This was one of the most influential short-seller reports ever: Hindenburg ResearchComprehensive against 2023 adani group This resulted in a loss of $153 billion in market value.
But it turned out that the profit American short-sellers made from the incident was comparatively small – just over $4 million.
The figure, which has not been independently confirmed by Bloomberg News, Hindenburg revealed in a statement This is the first time the New York-based firm founded by Nathan Anderson has offered an account of its recovery from last year’s bombshell report that accused the Indian business empire of fraud and market manipulation. gautam adani — One of the richest industrialists in Asia.
The contrast between Hindenburg’s profit and broader impact underscores how opportunistic research can have far-reaching effects, even if it’s not always easy to profit from its results. Shares and bonds of Adani Group companies fluctuated wildly immediately after Hindenburg’s report, but have since recovered. As of Monday, the group’s market value was $205 billion — roughly $30 billion lower than its pre-Hindenburg level.
The scathing report generated gross revenue of about $4.1 million through profits related to Adani shorts from “an investor relation” — Hindenburg did not name who that was — and “approximately $31,000 through our own short of Adani US bonds,” according to a July 1 statement from the short seller.
Hindenburg also criticised India’s market regulator in its report last year for failing to address allegations of fraud.
Hindenburg said the Securities and Exchange Board of India, or Sebi, “appears more interested in taking action against those who expose such practices,” while its investigations into billionaire Adani’s empire have fallen flat.
Its latest attack comes at a time when India’s newly energised opposition parties are criticising Prime Minister Narendra Modi for crony capitalism after the leader returned to power last month with a smaller mandate than expected.
The company has also posted on its website the full “show cause” notice it received from Sebi in June, which said Hindenburg’s report on the Adani Group contained certain misrepresentations and incorrect statements that were intended to mislead readers.
In a 46-page document, Sebi said Hindenburg has “resorted to conjectures and conjectures to emphasise certain facts and downplay others to create a negative inference against the Adani Group companies.” It also said the short seller cited a broker banned from the securities market, thereby undermining investor confidence in the regulatory framework.
Hindenburg’s latest message was ignored by Adani Group stocks. Shares of all 10 Adani-linked companies rose on Tuesday, led by energy and gas units, which each rose more than 4%.
‘Hiding Kotak’
Hindenburg said that this was not clearly mentioned in the SEBI notice Kotak Mahindra Bank Ltd, which it said created and oversaw the offshore fund structure used by Hindenburg’s investor partner to bet against Adani. The regulator said it “disguised the name “Kotak” with the acronym “KMIL,” even though Kotak is an India-linked entity.
KMIL stands for Kotak Mahindra Investments Limited, an asset management company. Shares of Kotak Mahindra Bank fell by up to 3% on Tuesday following Hindenburg’s disclosure.
Hindenburg has never been a client of Kotak Mahindra International Limited, Kotak said in a statement on Tuesday.
American hedge fund also named in SEBI notice Kingdon Capital Management As a party involved, it said Kingdon was aware of Hindenburg’s research on the Adani Group prior to its publication and had entered into a profit-sharing agreement with the short-seller on his trades.
According to Sebi’s show-cause notice, Hindenburg shared the draft Adani report with Kingdon in November 2022, about two months before the report was published. In return Kingdon agreed to share with Hindenburg 30% of its net profits from trading Adani-related securities. Due to the cost of setting up these trades, this profit-sharing was then reduced to 25%.
The cause notice said that in January next year, a fund controlled by Mark Kingdon transferred $43 million to K India Opportunities Fund, which started creating short positions through futures for the group’s flagship listed entity Adani Enterprises Ltd. These short positions were subsequently squared off by February 22 and $22 million was earned.
According to SEBI, as of June 1, Kingdon Fund has returned $4.1 million of gains from the Adani short sale to Hindenburg, while $1.4 million is still to be shared. In Tuesday’s statement, Kotak said Hindenburg has never been an investor in K India Opportunities Fund.
The Indian market regulator did not immediately respond to Bloomberg’s request for comment. Neither did the Adani Group. Kingdon Capital Management could not be immediately reached outside US business hours.
But it turned out that the profit American short-sellers made from the incident was comparatively small – just over $4 million.
The figure, which has not been independently confirmed by Bloomberg News, Hindenburg revealed in a statement This is the first time the New York-based firm founded by Nathan Anderson has offered an account of its recovery from last year’s bombshell report that accused the Indian business empire of fraud and market manipulation. gautam adani — One of the richest industrialists in Asia.
The contrast between Hindenburg’s profit and broader impact underscores how opportunistic research can have far-reaching effects, even if it’s not always easy to profit from its results. Shares and bonds of Adani Group companies fluctuated wildly immediately after Hindenburg’s report, but have since recovered. As of Monday, the group’s market value was $205 billion — roughly $30 billion lower than its pre-Hindenburg level.
The scathing report generated gross revenue of about $4.1 million through profits related to Adani shorts from “an investor relation” — Hindenburg did not name who that was — and “approximately $31,000 through our own short of Adani US bonds,” according to a July 1 statement from the short seller.
Hindenburg also criticised India’s market regulator in its report last year for failing to address allegations of fraud.
Hindenburg said the Securities and Exchange Board of India, or Sebi, “appears more interested in taking action against those who expose such practices,” while its investigations into billionaire Adani’s empire have fallen flat.
Its latest attack comes at a time when India’s newly energised opposition parties are criticising Prime Minister Narendra Modi for crony capitalism after the leader returned to power last month with a smaller mandate than expected.
The company has also posted on its website the full “show cause” notice it received from Sebi in June, which said Hindenburg’s report on the Adani Group contained certain misrepresentations and incorrect statements that were intended to mislead readers.
In a 46-page document, Sebi said Hindenburg has “resorted to conjectures and conjectures to emphasise certain facts and downplay others to create a negative inference against the Adani Group companies.” It also said the short seller cited a broker banned from the securities market, thereby undermining investor confidence in the regulatory framework.
Hindenburg’s latest message was ignored by Adani Group stocks. Shares of all 10 Adani-linked companies rose on Tuesday, led by energy and gas units, which each rose more than 4%.
‘Hiding Kotak’
Hindenburg said that this was not clearly mentioned in the SEBI notice Kotak Mahindra Bank Ltd, which it said created and oversaw the offshore fund structure used by Hindenburg’s investor partner to bet against Adani. The regulator said it “disguised the name “Kotak” with the acronym “KMIL,” even though Kotak is an India-linked entity.
KMIL stands for Kotak Mahindra Investments Limited, an asset management company. Shares of Kotak Mahindra Bank fell by up to 3% on Tuesday following Hindenburg’s disclosure.
Hindenburg has never been a client of Kotak Mahindra International Limited, Kotak said in a statement on Tuesday.
American hedge fund also named in SEBI notice Kingdon Capital Management As a party involved, it said Kingdon was aware of Hindenburg’s research on the Adani Group prior to its publication and had entered into a profit-sharing agreement with the short-seller on his trades.
According to Sebi’s show-cause notice, Hindenburg shared the draft Adani report with Kingdon in November 2022, about two months before the report was published. In return Kingdon agreed to share with Hindenburg 30% of its net profits from trading Adani-related securities. Due to the cost of setting up these trades, this profit-sharing was then reduced to 25%.
The cause notice said that in January next year, a fund controlled by Mark Kingdon transferred $43 million to K India Opportunities Fund, which started creating short positions through futures for the group’s flagship listed entity Adani Enterprises Ltd. These short positions were subsequently squared off by February 22 and $22 million was earned.
According to SEBI, as of June 1, Kingdon Fund has returned $4.1 million of gains from the Adani short sale to Hindenburg, while $1.4 million is still to be shared. In Tuesday’s statement, Kotak said Hindenburg has never been an investor in K India Opportunities Fund.
The Indian market regulator did not immediately respond to Bloomberg’s request for comment. Neither did the Adani Group. Kingdon Capital Management could not be immediately reached outside US business hours.
