How an obscure US firm profited from triggering the Indian giant’s price plunge.
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 25 January, Adani Group’s stock price has fallen 45%. The catalyst? An explosive report published on 24 January 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.
