To The Moon

Timeline:

25 Jan: Leading short-seller Hindenburg Research releases a report on Adani group corporate fraud.

25 Jan: Hindenburg Research said it holds a short position in India's Adani Group Companies through U.S.-traded bonds and non-India-traded derivatives instruments.

27 Jan: Adani group published a lengthy response of over 400 pages to Hindenburg’s report over the weekend, saying that it will exercise its rights to “pursue remedies” to protect its investors “before all appropriate authorities.”

Until now, most Adani group companies fell sharply for the third straight session, with founder and chairman Gautam Adani's net worth shrinking by $27.9 billion so far this year.

Hindenburg Research

known for its aggressive shorting strategy, has issued high-profile reports criticizing companies including $Nikola Corporation(NKLA)$, Kandi Technologies and $Lordstown Motors Corp.(RIDE)$.

Nathan Anderson, the founder. (The Washington Post)

Gautam Adani

Adani Group is an empire founded by Gautam Adani, the richest man in India. Gautam Adani was also The World's 3rd Richest Man. Seven Adani companies contribute 79% of India's 2022 market capitalization growth, demonstrating Adani's influence in India.

Gautam Adani (Forbes)

What the Hindenburg Research's report says

The original report is here: https://hindenburgresearch.com/adani/

Today we reveal the findings of our 2-year investigation, presenting evidence that the INR 17.8 trillion (U.S. $218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.

Gautam Adani, Founder & Chairman of Adani Group, has amassed a net worth of roughly $120 billion, adding over $100 billion the past 3 years largely through stock price appreciation in the group’s 7 key listed companies, which have spiked an average of 819% over the period.

Our research involved speaking with dozens of individuals, including former executives of Adani, reviewing thousands of documents, and conducting diligence site visits in almost half a dozen countries.

Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its 7 key listed companies have 85% downside purely on a fundamental basis, owing to sky-high valuations.

Key listed Adani co's have also taken on substantial debt, including pledging shares of inflated stock for loans, putting the group on precarious financial footing. 5 of 7 key listed companies have reported current ratios below 1, indicating near-term liquidity pressure.......

The Adani Group has previously been the focus of 4 major government fraud investigations which have alleged money laundering, theft of taxpayer funds and corruption, totaling an estimated U.S. $17 billion.

Adani family members allegedly cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, UAE & the Caribbean to generate forged import/export documentation, generate fake or illegitimate turnover and siphon money from the listed companies.

......

We have identified 38 Mauritius shell entities controlled by Vinod Adani and close associates.

We have also identified entities that are surreptitiously controlled by Vinod Adani in Cyprus, the UAE, Singapore, and several Caribbean Islands.

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The Vinod-Adani shells seem to serve several functions, including (1) stock parking / manipulation (2) and laundering money through Adani’s private companies onto the listed companies’ balance sheets in order to maintain the appearance of financial health and solvency.

India Pubcos are subject to rules requiring promoter holdings to be disclosed. Listed co's must have >25% of float held by non-promoters to mitigate manipulation/insider trading.

4 of Adani’s listed co's are near the delisting threshold for high promoter ownership.

......

One should note that Adani accounts for a huge percentage of the growth of the Indian stock market, and if something goes wrong with Adani, the Indian stock market is bound to be affected as well.

India's richest man was shorted, will the Indian stock market collapse?

Most read articles in the Economic Times of India, all about Adani.

"New Delhi: Selling pressure on shares of Adani group companies intensified in the second trading session on Friday after eroding investor wealth worth about Rs 1 billion on Wednesday and losing up to 20 percent on claims made in the short-seller Hindenburg report.

Some of the selling in the Indian stock market over the past two days was attributed to the impact of the report. Bank stocks were also under pressure due to debt-related issues mentioned in the Hindenburg report.

The dramatic fall of Adani Group has directly brought down the Indian stock market. This is the recent Indian stock market

So given the tragic shorting, what did Adani use to hedge this risk?

What will happen in this long/short battle?

See my next post~