<
https://theconversation.com/short-selling-adani-how-an-obscure-us-firm-profited-from-triggering-the-indian-giants-price-plunge-198991>
"A few weeks ago, Gautam Adani was indisputably India’s richest man.
Now his fortune is slipping away as the stocks of his many companies crash,
thanks to the efforts of a relatively obscure US company named after the 1937
Hindenberg disaster (in which a hydrogen-filled airship caught fire, killing 98
people).
Adani’s personal fortune was an estimated US$150 billion in 2022. He catapulted
past the previous richest Indian, Mukesh Ambani, on the back of the meteoric
rise of Adani Group, a multinational conglomerate with holdings in mining,
energy, airports, cement, food processing and weapons manufacturing.
Since January 25, Adani Group’s stock price has fallen 45%. The catalyst? An
explosive report published on January 24 by Hindenburg Research, alleging Adani
Group engaged in “brazen stock manipulation and accounting fraud scheme over
the course of decades”.
What complicates this report is that Hindenburg Research isn’t just a research
company. It’s an “activist short seller”, with a financial incentive in seeing
Adani’s stock price fall.
Hindenburg makes its profits by identifying “man-made disasters floating around
in the market”. It bets on the stock falling, then publicises that company’s
negatives – including doing so in Adani’s case:
After extensive research, we have taken a short position in Adani Group
Companies through US-traded bonds and non-Indian-traded derivative
instruments.
Adani’s response includes calling the report a “calculated attack on India” and
“intended only to create a false market in securities to enable Hindenburg, an
admitted short seller, to book massive financial gain through wrongful means at
the cost of countless investors”.
Activist short selling is certainly controversial. But it’s not necessarily
illegal, nor unethical."
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
