Not only Adani Group, Hindenburg report has affected many companies, know when it came in discussion for the first time
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New Delhi : The dispute between Hindenburg Research and Adani Group is gradually getting deeper and hotter. It is being told in media reports that the report of Hindenburg Research, an American financial research company, has affected not only Adani Group but also many big companies of the world. Media reports say that Hindenburg Research, which has accused Adani group companies of serious irregularities, was started six years ago with the intention of finding irregularities in the world’s biggest companies and betting on their shares.
Nathan Anderson started the Hindenburg
According to a report in the news agency Bhasha, Nathan Anderson, who studied international business management from the University of Connecticut, laid the foundation of this forensic financial research company in the year 2017. At that time, Anderson declared its purpose to be the identification of man-made tragedies of the business world. With this nomenclature, he reminded of the man-made tragedy eight decades ago, in which about 35 people had tragically died.
Why was the firm named Hindenburg?
In fact, in 1937, an airplane running on hydrogen gas collapsed due to a fire in New Jersey. It was described as a man-made tragedy, as about 100 people were forced into the highly flammable gas-powered aircraft. The name of that unfortunate aircraft was Hindenburg. When this American firm, formed in the name of Hindenburg, released a report a few days ago about the companies of the group headed by Gautam Adani, one of the world’s richest people, the capital of these companies increased by 51% in just two trading days of the stock market. billion dollars decreased. With this, Adani has come down four places in the list of billionaires.
Accused of stock manipulation and accounting fraud for decades
The Rs 20,000 crore follow-on public offering (FPO) of Adani Enterprises, the representative company of Adani Group, was to open on Friday itself. The Hindenburg Report, which came out just before this, caused a big drop in its shares. According to the Hindenburg report, Adani Group has been involved in ‘open stock manipulation and accounting fraud’ for decades. However, the group has denied this report saying that Hindenburg Research has released the report without any research and complete information with the wrong intention.
Adani Group failed to reassure investors
This attempt by the Adani group to reassure the investors has not been successful. On Friday, this report had a very negative effect on the investors and the shares of most of the companies of the group fell by up to 20 per cent. Because of this, the stock markets came down to the lowest level in three months. Hindenburg Research, which has created a ruckus in the Indian stock market, describes itself as an activist investment research company. Apart from this, it is also associated with ‘short selling’ of shares.
what is short selling
Under short selling, the borrowed shares are sold in the hope that they will be bought later at a lower level. Traders who do ‘short selling’ make huge profits when the prices of shares fall as expected. Hindenburg invests its capital in selected stocks for ‘short selling’. However, she chooses the right company for this after sufficient research. In this research, his focus is on man-made tragedies such as accounting errors, mismanagement and undisclosed transactions. Information about regulatory, product or financial issues, in particular accounting irregularities in companies, improprieties in the roles of management or key service providers, undisclosed related party transactions, illegal or unethical business and financial practices Aspects like not giving are on his target.
How does the Hindenburg work?
Hindenburg Research’s website states that we support our investment decision-making with our fundamental analysis. At the same time, we are of the opinion that the most effective research results emerge from facts that emerge from information gathered from unusual sources. The results of previous research reports of Hindenburg Research can raise concerns of companies. Prior to the Adani group, it had also published research reports against Lordstown Motors Corp of America, Nikola Motor Company and Clover Health, apart from China’s Kandi and Colombia’s Technoglass.
Targeted companies raised questions
By the way, the companies targeted by Hindenburg have questioned the role of regulators in ‘short selling’. At the same time, its supporters say that it exposes the mistakes of the companies, which only benefits the investors. As far as Anderson, the head of Hindenburg Research, is concerned, he lived in Jerusalem, Israel before returning to the US. Before starting this financial research firm, Anderson also worked with Harry Markopolos, who campaigned against Ponzi schemes.
When Hindenburg came into limelight
Hindenburg got the most discussion on releasing the report against Nikola. In September 2020, it made serious allegations against Nikola Corp, an electric truck maker. Today, Nikola Corp’s capitalization is just $1.34 billion, compared to $34 billion at one point, after claims about the performance of the electric truck were found to be false. According to the information given on the company’s website, it has so far exposed irregularities in more than a dozen companies. These include Vince Finance, SC Works, Bloom Energy. In almost all cases, Hindenburg has faced legal and regulatory action after releasing the report.
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