‘Something big soon India’: Hindenburg Research eyes new target after Adani
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The statement triggered widespread speculation about which corporation might be its next target.
What is Hindenburg Research?
Hindenburg Research, founded in 2017 by Nathan Anderson, is known for its meticulous investigations into major corporations. The firm has built a reputation for exposing corporate fraud and malfeasance, often targeting high-profile companies. Named after the infamous 1937 Hindenburg disaster, the firm views corporate wrongdoing as similarly catastrophic and avoidable.
Hindenburg’s investigative process involves combing through public records, and internal corporate documents, and conducting interviews with company employees. The firm then prepares a detailed report, which is shared with its limited partners. Together, they take a short position in the target company, profiting if the company’s share price declines following the report’s public release.
Over the years, Hindenburg has targeted several well-known companies, including Nikola, Clover Health, Block Inc, Kandi, and Lordstown Motors. The firm’s reports have often led to significant financial losses for the targeted companies and increased scrutiny from regulators and investors.
Hindenburg Research: Adani Group 2023 report
Hindenburg’s post has garnered significant attention, particularly in light of the controversy sparked by Hindenburg’s previous report on the Adani Group. In January 2023, Hindenburg accused the Adani Group, led by billionaire Gautam Adani, of orchestrating “the largest con in corporate history.”
The timing of the report, just before Adani Enterprises’ planned share sale, resulted in a massive sell-off, wiping out approximately $86 billion in market capitalisation and stock losses of more than $30 billion. This also triggers a significant decline in the group’s overseas-listed bonds.
By the end of May 2024, however, the Adani Group had recovered from all losses incurred following the release of the Hindenburg report. In the year since the report, Adani worked to cut its debt and managed to land major projects.
Sebi vs Hindenburg Research
In June of this year, the Securities and Exchange Board of India (Sebi) revealed that Hindenburg had allegedly shared an advance copy of its Adani report with New York hedge fund manager Mark Kingdon two months before its public release, enabling substantial profits through strategic trading.
Hindenburg dismissed Sebi’s accusations as “nonsense” and claimed that the notice was a fabricated attempt to silence those who expose corruption and fraud by powerful individuals in India. The firm also explicitly named Kotak Bank in its response, adding another layer to the ongoing controversy.
As the financial world speculates on Hindenburg’s next target, the firm’s recent hint has only intensified the anticipation. After the impact of the Adani report, the potential fallout from Hindenburg’s next revelation could once again send shockwaves through India’s corporate landscape.
First Published: Aug 10 2024 | 11:55 AM IST