Hindenburg Research, a well-known financial research firm with a track record of driving down target stock prices, is undertaking one of the richest man in the world.
Hindenburg is back in the headlines after last week accuses Indian conglomerate Adani Group about “a blatant accounting and securities manipulation scheme.” It cites two years of research, including talks with former senior Adani executives and a review of thousands of documents.
Adani Corporation has blast the accusationscalled them “a malicious combination of selective disinformation and stale, baseless and discredited allegations that have been examined and dismissed by India’s highest courts”.
However, Hindenburg’s harsh accusations have caused the fortune of Adani Group founder Gautam Adani to drop by nearly $47 billion in just over a week, according to the Bloomberg Billionaires Index. Here’s a look at the company behind all the movements:
What is it?
Hindenburg said it specializes in “forensic financial research”. In colloquial terms, it looks for corruption or fraud in the business world, such as irregularities in accounting and bad guys in management.
According to the Washington Post, Hindenburg was even known to be a Ponzi hunter in several circles, which detailed how it helped disrupt an alleged $500 million scheme targeting people. Mormons.
Where did the name come from?
The company says it considers the Hindenburg, the airship that famously caught fire in the 1930s with the cry of “Oh, humanity,” as “the epitome of an entirely man-made, entirely possible disaster. avoid.” It says it looks for similar disasters in financial markets “before they attract more unsuspecting victims”.
Who else is Hindenberg after?
It is perhaps most famous for a 2020 report on Nikola, a company in the electric vehicle industry whose founder Hindenburg said made false claims about partnerships with auto companies. the top is hungry to catch up Tesla.
Among his charges, Hindenburg accused Nikola of staging a video to assuage skepticism about his truck, one that showed the vehicle driving down the road. Hindenburg said the video actually only shows the truck rolling down a hill after being towed to the top.
What happened to such accusations?
For Nikola, scrutiny was swift from the government and investors.
The company and its founder, Trevor Milton, received a grand jury subpoena from the U.S. Attorney’s office for the Southern District of New York and the NY District Attorney’s Office shortly after Hindenburg released the report. his fox.
The Securities and Exchange Commission also soon issued subpoenas to Nikola’s directors.
Milton is sentenced last October about allegations that he misled investors with exaggerated statements about his company’s progress in producing zero-emission hydrogen or electric-powered 18-wheelers.
And Nikola at the end of 2021 agreed to pay $125 million to address the SEC’s allegations that it misled investors by misleading them about their products, technical advances, and commercial prospects.
What does Hindenburg gain from this?
It can make money. In its Adani report, it said it had a “short position in Adani Group Companies” through US-traded bonds and other investments that trade outside of India.
It has made similar “short” bets against other companies for which it has published negative reports. Trading “short” is a way for someone to make money if the price of an investment falls. Then, if a company’s stock or bond price falls due to negative attention from the report, Hindenburg could profit.
Such short sellers have been criticized for unfairly driving down stock prices with potentially unfounded allegations. But supporters also call them a healthy part of the stock marketkeep stock prices under control and prevent them from getting too high.
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter that examines what leaders need to succeed. Sign up here.
