 2022 when Elon Musk first offered to buy the company.
In September 2020, Hindenburg Research alleged that Nikola Corporation was “built on dozens of lies during the career of its founder and executive chairman, Trevor Milton”. In his report, the financial researcher claimed that Nicola staged a video titled “Nicola One in Motion”, which shows a semi-truck cruising down the road at high speed. The truck was actually rolling down a hill and not running under its own power – a claim that Nicola later admitted was true according to a BBC Report good.
Mr. Milton’s resignation came after the report, and news that the SEC and Justice Department were investigating the allegations.
In June 2020, Hindenburg Research also claimed that shares of Genius Brands, a TV production company, were overvalued and would be worth $1.50 “within a month”.
Hindenburg Research said, “The company itself appears to agree with us, believing that its shares are valued at $0.35 to $1.20 per share, down 83%-95% from current levels, accomplished at those prices in the last month alone.” Based on the three financing rounds conducted.” The prediction came true and by the end of July 2020 the share price had fallen to around $1.50.
Historically, the Hindenburg was a series of commercial German passenger aircraft best known for a tragic aviation disaster in 1937, when a Hindenburg airship caught fire and crashed during a docking attempt at an airfield in New Jersey, US. was destroyed during
What does Hindenburg Research say about Adani Group?
The findings of an investigation by Hindenburg Research allege that Gautam Adani, the group’s founder and chairman, has increased his net worth by more than $100 billion over the past three years, largely due to stock price appreciation in the group’s seven major listed companies. Via, who had an increase of about 819% over the same period. Major listed companies under the Adani group have also taken substantial loans, including “pledge of their inflated shares for loans”. Most of the top ranks in the company are held by members of the Adani family.
The probe also states that the auditor for Adani Enterprises and Adani Total Gas is a smaller firm named Shah Dhandharia. Researchers found no extant website associated with the firm, while historical archives list that it had four partners and 11 employees.
Due to this report, Adani group companies lost $ 48 billion last week.
What is a short seller?
In simple words, the short seller speculates on a fall in the prices of the shares of a company. An investor who short-sells stocks with the intention of selling them on the open market with the intention of buying them back later for less money when the price declines. A short seller does not essentially own the shares they are selling, and bet on their future price decline, therefore taking a greater risk.
Investors looking to sell stock usually have to borrow it from a dealer or brokerage company. This is why the trader must buy the stock back from the market even if they are not making a profit, as the stock needs to be returned to the broker.
The short seller’s profit lies in the money that remains after buying back the stock at a lower price. However, if the bet doesn’t pay out and the stock price rises, the short seller will suffer a loss.
Short selling sounds like a profitable investment strategy, but the risks involved are greater than those associated with buying and selling common stocks. There is limited scope for profit making, as the profit margin is only the decline in the value of the stock. However, if the stock price remains flat, or rises, you are likely to lose all your money or suffer losses.
Who are activist short sellers?
Hindenburg Research has established itself as the activist short seller – a financial researcher who investigates companies at length, points out irregularities and uses his public outreach to criticize a company he deems overvalued. It is accepted. Activist short sellers hope to make profits when the value of shares of the company they are investigating drops.
Activist short sellers also run the risk of losing money, as public sentiment is difficult to predict. According to law firm White & Case, social media reach has become critical to short selling activism. Hindenburg Research has 292,000 followers on Twitter, while Mr Anderson’s personal Twitter account has more than 27,000 followers.