Activist short-seller Hindenburg Research on Wednesday accused Asia’s richest person, Gautam Adani, of perpetrating “brazen market manipulation” and decades of fraud to help his family amass their fortune. Late Tuesday, the investment firm run by forensic financial researcher Nate Anderson tweeted that the report’s findings reveal “what we strongly suspect to be the largest corporate fraud in history.”
Hindenburg has subsequently shorted Adani securities through both derivatives and U.S.-traded bonds, and $12 billion was erased from the market value of Adani’s conglomerate, India-based Adani Group, during the first half of Wednesday.
The report took two years, the firm says. Among the accusations are:
Hindenburg’s team downloaded Mauritius’s entire corporate registry, pored through the entries, and reportedly found 38 shell companies tied to Adani.
Adani Group released a media statement on Wednesday morning blasting Hindenburg’s 30,000-plus-word document, which CFO Jugeshinder Singh called “a malicious combination of selective misinformation and stale, baseless, and discredited accusations.”
But Hindenburg—named for the hydrogen-filled airship that exploded from what is widely believed to have been avoidable human error—has an impressive track record with these short-seller reports, a large number of which have paid off since the firm called electric-automaker Nikola “an intricate fraud built on dozens of lies” back in 2020.
At the time, Nikola was worth $34 billion. Hindenburg singled out founder Trevor Milton as responsible for much of the alleged fraud. The U.S. Securities and Exchange Commission (SEC) soon opened an investigation, and the company is now worth $1.3 billion. A jury recently convicted Milton of defrauding Nikola’s investors.
The bombshell business is booming
Since the Niokla debacle, Hindenburg has targeted nearly three dozen other companies. According to calculations by Bloomberg News, these companies’ shares were still down an average of 26% six months later. Per the Hindenburg website, most of its exposés have led to legal or regulatory action.
Before he founded the firm, Anderson was an acolyte of Harry Markopolos, the famed ex-securities executive who uncovered Bernie Madoff’s Ponzi scheme. Anderson helped Markopolos look into Platinum Partners, a hedge fund later charged with a billion dollars’ worth of fraud. In an interview with the Financial Times, Markopolos called Anderson “a world-class digger” and said, “If there are facts he will find them, and all too often he’ll discover that there are skeletons in the closet.”
Where Hindenburg’s had the biggest impact so far has been on electrical vehicles. For instance, it has targeted Workhorse Group, whose drone and last-mile commercial-EV business was eventually probed by officials at the SEC and the Department of Justice. Workhorse has a partnership with Lordstown Motors, an EV automaker that in 2021 Hindenburg argued had exaggerated demand for its pickup trucks as well as its ability to produce those trucks.
Lordstown later admitted to the federal government that it didn’t have enough money to begin commercial production, and warned its business might simply fail. Hindenburg made similar claims against “fast-talking” Mullen Automotive (whose stock price has tanked 90% in the past year, to well below the $1-per-share threshold required to remain on Nasdaq) and Standard Lithium (an EV battery maker that’s currently the target of a securities-fraud class-action lawsuit).
Relatedly, Hindenburg went after Twitter when Elon Musk announced he was buying it last April. It shorted Twitter’s stock from May (when it was at $49.80) to June (after it hit $37.39), then quickly reversed its position and went long—a position it held as Twitter’s price climbed back north of $50 a share. The bets paid off, and Hindenburg in the process picked up a number of critics—Elon Musk stans now among them—who accused it of simply using these reports to make money.
Hindenburg can still point to a history of well-researched allegations. It correctly sized up the then-Nasdaq-listed Wins Finance in 2020; the “zombie company” China Metal Resources Utilization; and RD Legal, a hedge fund later fined for making misstatements to investors.
The position on Adani Group is Hindenburg’s boldest yet, and one that also requires wading into Indian stocks, an uncommon move for short sellers focused on U.S. stock exchanges. But Adani Group has courted years of controversy, having faced a slew of investigations from authorities in India. And Hindenburg would argue this latest report isn’t just well researched but also well timed: Adani’s flagship company, Adani Enterprises, was hoping to raise another $2.5 billion this week by issuing a series of new shares.
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