This has been a fast-developing story for the last week.
Adani slipped out of the Top 10 Richest list to #11
A Saudi-based firm has pledged to help out the deficit with Billions of dollars
Adani CFO has compared the selling of Adani Stocks to the Jallianwala Bagh massacre
The Adani FPO is fully subscribed
And Adani Group acquired the strategic Israeli port of Haifa for USD 1.2 billion
In between all this, the Adani Stocks have not stopped falling.
So, was this Hindenburg Report really a conspiracy?
Maybe, maybe not. After all, Hindenburg Research is a short-selling firm that is driven purely by market gain motivations.
But why would someone accuse one of the world’s most powerful men of a Global Scam?
The Hindenburg interest:
Hindenburg is what they call a party-pooper firm – its main motive is to short-sell stocks only to buy them later once the prices fall.
The Founder Nathan Anderson started the firm in 2017, comes from a humble background and had a brief stint in Israel as an ambulance driver.
The only difference from other short-sellers? They announce it to the world in the form of a ‘research report’ - hoping to persuade the market to sell shares
What is ‘Short Activism’?
Short selling is a risky bet because the prices of the stock they are reverse-betting on, may not fall.
But Hindenburg and Short activists go a step further. They intentionally leak out their ’findings’, and millions of media outlets and Twitterati around the world get busy popularising it.
As happened in the case of Adani – its the biggest bet THUS FAR!
So, is it just Social media overkill or is there a larger Conspiracy behind it?
The history of such reports and their effect on the market:
Veritas famously destroyed Kingfisher airlines and its founder Vijay Mallaya
Hindenburg has in the past reported on Nikola, and brought it down to its knees
In 2020 market responded similarly to GameStop stocks, where a bunch of internet users destroyed & bankrupted investment Bankers
Nate’s done it before:
From asking a rabbi in his Orthodox Jewish school about the Book of Genesis being incompatible with the theory of evolution – Nathan Anderson has been a born troublemaker.
He had a business degree from the University of Connecticut and not much background in Investment and Stock Research
He was broke until 2 years ago even though he started the ‘research firm’ Hindenburg in 2017
His notable targets have been electric vehicle maker Nikola whose valuation was brought down from $34 Billion to $1.34 Billion as Hindenburg took a short position, and Elon Musk’s now-owned Twitter whose stock price went up 39.8%, from $37.22 to $52.02 while Hindenburg took a long position
But he is still not a big name. Not as compared to Adani and the Indian Government.
Then why the daredevilry?
Will perseverance alone help?
Gautam Adani started out as a diamond sorter in the 1980s. After a diamond trading business stint, Adani started with agricultural products and power business in 1988.
In 1991, India’s New Economic Policy around the liberalization of the economy and deregulation of markets helped his fortunes.
But in 2014- Modi Government’s NDA Government came to power and since then –
Gautam Adani’s Net Worth rocketed –
Adani is said to be close to the Indian Prime Minister Mr Narendra Modi on a personal as well as a professional note
Adani Group has always participated in the Government’s ambitious forays – From Green Energy to Women’s IPL Teams
Conclusion:
Hindenburg could have support from India’s naysayers
Adani can drape itself up in national pride & say that this report is an attack on India Inc
Twitteratis can fight & bicker all day long
But will Adani face a similar fate? Or will it coast over this and keep growing? Only time will tell. And these next few weeks will be extremely crucial for everyone involved.
Maybe the budget will take some heat off his back, but what the markets decide to do with his valuations and companies, is up to the open markets to decide.
We will keep a keen eye on this developing story, and keep you updated on the same.
“In terms of the risk-taking appetite and risk absorption capacity, there are very few who can match Gautam Adani. There are many who take large risks, but very few have the ability to face their adversity with courage and conviction,” Former IIM-A director Bakul Dholakia
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