Hindenburg says it may break even on report that knocked $153 billion off Adani

By Louis Goss

Hindenburg Research has said it made just $4.1 million from betting against Adani Group following publication of its highly-influential 106-page report into the Indian conglomerate that knocked $153 billion off its market value.

In a statement responding to a series of allegations from India's market regulator, Hindenburg Research denied claims it had made hundreds of millions by shorting Adani as the short-seller instead said research costs and legal expenses may result in it breaking even on its trades.

The short-seller's 106-page report on Adani Group (IN:512599), published in January 2023, said a two-year investigation into the Indian company had uncovered evidence of "brazen fraud, stock manipulation, and money laundering," that was being facilitated by "enablers in government".

Hindenburg has now revealed that the Securities and Exchange Board of India (SEBI) sent it a "show cause" letter on June 26, accusing the short-seller of making "misrepresentations in a reckless and careless manner" while working with various partners to make millions of dollars.

SEBI's letter gives Hindenburg 21 days to respond to its allegations, including claims that it shared a draft of its report with New York hedge fund Kingdon Capital Management which let it short Adani before the report was published. SEBI has the power to impose financial penalties.

In response, the short seller accused SEBI of concocting a set of "nonsense" allegations in "an attempt to silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India."

Hindenburg instead said it made just $31,000 from shorting Adani itself and made "$4.1 million in gross revenue through gains related to Adani shorts" via its relationship with the only investor who supported its investigation into the Indian conglomerate.

"Net of legal and research expenses (including time, salaries/compensation, and costs for a 2-year global investigation) we may come out ahead of breakeven on our Adani short," the short-seller said.

Hindenburg was first started by Connecticut-born financial investigator Nathan Anderson, who started his career at financial data provider FactSet Research Systems before launching the short-seller firm in 2017, according to a profile in the Wall Street Journal.

The short-seller's report into Adani Group led to a major sell-off of the Ahmedabad based conglomerate's stock, while also massively boosting Hindenburg's reputation for impactful investigations.

Adani has denied Hindenburg's allegations against it. Adani Group was contacted by MarketWatch for comment.

-Louis Goss

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07-02-24 1018ET

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