A report by Hindenburg Research, a short seller, grabbed headlines on Wednesday and sent shares of Adani group tumbling. A short seller is one who sells a stock without owning it at the time of trade . a short seller sells a borrowed stock in hopes of making money by buying it back at a cheaper price later.
Hindenburg Research says on its website that the company specialises in forensic financial research. It says it has decades of experience in the investment management industry, “with a historical focus on equity , credit , and derivatives analysis” The company says it believes that “the most impactful research results from uncovering hard to find information from atypical sources” , and that is especially looks for “accounting irregularities ; bad actors in management or key service provider roles; undisclosed related – party transactions; illegal/unethical business or financial issues” in companies.
Hindenburg Research, investment firm published a report on Adani group headed by Gautam Adani , on Wednesday said that , It is presenting a evidence that the group has engaged in a ‘ brazen stock manipulation and accounting fraud scheme over the course of decades.
The Hindenburg Research said that the seven listed companies of the Adani group, have an 85% downside on a fundamental basis due to sky – high valuations , Hindenburg report said in the report. It also pointed out the debt on the company. “key listed Adani companies have also taken on substantial debt , including pledging shares of their inflated stock for loans , putting the entire group on precarious financial footing,” the report said .
Money laundering cases
The Adani group has previously been the focus of 4 major government fraud investigation which have alleged money laundering, theft of taxpayer funds and corruption, totalling an estimated US $17 billion, said the report. Adani family members allegedly cooperated to create offshore shell entities in tax – haven jurisdiction like mauritius , the UAE and the Caribbean islands , generating forged imports / export documentation in an apparent effort to generate fake or illegitimate turnover and to siphon money from the listed companies, the report added .
Adani rejects report
Adani group issued a report ‘malicious combination of selective misinformation and stale’.
“We are shocked that Hindenburg Research has published a report on 24 January 2023 without making any attempt to contact us or verify the factual matrix . The report is a malicious combination of selective misinformation and stale , baseless and discredited allegations that have been tested and rejected by India’s highest court,” Adani group CFO Jugeshinder Singh .
India and Asia’s richest man Gautam Adani’s net worth plunged significantly in just a day after a sharp fall in bonds and stocks of the seven Adani group companies that fell between 3% and 7% yesterday. As per the Bloomberg Billionaire Index , Gautam Adani lost about $6 billion (around rupees 48,000 crore) , down nearly 5% , in a day and his net worth currently stands at $113 billion as of January 28, 2023