Evidence that Adani Group has engaged in stock manipulation and accounting fraud(hindenburgresearch.com)
hindenburgresearch.com
Evidence that Adani Group has engaged in stock manipulation and accounting fraud
https://hindenburgresearch.com/adani/
229 comments
The Ambanis are actually not very different from the Adanis, just better at hiding. Hindenburg might have take a short position based on numbers but its likely that as long as the current government stays in power its unlikely these two giants (whether they are really giants or no) will change as governments play a big role in such things. Like someone pointed out, it's more likely that their cons will outlast Hindenburgs short positions. Also we dont know the size of Hindenburgs short. For all we care they have shorted 10$ for this article. I am not defending Adani but I did make money on Adani Wilmar simply because compared to other FMCG stocks it was actually undervalued. If you look at some of the other fmcgs they are significantly more overvalued than Adani Wilmar was when it entered IPO. I gained almost 3x in a short while after which it hit the overvaluation equal to other FMCGs and I exited obviously because from a value stand point it made no sense even at IPO. So when Hindenburg says this will all crash, they are assuming everyone goes by the books in this world.
Mukesh Ambani changed the face of Indian telecom with Jio and its novel pricing model. Not to mention, Reliance has tons of businesses with actual real value, real history and real employees. Mukesh Ambani plays along with both the parties.
Gautam Adani is a Gujarati impex trader who won the lottery when his pony won the parliamentary race.
I would argue both families are extremely different, even if they seem culturally similar on the outside. That being said, I would say there are parallels to Gautam Adani and Dhirubhai Ambani (Mukesh's father, for those ootl).
Gautam Adani is a Gujarati impex trader who won the lottery when his pony won the parliamentary race.
I would argue both families are extremely different, even if they seem culturally similar on the outside. That being said, I would say there are parallels to Gautam Adani and Dhirubhai Ambani (Mukesh's father, for those ootl).
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From the article, Hindenburg’s short positions are outside India’s capital markets which (presumably) have better oversight/more skittish/sophisticated investors who would prefer not to do business with a sham company.
Betting against it is doing business with the company. Whether directly in the Indian market or in a market outside India. If I bet against a race happening in some other part of the world, I am in some capacity (indirectly) involved in the race. All they are doing is using analysis to predict a crash and betting against it.
I dont like the idea of 'This seems fishy so let's bet against it'. If something feels fishy stay away from it as much as possible. Michael Burry doesn't happen every day.
I dont like the idea of 'This seems fishy so let's bet against it'. If something feels fishy stay away from it as much as possible. Michael Burry doesn't happen every day.
> Betting against it is doing business with the company.
What do you mean? I struggle to understand how betting against a company is "doing business" with them, it seems even less like "doing business" than having no relationship at all. You are actively signaling you expect them to fail.
What do you mean? I struggle to understand how betting against a company is "doing business" with them, it seems even less like "doing business" than having no relationship at all. You are actively signaling you expect them to fail.
I think 'with' was the wrong word here. Betting against a company is being in business around the company. Meaning you still trust the business, just trust it enough to fail. You can't not trust something and at the same time bet against it. You must trust one of the two if you want to be involved with the company.
I don't think you're trusting the company when you bet against it. You're trusting the stock market and brokerage you're using to do the short.
If the company completely disappears tomorrow, your short will be profitable.
If the company completely disappears tomorrow, your short will be profitable.
Well, then you couldn't cover your short position.
Why would you need to? Who wants it back?
Nobody, but you would continue paying fees on your short position and there would be no liquidity to close it out.
A simple Google search indicates that you often don't need to cover a short if a company is delisted, and if it's not delisted then you can always offer over the current value (even if the current value is zero) to get some of the worthless stock, so I don't see how covering the short if the company implodes is a problem.
Unless you have expertise that it's not that simple? Or a source saying otherwise? (Not an attempt to be snide, but an honest opening for counter evidence, I'm not an expert in this).
Unless you have expertise that it's not that simple? Or a source saying otherwise? (Not an attempt to be snide, but an honest opening for counter evidence, I'm not an expert in this).
In some markets, such as Hong Kong, instead of being delisted, suspected frauds are often halted (the stock cannot be traded). So you might end up paying the borrow fee for years, even though you were right about the company being a fraud.
See https://www.reuters.com/article/muddy-waters-asia-short-sell...
See https://www.reuters.com/article/muddy-waters-asia-short-sell...
If a company disappears tomorrow, how would you realize the gains on the short? If there is no liquid stock to trade, they're just paper gains. You'd have to wait until legal proceedings end.
What you are betting on in a short position is for the company to continue to exist, but at a lower valuation.
What you are betting on in a short position is for the company to continue to exist, but at a lower valuation.
My naive understanding: In a short you borrow then sell immediately. If the company disappears you keep the money from the sale (which you already made) and never have to return what you borrowed.
I agree with you 99.8%. I think there would be a clause in any short contract where if you were unable to provide the stock at the end then you would be liable to pay the cash equivalent. If the stock had "gone to the moon" you would be bankrupt but if the stock had gone to zero then your payment would be zero (or maybe miniscule)
There is no such clause, and yes you would have to figure out how to obtain the delisted stock from other holders (who are generally not friendly towards you).
Hindenburg specialise in doing this. They know the endgame better than anyone. You can guarantee they have a plan which will result in them getting paid off if their short thesis is correct.
The Ambanis are very different than the Adanis.
1) The Ambanis didn’t exist when the Ambanis were rising. This is similar to how everyone wants to be the next Amazon, ignoring the little fact that unlike when Amazon was growing, there already is an Amazon now.
2) The Ambanis were able to ride a wave of massive growth post liberalization to cover up their illegal dealings and essentially become legitimate. It’s not clear that there is any such wave of massive growth available to the Adanis to cover up their illegal dealings.
3) The Ambanis raised money illegally almost entirely locally, which meant they avoided international scrutiny, and they did so at a time when the Indian financial agencies were simply not mature enough. The Adanis will be raising foreign funds which increases scrutiny, but also Indian regulatory agencies are far more mature at this point.
4) The Ambanis valuation did collapse dramatically for a significant period of time. The difference is that the business has been split between the 2 brothers and one went to almost 0, while the other grew slightly. Their combined wealth, simulating the market cap of the company, has declined drastically from its peak level.
1) The Ambanis didn’t exist when the Ambanis were rising. This is similar to how everyone wants to be the next Amazon, ignoring the little fact that unlike when Amazon was growing, there already is an Amazon now.
2) The Ambanis were able to ride a wave of massive growth post liberalization to cover up their illegal dealings and essentially become legitimate. It’s not clear that there is any such wave of massive growth available to the Adanis to cover up their illegal dealings.
3) The Ambanis raised money illegally almost entirely locally, which meant they avoided international scrutiny, and they did so at a time when the Indian financial agencies were simply not mature enough. The Adanis will be raising foreign funds which increases scrutiny, but also Indian regulatory agencies are far more mature at this point.
4) The Ambanis valuation did collapse dramatically for a significant period of time. The difference is that the business has been split between the 2 brothers and one went to almost 0, while the other grew slightly. Their combined wealth, simulating the market cap of the company, has declined drastically from its peak level.
I was scrolling down the list of claims and then reached "Introduction" lol
I love short sellers, Citron did a little sting in my city, Hong Kong, trying to short Evergrande with an A to Z demonstration of how it was ponzinomics, to end up being sued by our regulator for stock manipulation and being condemned years later finally to not trade in HK for years. A little while later, Evergrande's Ponzi finally collapsed. Nobody here bothered to disprove the claim, they only cared about the share price dropping too fast.
Any company claiming short sellers are evil are lying to you: they d simply buy back the shares at a discount, if they were so sure of themselves.
I love short sellers, Citron did a little sting in my city, Hong Kong, trying to short Evergrande with an A to Z demonstration of how it was ponzinomics, to end up being sued by our regulator for stock manipulation and being condemned years later finally to not trade in HK for years. A little while later, Evergrande's Ponzi finally collapsed. Nobody here bothered to disprove the claim, they only cared about the share price dropping too fast.
Any company claiming short sellers are evil are lying to you: they d simply buy back the shares at a discount, if they were so sure of themselves.
>to end up being sued by our regulator for stock manipulation
It could be manipulation in principle, but the instances where regulators have been corrupted and use that as an excuse are really terrifying. See: Wirecard in Germany.
It could be manipulation in principle, but the instances where regulators have been corrupted and use that as an excuse are really terrifying. See: Wirecard in Germany.
Citron also claimed that a certain stock (that was shorted at more than 100 percent of outstanding shares in 2021 at the time of their claim) would be "back to 20 USD fast, we will explain soon".
They never explained and the stock never went back down to 20.
Citron is definitely part of the scamming. The fact that a scammer (Citron) scammed another scammer (Evergrande) doesn't make them good guys.
They never explained and the stock never went back down to 20.
Citron is definitely part of the scamming. The fact that a scammer (Citron) scammed another scammer (Evergrande) doesn't make them good guys.
Are you talking about gamestop? it's continually drifting downwards, but even if we ignore that how does making a wrong call make them scammers? TBF to them the company is absolute shit and only being propped up by dumb money turning into a cult. Really hard to blame them for not predicting that
If these companies assets or stocks go to zero or are locked due to fraud or something that makes the actual public stocks untradable, how do you get out of a short position? Borrowing and selling the stock means you can’t get it back to return to the original owner, and buying put options means you can’t sell the stock to the contract holder. Do you have to get out before it gets completely vaporized?
If stocks go to zero, it's generally easy to get your hands on them, since people holding those shares will want to realize capital losses for tax purposes. Even if the stock is delisted from exchanges, brokerages routinely "buy" such shares from their clients, and I'm sure they would make the shares available to anyone wanting to close out a short position.
It depends on the structure of the contract. There are a few famous cases of short positions being locked out of value for some arcane reasons.
https://www.bloomberg.com/opinion/articles/2018-04-11/-go-to...
https://www.bloomberg.com/opinion/articles/2018-04-11/-go-to...
Since these guys are professional investors I assume they have access to more complex financial instruments they can use for a short position.
Maybe the company being vaporized is always a risk of shorting though, not a finance guy so I have no idea.
Maybe the company being vaporized is always a risk of shorting though, not a finance guy so I have no idea.
> the company being vaporized is always a risk of shorting
why is that a risk tho? If you shorted something, the money is already in your hands (aka, you "sell" short presumably, where you make a buck selling it now, and have to put up cash in the future to make the short whole).
If in the future, the company vaporized, then wouldn't you no longer owe the shorted stock?
why is that a risk tho? If you shorted something, the money is already in your hands (aka, you "sell" short presumably, where you make a buck selling it now, and have to put up cash in the future to make the short whole).
If in the future, the company vaporized, then wouldn't you no longer owe the shorted stock?
No, you still owe the stock, but if trading is halted or the stock's registration is revoked, you cannot close the position. That means that (a) you still owe (daily!) stock borrow fees, and (b) you are still required to keep collateral posted against the shares with your broker (because the stock is not trading, the last posted price can be considerably above zero, so this can tie up a non-trivial amount of money).
In recent memory, this has happened to Longfin Corp. [0], Cynk Technologies [1], China Biotics [2], and surely others. If it does happen before you can close out a short position, that's bad. You can be stuck that way for years [3].
[0] https://www.sec.gov/enforce/information-longfin-investors
[1] https://www.sec.gov/litigation/suspensions/2014/34-72594.pdf
[2] https://www.sec.gov/litigation/opinions/2013/34-70800.pdf
[3] https://www.barrons.com/articles/getting-caught-short-152306...
In recent memory, this has happened to Longfin Corp. [0], Cynk Technologies [1], China Biotics [2], and surely others. If it does happen before you can close out a short position, that's bad. You can be stuck that way for years [3].
[0] https://www.sec.gov/enforce/information-longfin-investors
[1] https://www.sec.gov/litigation/suspensions/2014/34-72594.pdf
[2] https://www.sec.gov/litigation/opinions/2013/34-70800.pdf
[3] https://www.barrons.com/articles/getting-caught-short-152306...
The issue is one of margin calling, and other institutions being unwilling to lend you infinite amounts of money.
Even if your investment strategy is sound, if in the short term, you on paper owe stock that is "worth" billions of dollars, the institutions that you are owning this paper billions of dollars too, could be unwilling to just trust that you will be able to pay it.
Thus, they bake in contractual provisions, such as margin calls, which require you to automatically sell/buy the stock back, if you ever reach certain loss limits. Thus, forcing you to accept the loss now, even if your long term strategy is hypothetically profitable.
Or, at least that is the simplest/most common ways that this work. I am sure that margin calls are more complicated than that, for large financial institutions.
Even if your investment strategy is sound, if in the short term, you on paper owe stock that is "worth" billions of dollars, the institutions that you are owning this paper billions of dollars too, could be unwilling to just trust that you will be able to pay it.
Thus, they bake in contractual provisions, such as margin calls, which require you to automatically sell/buy the stock back, if you ever reach certain loss limits. Thus, forcing you to accept the loss now, even if your long term strategy is hypothetically profitable.
Or, at least that is the simplest/most common ways that this work. I am sure that margin calls are more complicated than that, for large financial institutions.
But if the stock goes to zero and you are shorting it the trade was massively profitable. why would you then be at risk of a margin call?
If trading is halted or it's delisted, how can you prove the value of the stock is zero?
You don’t have to “prove” anything, you already got the money
You're still stuck paying borrow fees and posting collateral, potentially forever.
This is just wrong. If the stock is delisted you no longer are "borrowing" anything. There is nothing to borrow.
An unlisted stock is still a stock, you still have to have a borrow for it until the company is fully wound up (which could be years after being delisted).
If it is vaporised there
is nothing really to return. I presume the contract details what happens then.
The Adani Group is massive, transnational, and has resource partnerships that cross continents with multiple joint companies and government relations.
There are relationships with Indian banking giant ICICI that are questionable and that also cross continents.
And more (it's big wall map tiny font material here).
Point being, shaking up the Adani Groups reputation has flow on effects that can be capitalised upon in many ways by shorting many other associated companies that may fail due to governments losing confidence to proceed on large projects, choosing other partners, etc.
There are relationships with Indian banking giant ICICI that are questionable and that also cross continents.
And more (it's big wall map tiny font material here).
Point being, shaking up the Adani Groups reputation has flow on effects that can be capitalised upon in many ways by shorting many other associated companies that may fail due to governments losing confidence to proceed on large projects, choosing other partners, etc.
> something that makes the actual public stocks untradable, how do you get out of a short position?
If it's illiquid - you don't.
Jeopardy with market crashes isn't that you'll be forced to sell your stocks low but that there will be no one to sell to and you'll sit on assets devaluing to zero or close.
If it's illiquid - you don't.
Jeopardy with market crashes isn't that you'll be forced to sell your stocks low but that there will be no one to sell to and you'll sit on assets devaluing to zero or close.
It depends what you mean by "untradeable". If the market or regulator decides that the stock cannot be traded at all, you might end up paying a lot of money in fees for years even if you were right.
https://www.reuters.com/article/muddy-waters-asia-short-sell...
https://www.reuters.com/article/muddy-waters-asia-short-sell...
If you buy a PUT option on a stock, at a low strike (far OTM) as the stock is tanking your PUT becomes more valuable and you can sell that.
If the stock is near zero and you have a contract to sell at $5 - that's profit.
If the stock is near zero and you have a contract to sell at $5 - that's profit.
But the put option will be hedged by options market makers taking a (net) short position in the stock.
So in so far as you have technical concerns about the risks of not getting completely paid on your short position if you have a borrow on a delisted bankrupt company whose shares are tied up in litigation, the market maker will have the same concerns about the same arcane risks and will pass the cost on to you in the form of a worse price on your option.
It might still be a better way for you to make this trade - the options trader has a whole settlement team to figure this out - but it's a service you're paying for.
So in so far as you have technical concerns about the risks of not getting completely paid on your short position if you have a borrow on a delisted bankrupt company whose shares are tied up in litigation, the market maker will have the same concerns about the same arcane risks and will pass the cost on to you in the form of a worse price on your option.
It might still be a better way for you to make this trade - the options trader has a whole settlement team to figure this out - but it's a service you're paying for.
They could have used put options or Credit Default swaps.
A few items that did not make it into the list:
1) Adani is very close to the current ruling party and the PM - deploying his extensive business network and assets (in various forms) to help get the PM elected (2014) and then re-elected. A bit of googling will reveal the vast scale of politico-corporate nexus between these two - extending all the way back to when they were chums in Gujarat - the Indian state of the PM
2) The only reason the Adani Group has not been hauled up in-front of multiple regulators and law-enforcement agencies on a constant basis is because of #1 above
3)Adani ports seem to be curiously immune to investigations despite literal TONS of drug seizures [1]
4) There were multiple stories of forced resignations being used by the companies across its workforce to trim costs during the pandemic and avoid paying hefty severance per India's strict labor laws
5)A lot of the public sector banks in India are purported to be under pressure to not recall loans or issue fresh loans on demand to him - essentially a federal backstop to all his liabilities - enabling crazy levels of debt
[1] https://www.ndtv.com/india-news/adani-ports-says-its-termina...
1) Adani is very close to the current ruling party and the PM - deploying his extensive business network and assets (in various forms) to help get the PM elected (2014) and then re-elected. A bit of googling will reveal the vast scale of politico-corporate nexus between these two - extending all the way back to when they were chums in Gujarat - the Indian state of the PM
2) The only reason the Adani Group has not been hauled up in-front of multiple regulators and law-enforcement agencies on a constant basis is because of #1 above
3)Adani ports seem to be curiously immune to investigations despite literal TONS of drug seizures [1]
4) There were multiple stories of forced resignations being used by the companies across its workforce to trim costs during the pandemic and avoid paying hefty severance per India's strict labor laws
5)A lot of the public sector banks in India are purported to be under pressure to not recall loans or issue fresh loans on demand to him - essentially a federal backstop to all his liabilities - enabling crazy levels of debt
[1] https://www.ndtv.com/india-news/adani-ports-says-its-termina...
The article has lots of factual arguments going. But it misses the 1) point you mentioned. Regardless of whatever people like to believe, that guy isn't going crash and burn, go bankrupt or anything like that.
It's fairly simple for the government to bail him out. They already did that to Anil Ambani. It doesn't even have to be a direct payout, there are always 'projects' you can give and pay them some 1000% extra money compared what it would otherwise cost. In other words a government(tax funded) bailout is easily doable and will be done, when the need arises. In many ways the party is just giving money to itself(Electoral bonds).
Just to complete the argument, don't expect any backlash against the government either. The current ruling party enjoys nearly 'no prior conditions' based support from their constituency regardless of whatever they do, no matter big a disaster unfolds. And this is going to be the case for the foreseeable future(think decades).
To summarise, whatever fraud this is, no matter how big the impact of this on the Indian economy. In fact even if takes down the whole set up with him. He is just going to emerge from this fine. And the government will bail him out without any consequences for them.
It's fairly simple for the government to bail him out. They already did that to Anil Ambani. It doesn't even have to be a direct payout, there are always 'projects' you can give and pay them some 1000% extra money compared what it would otherwise cost. In other words a government(tax funded) bailout is easily doable and will be done, when the need arises. In many ways the party is just giving money to itself(Electoral bonds).
Just to complete the argument, don't expect any backlash against the government either. The current ruling party enjoys nearly 'no prior conditions' based support from their constituency regardless of whatever they do, no matter big a disaster unfolds. And this is going to be the case for the foreseeable future(think decades).
To summarise, whatever fraud this is, no matter how big the impact of this on the Indian economy. In fact even if takes down the whole set up with him. He is just going to emerge from this fine. And the government will bail him out without any consequences for them.
> It doesn't even have to be a direct payout, there are always 'projects' you can give and pay them some 1000% extra money compared what it would otherwise cost. In other words a government(tax funded) bailout is easily doable and will be done, when the need arises. In many ways the party is just giving money to itself(Electoral bonds).
I'm reminded of this: https://www.economist.com/asia/2022/12/20/can-indias-richest... / https://archive.is/zPgHY
> Many of the slum’s thousands of cottage industries, which churn out textiles, leather and metal goods by the truckload, will also be relocated within Dharavi’s boundaries, even if they may have to downsize. Those considered to be polluting will be excluded. Whatever former slumland remains will be for Mr Adani. Superbly located on three suburban railway lines, an upcoming metro line and adjacent to Mumbai’s prime commercial district, it could be worth 30,000-40,000 rupees ($360-480) a square foot at today’s rates, reckons Gulam Zia of Knight Frank India, a property firm.
I'm reminded of this: https://www.economist.com/asia/2022/12/20/can-indias-richest... / https://archive.is/zPgHY
> Many of the slum’s thousands of cottage industries, which churn out textiles, leather and metal goods by the truckload, will also be relocated within Dharavi’s boundaries, even if they may have to downsize. Those considered to be polluting will be excluded. Whatever former slumland remains will be for Mr Adani. Superbly located on three suburban railway lines, an upcoming metro line and adjacent to Mumbai’s prime commercial district, it could be worth 30,000-40,000 rupees ($360-480) a square foot at today’s rates, reckons Gulam Zia of Knight Frank India, a property firm.
India's case is unfortunately a lot more worse. The reason why this sort of corruption gets an easy pass is because the public is not necessarily against corruption. They like to imagine themselves as temporarily embarrassed 'millionaires' type of section. While the discussion is always on the lines corruption being bad, its only used in the context of looking better.
Pretty much everyone wants a government job, or any job where they can make money through bribes. Major Indian cities run dozens of coaching class cram schools to prep people for civil services jobs. Becoming corrupt is an aspirational thing in India. This is an elephant in the room nobody wants to discuss. Your ordinary Indian walking on the street deeply aspires to be corrupt. Only thing next to this is the desire for managerial jobs in private firms. Because this is how you get by life giving orders and not doing any work.
The only reason why the protests against the previous governments was so intense was not because of corruption. The overall polarising movement that started in the 1980s from the destruction of Babri Masjid means there is a long running and developing trend among India's electoral masses to consolidate on the lines of religion. This means other things aren't all that important. This also means to win elections, you need money from all these big corporate payers. Their corruption goes ignored, and in many is even perfectly acceptable.
Pretty much everyone wants a government job, or any job where they can make money through bribes. Major Indian cities run dozens of coaching class cram schools to prep people for civil services jobs. Becoming corrupt is an aspirational thing in India. This is an elephant in the room nobody wants to discuss. Your ordinary Indian walking on the street deeply aspires to be corrupt. Only thing next to this is the desire for managerial jobs in private firms. Because this is how you get by life giving orders and not doing any work.
The only reason why the protests against the previous governments was so intense was not because of corruption. The overall polarising movement that started in the 1980s from the destruction of Babri Masjid means there is a long running and developing trend among India's electoral masses to consolidate on the lines of religion. This means other things aren't all that important. This also means to win elections, you need money from all these big corporate payers. Their corruption goes ignored, and in many is even perfectly acceptable.
Its more an inequality story than a corruption story. Corruption is always a side effect of inequality.
If an ambitious, energetic kid is born in a slum or some backward area and doesn't see legitimate ways to access resources/climb the ladder, chances are very high the kid will take shortcuts. That's the nature of high energy, ambitious people. These people, purely based on the drive they have, influence the behavior of the rest that surround them.
When such people are identified early, and given the right guidance/resources the outcomes are totally different.
If an ambitious, energetic kid is born in a slum or some backward area and doesn't see legitimate ways to access resources/climb the ladder, chances are very high the kid will take shortcuts. That's the nature of high energy, ambitious people. These people, purely based on the drive they have, influence the behavior of the rest that surround them.
When such people are identified early, and given the right guidance/resources the outcomes are totally different.
When the only perceived options are to swindle or be swindled, what are people supposed to aspire to?
[deleted]
+100. The short sellers are going to find out, to their dismay, how deeply intertwined Adani group is with the ruling party. Call it what you will, corruption/nepotism/favourtism etc., the net result is Adani group and BJP need each other and there's no way in my life time the ruling govt is going to let it fail for all the reasons you mentioned above.
Adani also owns a majority stake in NDTV Group now :
https://www.reuters.com/business/media-telecom/indias-ndtv-f...
[deleted]
Wow. Adani is super scummy, and from research when they were starting construction on a big mine in Australia we knew they were structuring their tax affairs to not pay any tax here [1], but all this is something else.
They have been suing a climate activist here for millions of dollars, and as part of it they had private investigators following him, his wife, and his children, including photographing his children while they were alone on the way to and from school. They were “unapologetic” [2].
Although from what I read of Adani’s human rights abuses overseas (such as forcing native tribes off their lands to build mines and infrastructure, and complete disregard for the environmental effects of their operations poisoning nearby communities’ air and water/food sources) this is a tiny drop in the bucket of that company’s scummyness.
1. https://cdn.getup.org.au/2061-2059-The-Adani-Files.pdf
2. https://www.theguardian.com/business/2020/oct/28/private-inv...
They have been suing a climate activist here for millions of dollars, and as part of it they had private investigators following him, his wife, and his children, including photographing his children while they were alone on the way to and from school. They were “unapologetic” [2].
Although from what I read of Adani’s human rights abuses overseas (such as forcing native tribes off their lands to build mines and infrastructure, and complete disregard for the environmental effects of their operations poisoning nearby communities’ air and water/food sources) this is a tiny drop in the bucket of that company’s scummyness.
1. https://cdn.getup.org.au/2061-2059-The-Adani-Files.pdf
2. https://www.theguardian.com/business/2020/oct/28/private-inv...
And despite the obviousness of the tax structuring and other, worse, scummy behaviour, the Australian Government at the time was determined to push ahead with clearing the path for Adani to operate what would have been one of largest, if not the largest, mines in Australia.
Infuriating.
Infuriating.
That same government is still in power. It is the Labor government in Queensland, for anybody that is wondering.
Yes. Our biggest problem in Queensland is that Labor aren't very good, but the opposition (LNP) is much worse and are basically just an absolute joke - they were a complete disaster last time they were in power (and voted out in a huge wipeout the very next election), have a lot of far-right crazies, are incompetent and extremely ideological. Minor parties like the Greens are getting more traction because of it, and there's been a big independent movement in the last few years across the country so perhaps that will dilute Labor's power somewhat. But we'll have to see next election...
That LNP government was absolutely amazing. They managed to go from absolute majority to losing an election in a single election cycle. Campbell Newman (the premier at the time) managed to pretty much piss off every voting bloc in the state. All done in three years. Cannot remember any other politician that was able to do that.
What did they do that was worse?
They went on big firing sprees around the public service, just absolute slash and burn style, huge spending cuts to the budget, reduction in services, and were getting ready to privitise a lot of public assets that bring in a lot of revenue (things that have been privitised in other states and have turned out to be disasters there, gouging people for essential services, like the power transmission networks). They under-invested in health, public transport, etc.
They'd been voted in I think because there was desire for change, and very quickly the public sentiment changed. Kind of like "oh crap, not like this"... It's very unusual for a Government to only have one term but they were booted out decisively. Since then the party seems even less competent... So they haven't been able to make much of an impact in the last few elections.
They'd been voted in I think because there was desire for change, and very quickly the public sentiment changed. Kind of like "oh crap, not like this"... It's very unusual for a Government to only have one term but they were booted out decisively. Since then the party seems even less competent... So they haven't been able to make much of an impact in the last few elections.
One more point is that the QLD Labour wing is much further to the right and much less progressive when it comes to coal and global warming. The vested interest in coal mining has limited a lot of the green energy push even as places like Brisbane and The Reef face some of the biggest challeges due to climate change.
Yep - that's them.
They're also fully trans national scumbags and haven't limited their bad behaviour to just India and Australia, they don't mind a contraversal resource | energy project or three.
https://en.wikipedia.org/wiki/Carmichael_coal_mine
They're also fully trans national scumbags and haven't limited their bad behaviour to just India and Australia, they don't mind a contraversal resource | energy project or three.
https://en.wikipedia.org/wiki/Carmichael_coal_mine
In one of those very odd Baader-Meinhof moments, I was reading about a different Indian mining company (Vedanta) today for the first time in my life. The controversies surrounding them look almost exactly like what you describe here with Adani.
I guess once you've spotted a scummy Indian mining company you start to see them all over?
I guess once you've spotted a scummy Indian mining company you start to see them all over?
> I guess once you've spotted a scummy Indian mining company you start to see them all over?
Non-Indian[1] mining companies operate in a similar way. When the mines they operate are in the global south, political and indigenous opponents to them have a habit of ending up in pieces.
Oh, it's not the executives in Toronto that are ordering organizers murdered and stuffed into oil drums - it's just the problem-solvers that their overseas branches happen to employ...
[1] https://justice-project.org/the-canada-brand-violence-and-ca...
Non-Indian[1] mining companies operate in a similar way. When the mines they operate are in the global south, political and indigenous opponents to them have a habit of ending up in pieces.
Oh, it's not the executives in Toronto that are ordering organizers murdered and stuffed into oil drums - it's just the problem-solvers that their overseas branches happen to employ...
[1] https://justice-project.org/the-canada-brand-violence-and-ca...
Just to be clear here, the Toronto TSX and TSXV exchanges are home to more mining companies than any other market in the globe; as such companies listed there aren't neccesarily majority owned or controlled by Canadian citizens (although there is a huge Anglo-Australian presence there).
That said, shitty behaviour in the "global south" (or towards indigenous land holders enclaved with the US, Canada, or Australia) is common enough across the board no matter the nationalities of majority owners and board members.
That said, shitty behaviour in the "global south" (or towards indigenous land holders enclaved with the US, Canada, or Australia) is common enough across the board no matter the nationalities of majority owners and board members.
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jimbob45(2)
Original title: Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History
(too long for HN post title, mea culpa, feel free to change it up dang)
(too long for HN post title, mea culpa, feel free to change it up dang)
logicallee(4)
The Hindenburg report is well researched. Shorting Adani stock won't be the thing that puts nails in Adani's coffin, but rather it is the waning confidence in Adani as these insights get absorbed by the market. It seems as though Adani is "too big to fail" which is actually helpful toward the effort to tank the shares. If Indian government is forced to bail out Adani, then the government won't do so under a structure that is beneficial to holders of today's shares. If taxpayers need to step up, then equity holders must share most of the pain.
These are the people that broke the “Nikola rolling a truck down a hill” story.
https://hindenburgresearch.com/nikola/
https://hindenburgresearch.com/nikola/
That was quite a bit easier to digest, though. Can someone give me a more summarized version? I gave up after the ninth or tenth bullet item. Who's being defrauded and how?
Any shareholder in this fiasco who isn't a member of the family is the proverbial sucker at the table. Also, anyone who's lending money against inflated shares is going to lose everything.
Looks like Majority of the holding (72%) is by the promoters for one of the Company - Adani Enterprises Ltd. Lot of individual shareholders (Public) got greedy and started buying since last year. [1]
[1] https://www.screener.in/company/ADANIENT/consolidated/#share...
[1] https://www.screener.in/company/ADANIENT/consolidated/#share...
Also alleged are a vast array of offshore shell companies that are secretly controlled by insiders, making undisclosed transactions to wash money, shore up balance sheets, juice revenue numbers, and generally create massive financial interdependence between entities that are presented to the public as being unrelated.
OK, sure. That stuff is all questionably legal and bad for the market and they shouldn't do it.
I'm trying to find the (sigh) "Largest Con in Corporate History" promised in the headline. All I'm finding is accounting games and market cheating? I mean, these are routine crimes. In the US, the SEC prosecutes dozens of these every year (maybe it's easier to get away with it in India). Maybe there's an argument that the scale here is larger? If so the numbers aren't in the article.
I'm trying to find the (sigh) "Largest Con in Corporate History" promised in the headline. All I'm finding is accounting games and market cheating? I mean, these are routine crimes. In the US, the SEC prosecutes dozens of these every year (maybe it's easier to get away with it in India). Maybe there's an argument that the scale here is larger? If so the numbers aren't in the article.
These guys are amazing. My favorite is when they revealed Lordstown motors was operating on fake sales and a few one-off self immolating swap-em-up gutted oem trucks. They rekt their CEO Steve Burns who went on the news with a shiny clean and poorly fitting hard hat and vest that obviously had never been on a shop floor and he was promptly sacked.
"Nobody thought the sales were real" LMAO
https://www.youtube.com/watch?v=n0Y81M8oWn4 (make sure you watch the ending)
"Nobody thought the sales were real" LMAO
https://www.youtube.com/watch?v=n0Y81M8oWn4 (make sure you watch the ending)
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Yesterday there was a submission about the BBC's documentary on the "supreme leader". I wonder what mental gymnastics we will see from people who were defending him, after this report. Most likely, they will never read this report.
This is reminiscent of the FTT/SRM debacle:
1. A highly illiquid asset that's mostly owned by the founder
2. Price manipulation to artificially inflate the asset price
3. Mark-to-market accounting to artificially inflate the market cap
4. Using the inflated market cap to justify borrowing billions in liquid assets
5. A downturn in the market and... the money's gone
1. A highly illiquid asset that's mostly owned by the founder
2. Price manipulation to artificially inflate the asset price
3. Mark-to-market accounting to artificially inflate the market cap
4. Using the inflated market cap to justify borrowing billions in liquid assets
5. A downturn in the market and... the money's gone
They also threatened an environmental activist from Queensland, Australia by sending private investigators to stalk him and his nine year old daughter. They're beyond corrupt and are a criminal organisation.
https://www.theguardian.com/australia-news/2022/nov/29/still...
https://www.theguardian.com/australia-news/2022/nov/29/still...
The Mauritius connection is interesting. India and Mauritius have tax treaties[1] which are very advantageous to Indian companies seeking to do business abroad. I don't know the full details but I do know that international companies who have an India presence, are frequently set up with a Mauritius company owning the India entity and doing some sort of back to back billing arrangement.
[1] https://www.forbesindia.com/blog/economy-policy/india-maurit...
[1] https://www.forbesindia.com/blog/economy-policy/india-maurit...
He's too big to fail status in India, so it'll be interesting to see how their short position unfolds. They can keep the scam going for much longer than Hindenburg can keep their short I imagine.
According to Wikipedia Adani is in with Modi, the current Indian prime minster who likes to play favourites. Thus he could get quite a bit of protection at home.
But that may not protect him from a market run...
But that may not protect him from a market run...
It can. Indian Govt protects/can intervene through LIC India which invests in companies like this. In the past during major downturns, LIC with its huge cash pile acted as a backstop.
Wikipedia is a reliable source?
Bruh, Everyone knows Adani and Modi are pals
Ever heard of license raj?
license raj culminated in 1991 economic crisis for india.
That's what Hanjin thought in Korea. Closely tied to a chaebol. Too big and too well connected to fail. Until they weren't.
Why do you think Hidenburg released this research? They want to move the market and also pressure his position.
I don't understand why any entity is "too big to fail".
Modi used Adani planes during election campaign. Adani and Modi are close since his Gujarat CM days. He truly is too big to fail.
https://timesofindia.indiatimes.com/news/fleet-of-3-aircraft...
https://timesofindia.indiatimes.com/news/fleet-of-3-aircraft...
My understanding is that if an entity going down results in a widespread wealth destruction in the entire domain then it's deemed to be too-big-to-fail. It would in turn lead to social unrest threatening the stability of government. Like a huge lender going bust would lead to credit shrinkage leading to millions of small/medium businesses going bust.
Exactly. It's not 'too big to fail,' it's 'too big for the Government to let fail.'
Yup you're right. It's more like Adani's lenders might threaten social stability if Adani becomes insolvent. But I'm pretty sure the govt will give SBI a cash injection and have them loan that amount to Adani in the event that things actually get bad.
> But I'm pretty sure the govt will give SBI a cash injection and have them loan that amount to Adani in the event that things actually get bad.
It's exactly (in content) what I wrote to my friends while we were discussing this in WhatsApp.
"If push comes to shove RBI could well bail out Adani through some complicated deal....they'll bail out LIC and SBI for sure...through those entities I meant not directly"
It's exactly (in content) what I wrote to my friends while we were discussing this in WhatsApp.
"If push comes to shove RBI could well bail out Adani through some complicated deal....they'll bail out LIC and SBI for sure...through those entities I meant not directly"
I think it's usually that the company's failure would have too large an impact on the economy or other dependent companies, so it will get bailed out by the dependents or the government.
You don’t have to because you don’t matter. Enough people will just nod and accept the explanation for why their tax dollars are being given to billionaires that your voice doesn’t matter.
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adani will take down entire indian economy with it.
i might be the only one to think this, but the relationship between Adani and the current administration (mainly the PM) has been an open secret. iirc the book "billionaire raj" (2018) also talks about this.
besides the shady ways of raising initial capital, the main crux of the issue with the rise of both Ambani and Adani empires rely on getting favours from local administration. Adani was able to catapult to a big position in the country because of winning contracts from the state administration when the current PM was the CM of the state.
for now, this remains the reality for those who want to set up conglomerates in the country, especially involving infrastructure and commodities.
besides the shady ways of raising initial capital, the main crux of the issue with the rise of both Ambani and Adani empires rely on getting favours from local administration. Adani was able to catapult to a big position in the country because of winning contracts from the state administration when the current PM was the CM of the state.
for now, this remains the reality for those who want to set up conglomerates in the country, especially involving infrastructure and commodities.
Ah, the guns of navarone of the indian protectioned industry versus the ships of international capital gang, what a battle.
Surely, they will try to subvert the indian government and take over local giants to establish a construct similar to the ccp to engage in rampant proxy colonialism.
Surely, they will try to subvert the indian government and take over local giants to establish a construct similar to the ccp to engage in rampant proxy colonialism.
Say what you will about the CCP, but they are NOT a colony.
How will it affect India’s economy if the Adani Group crashes? India8is currently one of the fastest growing economies and wondering what effect this may have on the economy.
Minimally, directly. But the hypernationalism has to stop. It’s reminiscent of how Wirecard got as far as it did.
A good day to be thankful for short sellers.
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Where would India be without their glorious scammers?
I started reading but couldn't get my sleepy brain around how Adani manipulated the stocks. Sure, the valuations are astronomical but doesn't indicate that Adanis themselves are behind the rise? Can someone please post a TLDR?
As far as I understand, an overwhelming majority of the stock of the companies are not up for trade on the exchange but rather held by offshore entities in violation of the rules which makes it trivial to manipulate the price of the stock. These entities are owned by Adani or his associates.
When you have the PM in your pocket, you can do whatever you want.
Also, he might be a 3rd richest person on paper, but I call him a flight risk. Once Modi govt is kicked out, he’ll flee India, just like other scammers like Nirav Modi and Vijay Mallya.
Also, he might be a 3rd richest person on paper, but I call him a flight risk. Once Modi govt is kicked out, he’ll flee India, just like other scammers like Nirav Modi and Vijay Mallya.
This is something that is well known to Indian investors that most of Adani companies are vaporware that basically have no revenue and trade for price to sales ratio much higher than other companies.
However this guy and his family members are pretty well connected and would be fine as long as Modi is India’s PM. In fact it is even stated that this guy is basically a kingmaker as his massive inflated fortune funds the political contributions to the ruling BJP party.
However this guy and his family members are pretty well connected and would be fine as long as Modi is India’s PM. In fact it is even stated that this guy is basically a kingmaker as his massive inflated fortune funds the political contributions to the ruling BJP party.
Unless the corruption is so clear and irrefutable and the media actually presses hard enough that Modi decides it's time to throw Adani under the bus to save himself.
But that's a high bar I assume...
If the rest of the world weren't also so corrupt, it'd be fairly trivial to call out Adani and cancel all business with them and add some nice sanctions, but that's not the world we're in it seems.
But that's a high bar I assume...
If the rest of the world weren't also so corrupt, it'd be fairly trivial to call out Adani and cancel all business with them and add some nice sanctions, but that's not the world we're in it seems.
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I am afraid, now modi will ask to ban HN! He won't stand this insult on his biggest friend and greatest money source. Like the govt is trying to ban the BBC documentary..
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> Initial Disclosure: After extensive research, we have taken a short position in Adani Group Companies
That is pretty much what Hindenburg does; they find frauds and short them. Peruse their site. I mean, it’s in the name, you know, like the dirigible.
https://hindenburgresearch.com/
https://en.wikipedia.org/wiki/Hindenburg_disaster
https://hindenburgresearch.com/
https://en.wikipedia.org/wiki/Hindenburg_disaster
> That is pretty much what Hindenburg does; they find frauds and short them.
While such firms certainly have an incentive to make the company they've shorted look bad, it turns out that it works best (and is easier) when the company they short actually is bad. Thus, they've found a way to make a business out of identifying frothy financial bubbles built on shaky-to-fraudulent fundamentals and popping them.
It's kind of a public service in the sense that it corrects the market when it goes awry and ultimately they are betting their own money that their investigation is correct.
While such firms certainly have an incentive to make the company they've shorted look bad, it turns out that it works best (and is easier) when the company they short actually is bad. Thus, they've found a way to make a business out of identifying frothy financial bubbles built on shaky-to-fraudulent fundamentals and popping them.
It's kind of a public service in the sense that it corrects the market when it goes awry and ultimately they are betting their own money that their investigation is correct.
People often don't like them but they have a function in the market for sure!
Honestly, it's a great thing that our financial system enables and rewards investigations like this.
(It's a less great thing that fraud of this sort is possible, and that falsely accusing others of fraud can happen too)
(It's a less great thing that fraud of this sort is possible, and that falsely accusing others of fraud can happen too)
Unless you're wallstreet trying to punish some poorly run companies and leadership by shorting them, and then having a reddit lynch mob coming after you.
Hindenburg don't seem to waste much time on merely "poorly run". They seem to go for frauds: stuff that whether you think it will go down right now or not, you can't deny that it should.
Pretty cool and makes the name make a lot more sense too.
Peruse*
But yes, that is exactly what Hindenburg does – not sure if GC thinks shorting companies you think are frauds is a bad thing or what – as far as I'm concerned it is the best reason for shorts to exist! I'd have more questions if Hindenburg wasn't shorting Adani Group after this report.
But yes, that is exactly what Hindenburg does – not sure if GC thinks shorting companies you think are frauds is a bad thing or what – as far as I'm concerned it is the best reason for shorts to exist! I'd have more questions if Hindenburg wasn't shorting Adani Group after this report.
Thank you for correcting my typo!
I thought it was named after the former German field marshal and president.
Transitively, in any case.
Funnily thanks to the Hindenburg disaster the airship is much more popular worldwide (outside of Germany and maybe the immediate vicinity) than the person it was named after. Which is kind of unfortunate because Paul von Hindenburg is a fascinating figure with an enormous impact on world history.
Not only was he a highly successful field marshal on the Eastern Front in WWI (after being brought out of retirement to replace the panicking previous commander there), he later became de facto dictator of Germany for the remainder of the war (until it was time to surrender, then he threw the dumpster fire over the wall to the civilian politicians). (Of course as his second, Ludendorff, wouldn't miss to tell anyone after the war, Hindenburg's role was more one of moral authority, calming presence and coordination, the actual war plans being made by the people under him, most notably Ludendorff who was really pissed after the war Hindenburg took all the credit).
However he's even more interesting after WW1, when his popularity brings him to being elected as President, being in de facto control of Germany again thanks to a constitutional workaround, and then working to stop Hitler from getting to power before finally being convinced to give him the chancellorship. After his death, Hitler also took over the presidentship, and that was that. So Hindenburg was the only man who could stop/delay Hitler from taking power, and he failed.
Not only was he a highly successful field marshal on the Eastern Front in WWI (after being brought out of retirement to replace the panicking previous commander there), he later became de facto dictator of Germany for the remainder of the war (until it was time to surrender, then he threw the dumpster fire over the wall to the civilian politicians). (Of course as his second, Ludendorff, wouldn't miss to tell anyone after the war, Hindenburg's role was more one of moral authority, calming presence and coordination, the actual war plans being made by the people under him, most notably Ludendorff who was really pissed after the war Hindenburg took all the credit).
However he's even more interesting after WW1, when his popularity brings him to being elected as President, being in de facto control of Germany again thanks to a constitutional workaround, and then working to stop Hitler from getting to power before finally being convinced to give him the chancellorship. After his death, Hitler also took over the presidentship, and that was that. So Hindenburg was the only man who could stop/delay Hitler from taking power, and he failed.
There are a few of these outlets that do research into companies with questionable accounting/fundamentals and then monetize the research via shorting+publicizing.
Haven't seen many "manufactured fraud" allegations. In my experience the research is often quite in-depth and they tend to be proven correct in the end.
Haven't seen many "manufactured fraud" allegations. In my experience the research is often quite in-depth and they tend to be proven correct in the end.
idk, should I also take one?
Given that we're reading this, it's probably priced in by now. But in principle the answer would be yes, but only with money you can afford to lose; any investment on a single-name stock is risky, and shorting is even more so.
In my experience narratives are as priced in as they are accepted, so in the interim between "you first hear of this" and "everyone believes this" there is opportunity - bearing in mind that the interim between those two things is shorter the more believable the new thing.
But for instance in the case of "there's a new plague and China is locking down" there were several months between first hearing about it and everyone recognizing it.
But for instance in the case of "there's a new plague and China is locking down" there were several months between first hearing about it and everyone recognizing it.
And it's shorting, so no cap on losses, right?
Naked short sure, but you could buy some out of the money calls to cap your max loss. It’d just eat into the profit margin of your total bet. If you’re going to keep shorting more on the way down it gets more complicated.
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Right, that's part of why it's so risky.
sell short and set a limit buy order where your appetite for risk ends. But theoretically yea.
stock is in INR and market is in India.
If the report is true, there maybe insufficient market capacity for the stock to move freely, any short position - including the one that Hindenburg made maybe blown up by determined opposition.
If the report is true, there maybe insufficient market capacity for the stock to move freely, any short position - including the one that Hindenburg made maybe blown up by determined opposition.
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I got part way down the bulleted list, then scrolled down (and down and down and down) to see how long it was - and then saw “Introduction”. Wow.
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If you think the US markets have a lot of fraud, they are paragons of virtue compared to India and China.
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Probably almost everyone was thinking, fearing ( or hoping ) it was Elon Musk when they clicked the link. He was no longer #1.
Wrong.
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Hindenburg Research have a pedigree. I don't find these sorts of reports at all readable either, but that doesn't mean that the people they're aimed at (investors, etc) don't. I assume it's an industry style because it's worked for them in the past.
https://en.wikipedia.org/wiki/Hindenburg_Research
https://en.wikipedia.org/wiki/Hindenburg_Research
I don't think you not having heard of the guy mentioned makes it machine generated? You could Google him, he is very big fish but keeps a low profile in the media. Most of his wealth is also stocks so it's highly vulnerable to fluctuations.
You looked at a publication filled with images of evidence and thought it of all things was machine generated?
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amitprayal(1)
pclmulqdq(3)
serverholic(1)