Hindenburg Research: Recent past, present & future

Even as it promises 'another significant' exposure shortly, Hindenburg's last analysis has caused a loss of over $120 billion to the Adani Group since it highlighted irregularities on January 24.

Hindenburg Research: Recent past, present & future

Aditya Anand

Two months after releasing an explosive report on businessman Gautam Adani and his group, Hindenburg Research warned on Thursday that 'another significant' exposure will shortly follow. Given that Adani has lost more than $120 billion since the previous report on January 24, Hindenburg's latest tweet has generated significant interest.

Past exposures

The New York-based research business, founded by Nathan Anderson, has previously published several findings that have targeted the following RD Legal (2016), Pershing Gold (November 2017), Opko Health (November 2017), Polarity TE (December 2017), Riot Blockchain (December 2017), Aphria (December 2018), Liberty Health Sciences (December 2018), Yangtze Port & Logistics (December 2018), SmileDirectClub (October 2019), among others.

The report on Adani Enterprises in January 2023 was only the latest in its scope of work that led to Hindenburg making headlines in India. Hindenburg’s next report is expected to be released sometime over the weekend.  

Previous impact

With help of whistle-blowers and former employees, Hindenburg published a paper titled Nikola: How to Parlay an Ocean of Lies into a Partnership with the Biggest Car Manufacturer in America in September 2020. The report alleged an array of deceptions and lies in the years preceding up to Nikola's proposed alliance with General Motors. Hindenburg accused Nikola's founder Trevor Milton of nepotism and said it has gathered enough evidence to show that Milton made false statements to form partnerships with large automakers.

The short seller said Milton appointed his brother, Travis, to lead the hydrogen production- infrastructure unit, despite not having any substantial experience related to the sector. On July 29, 2021, when US federal authorities reported that Milton had been charged with securities fraud, the company's stock fell 15 per cent. Hindenburg’s Nathen Anderson remarked on Twitter that the government's actions were "a testament to the role of short sellers and critical researchers" in promoting a well-functioning stock market.

Hindenburg also predicted in 2020 that Genius Brands, which was valued at $6.86 per share at the time, will shortly drop to $1.50 per share due to high retail enthusiasm and impending dilution. Less than two months later, at the end of July, shares were selling at $1.50, a decrease of about 80%. In 2021, Genius Brands was successful in persuading a federal judge in California to dismiss a securities fraud complaint brought by a group of investors alleging that the media business marketed its stock using deceptive statements.

Hindenburg-Adani: The present

Describing itself as a firm that specializes in forensic financial research, Hindenburg Research, a financial research firm, claims to investigate stock, credit, and derivatives for mismanagement, accounting problems, and hidden transactions. After releasing its findings, the company invests its own capital and wagers against the company who it has targeted.

The Hindenburg investigation asserted that the Adani Group engaged in egregious stock manipulation and accounting fraud, made improper use of offshore tax havens, and raised worries about the group's enormous debt, all of which the Adani conglomerate has denied.

Since the report was published January 24, it steadily reduced the market value of the Adani group by more than $150 billion, and Gautam Adani lost his position as Asia's and India's richest person. Officials are now investigating the business magnate whose fortune has multiplied exponentially over the past decade. However, the silence and lack of visible action from the market’s regulator SEBI has only added to allegations of the government trying to shield the Adani group.

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