Hindenburg research report on Adani: Know the man who rattled Asia’s richest man and Indian stock market; Hindenburg’s past targets and more
Hindenburg research report on Adani: Hindenburg has ignited a fierce firestorm that threatens to singe Asia’s richest man, Indian tycoon Gautam Adani, who presides over a sprawling empire that now spans from ports and airports to energy, cement and data centres.
What’s Adani-Hindenburg saga all about?
On January 25, Hindenburg released a report that alleged the Adani Group had “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades”. The disclosure sparked a USD 51-billion sell-off in shares of his group companies over two trading sessions, pushing him four places down on the world billionaire index.
Report just ahead of FPO
Worse, it came ahead of a Rs 20,000-crore follow-on share sale in Adani Enterprises. The share sale could get subscribed up to a meagre 1 per cent on the opening day, Friday, when Adani Enterprises shares fell 18.5 per cent, slipping below the offer price.
Adani group rubbishes report
Adani group has since rubbished the report as a “malicious combination of selective misinformation and stale, baseless and discredited allegations”.
Nathan Anderson, Man Behind Hindenburg
1) In 1937, a hydrogen-powered German airship flying into New Jersey caught fire and crashed, killing 35 passengers on board. It was sort of a man-made disaster as some 100 people were loaded on to a balloon filled with the most flammable material in the universe. The airship was named Hindenburg.
2) Eight decades later, in 2017, a graduate of international business management from the University of Connecticut founded a “forensic financial research” firm to specialise in spotting wrong-doings and frauds, or what it calls “man-made disasters”, at companies around the globe and take market bets against them. Founder Nathan (Nate) Anderson named his firm Hindenburg Research after the doomed airship.
3) 38-year-old founder Anderson, lived in Jerusalem, Israel before returning to the US where he first took up a consulting job with a financial data company FactSet and then worked at broker dealer firms in Washington DC and New York.
4) Before he founded Hindenburg, Anderson worked with Harry Markopolos, who had flagged Bernie Madoff’s Ponzi scheme, to investigate Platinum Partners, a hedge fund that was eventually charged with fraud worth USD 1 billion.
5) While living in Jerusalem, Nathan Anderson volunteered for a local ambulance service.
Past targets of Hindenburg
1) Hindenburg is best known for its bet against electric truck maker Nikola Corp in September 2020 for its “alleged lies and deceptions” in years leading up to its proposed partnership with General Motors.
Among dozens of other issues, it challenged a promotional video Nikola produced showing its electric truck cruising at high speed. This it said was nothing more than a truck being rolled down a hill in the Utah desert, a claim the company later admitted and its founder and executive chairman Trevor Milton resigning. Nikola, which agreed in 2021 to pay USD 125 million to settle a case with the US Securities and Exchange Commission, listed in June 2020 and its valuation touched USD 34 billion at peak but is now worth USD 1.34 billion.
2) Hindenburg’s website lists over a dozen companies where it has flagged alleged wrongdoings. These include WINS Finance, which Hindenburg revealed had failed to disclose to US investors an RMB 350 million asset freeze imposed on one of its subsidiaries in China;
3) The “zombie company” China Metal Resources Utilization which had a “100 per cent downside” and was “under severe financial distress” with “numerous accounting irregularities”
4) SC Worx’s “completely bogus” Covid-19 testing deal
5) “Massive undisclosed related party transactions, including a USD 509 million merger” at HF Foods
6) “Billions of dollars in undisclosed off-balance sheet liabilities” of Bloom Energy
7) A whistleblower report to the United States Securities and Exchange Commission (SEC) “relating to RD Legal, a hedge fund that was later charged by the commission for allegedly making material misstatements to its investors”. Almost all of Hindenburg’s work has been followed up by legal or regulatory action, according to its website.
(PTI Inputs)
