After Hindenburg Research, a US-based short selling firm, allegedly earned only $4.1 million from betting against Adani Group securities—an amount insufficient to cover their research costs—they have once again in desperateness posted a cryptic message on their official X account on 10 August 2024: “Something big soon India.”
Something big soon India
— Hindenburg Research (@HindenburgRes) August 10, 2024
This development follows Hindenburg’s January 2023 report, which accused the Adani Group of insider trading and stock market violations, leading to a dramatic fall in Adani’s stock prices and reported losses exceeding $100 billion. The Adani Group has consistently denied these allegations, calling them baseless. At their Annual General Meeting in June, Chairman Gautam Adani responded, asserting that the group’s integrity remained unshaken despite the attack.
Additionally, the Supreme Court of India recently rejected a petition for a court-monitored investigation into the Adani-Hindenburg issue, based on a report by the Securities and Exchange Board of India (SEBI).
Recent complications have arisen with allegations from Mahesh Jethmalani, a senior Indian lawyer and BJP leader. In July 2024, Jethmalani alleged that an American businessman with Chinese ties, specifically Mark Kingdon of Kingdon Capital Management LLC, had commissioned the Hindenburg report. He claimed that Kingdon and his associate Anla Cheng had used Kotak Mahindra Investments Limited to establish a trading account for short-selling Adani shares. Jethmalani called for an investigation into potential connections between political critics of Adani and China, suggesting that the report might be Chinese retaliation for losing infrastructure projects like the Haifa Port.
Here’s a huge smoking gun in the sordid episode of the short sale of #Adani shares by #Hindenburg. Pursuant to #SEBI's notice to Hindenburg, the following facts emerge:
1. Hindenburg – a research agency – was hired by American businessman #MarkKingdon to prepare a report on the… https://t.co/yar0uEuarm— Mahesh Jethmalani (@JethmalaniM) July 4, 2024
On the other hand, SEBI’s show-cause notice to Hindenburg, issued on 26 June 2024, accused the firm of “deliberately sensationalizing and distorting certain facts” in their January 2023 report and collaborating with a New York hedge fund for their short positions. SEBI has given Hindenburg 21 days to respond.
The 46-page notice alleged that Hindenburg and Kingdon established a relationship in autumn 2022, prior to the report’s release, with Kingdon setting up positions in Adani stocks to profit from their decline.
Hindenburg responded by publishing their notice on their website, stating that they made only $4.1 million from their Adani positions. They lamented SEBI for not focusing on the evidence they provided about Adani’s offshore shell entities and financial movements. Hindenburg also pointed out that SEBI’s notice failed to address Kotak Mahindra Bank’s role, which had created and managed the offshore fund structure used by Hindenburg’s partner.
Hindenburg Research LLC – Who Are They?
Hindenburg Research LLC, a New York City-based firm, is recognised for its focus on short-selling strategies. Short sellers are investors who bet against specific stocks by borrowing them, selling them at current market prices, and then repurchasing them later at a lower price to return to the lender, thereby making a profit from the price drop.
The firm is currently under investigation by the U.S. Department of Justice for allegations related to short-selling practices and potential collusion with hedge funds.
Nate Anderson, the founder of Hindenburg Research, is known for his expertise in identifying and capitalizing on corporate crises. The firm’s operations center around uncovering and profiting from corporate failures.
Another short seller, Marc Cohodes, also claimed that Hindenburg obtains information from large funds to support their short trades.
In India, Hindenburg previously targeted Bollywood production company Eros, accusing it of accounting irregularities.
The Adani Group has argued that Hindenburg Research, by its admission, stands to gain financially from a decline in Adani’s share prices.
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