How this billionaire lost half his net worth in a matter of weeks
February 8, 2023 6:54 AM Subscribe
Poor guy's down to his last five dozen billion.
posted by The Card Cheat at 7:07 AM on February 8, 2023 [12 favorites]
posted by The Card Cheat at 7:07 AM on February 8, 2023 [12 favorites]
A billionaire who does stock manipulation and fraud and has ties to far right figures? Yes, please destroy all of those, thank you. Couple of ones over here could do with it as well.
posted by Artw at 7:11 AM on February 8, 2023 [32 favorites]
posted by Artw at 7:11 AM on February 8, 2023 [32 favorites]
oh come on.
Insert Rainier Wolfcastle
Insert Rainier Wolfcastle
That’s the jokeGIF here. From Hindenburg’s About page:
We view the Hindenburg as the epitome of a totally man-made, totally avoidable disaster. Almost 100 people were loaded onto a balloon filled with the most flammable element in the universe. This was despite dozens of earlier hydrogen-based aircraft meeting with similar fates. Nonetheless, the operators of the Hindenburg forged ahead, adopting the oft-cited Wall Street maxim of “this time is different”.posted by zamboni at 7:19 AM on February 8, 2023 [43 favorites]
We look for similar man-made disasters floating around in the market and aim to shed light on them before they lure in more unsuspecting victims.
Pretty hilarious that one of the accusations laid against Adani is stock price manipulation when the report was released with the sole purpose of tanking the stock to allow a short trader to take advantage of the decline.
posted by Mitheral at 7:28 AM on February 8, 2023 [7 favorites]
posted by Mitheral at 7:28 AM on February 8, 2023 [7 favorites]
Mitheral, is that true? You got a link? Or is that in TFA?
posted by Bella Donna at 7:29 AM on February 8, 2023
posted by Bella Donna at 7:29 AM on February 8, 2023
From the article:
Hindenburg Research did not undertake this two-year investigation of the Adani Group because it just really cares that the public is informed about possible misdeeds by an Indian conglomerate — it is doing so to make money. Anderson, its founder, is a short seller, meaning he stands to make money if the price of Adani Group company shares and bonds fall. And he’s making those prices fall with the report.posted by zamboni at 7:36 AM on February 8, 2023 [8 favorites]
It's in TFA, but in theory, shorting stocks is not just pure pessimism. It's literally the only way to "put your money where your mouth is" if you believe a stock is overvalued in some way.
Whether you think it's straight-up fraud as alleged in this case, or the business itself is a scam (in the case of Herbalife), or if you think the products are shoddy and the business model's due to collapse (e.g. Tesla, perhaps), you can try to shed light on this, but you can't move the needle by "buying all their competitors" nearly as well as a direct bet against them, and that is what shorting is.
There's a lot wrong with the stock market, but a firm like Hindenburg isn't going to be that successful if they just put out hit pieces on random stocks and hope to deflate them. They have to find actually artificially inflated stocks and make the case against them. The profit motive just means they're not altruistic, it doesn't mean they're necessarily wrong.
posted by explosion at 7:39 AM on February 8, 2023 [33 favorites]
Whether you think it's straight-up fraud as alleged in this case, or the business itself is a scam (in the case of Herbalife), or if you think the products are shoddy and the business model's due to collapse (e.g. Tesla, perhaps), you can try to shed light on this, but you can't move the needle by "buying all their competitors" nearly as well as a direct bet against them, and that is what shorting is.
There's a lot wrong with the stock market, but a firm like Hindenburg isn't going to be that successful if they just put out hit pieces on random stocks and hope to deflate them. They have to find actually artificially inflated stocks and make the case against them. The profit motive just means they're not altruistic, it doesn't mean they're necessarily wrong.
posted by explosion at 7:39 AM on February 8, 2023 [33 favorites]
Pretty hilarious that one of the accusations laid against Adani is stock price manipulation when the report was released with the sole purpose of tanking the stock to allow a short trader to take advantage of the decline.
However, Hindenburg is clear and upfront about what they are doing. They have a huge short position in the target and are publishing their research explaining why they think the target is overvalued. If you are convinced by the research, you sell. If you think they are blowing smoke, you buy and crush them. An extended short squeeze could put them out of business in a hurry.
posted by chavenet at 7:45 AM on February 8, 2023 [10 favorites]
However, Hindenburg is clear and upfront about what they are doing. They have a huge short position in the target and are publishing their research explaining why they think the target is overvalued. If you are convinced by the research, you sell. If you think they are blowing smoke, you buy and crush them. An extended short squeeze could put them out of business in a hurry.
posted by chavenet at 7:45 AM on February 8, 2023 [10 favorites]
Hindenburg Research nailed the hilariously fraudulent Nikola so it's not like they don't have a track record of getting stuff right.
posted by BungaDunga at 7:56 AM on February 8, 2023 [7 favorites]
posted by BungaDunga at 7:56 AM on February 8, 2023 [7 favorites]
Insert Rainier Wolfcastle "That’s the joke" GIF here. From Hindenburg’s About page:
I get it, but it's still lazy writing.
Hindenburg Research did not undertake this two-year investigation of the Adani Group because it just really cares that the public is informed about possible misdeeds by an Indian conglomerate — it is doing so to make money.
Insert the Godzilla 2014 "let them fight" GIF here.
posted by mhoye at 7:56 AM on February 8, 2023
I get it, but it's still lazy writing.
Hindenburg Research did not undertake this two-year investigation of the Adani Group because it just really cares that the public is informed about possible misdeeds by an Indian conglomerate — it is doing so to make money.
Insert the Godzilla 2014 "let them fight" GIF here.
posted by mhoye at 7:56 AM on February 8, 2023
the report was released with the sole purpose of tanking the stock to allow a short trader to take advantage of the decline.
I mean, you could describe most enterprises in the same way: "The grocery store was established with the sole purpose of enabling the founder to profit by selling food for more than she paid for it." "The plumber started his company in order to make a living." They are profiting, but they are also providing a social benefit. The benefit from short selling is less direct, and there are plenty of cases in which short-selling just temporarily depresses the price, so the short-seller is not helping anyone, but if they are actually providing real information that informs the market, I'm all for it.
posted by Mr.Know-it-some at 8:04 AM on February 8, 2023 [1 favorite]
I mean, you could describe most enterprises in the same way: "The grocery store was established with the sole purpose of enabling the founder to profit by selling food for more than she paid for it." "The plumber started his company in order to make a living." They are profiting, but they are also providing a social benefit. The benefit from short selling is less direct, and there are plenty of cases in which short-selling just temporarily depresses the price, so the short-seller is not helping anyone, but if they are actually providing real information that informs the market, I'm all for it.
posted by Mr.Know-it-some at 8:04 AM on February 8, 2023 [1 favorite]
The economist Adam Tooze did a deep dive into this subject in his latest podcast for foreign policy magazine . Tooze is a gifted communicator and explains a lot of this story, such as the short selling thing.
posted by The River Ivel at 8:16 AM on February 8, 2023 [3 favorites]
posted by The River Ivel at 8:16 AM on February 8, 2023 [3 favorites]
As a technical writing teacher, part of me is kind of excited that a technical report can make someone lose billions of dollars. Yay language! Yay words!
posted by craniac at 8:45 AM on February 8, 2023 [13 favorites]
posted by craniac at 8:45 AM on February 8, 2023 [13 favorites]
This video from Khan Academy gets into some of the arguments about whether short selling is a beneficial activity or not.
posted by gauche at 8:48 AM on February 8, 2023 [2 favorites]
posted by gauche at 8:48 AM on February 8, 2023 [2 favorites]
For a 101 on the very concept of short-selling, please see the Wikipedia article on the subject.
Otherwise, it would be nice if we could focus the discussion on the oligarch Adani and his financial shenanigans, not to mention his corrupt ties with the right-wing Modi government (and apparently other governments too).
posted by splitpeasoup at 8:57 AM on February 8, 2023 [10 favorites]
Otherwise, it would be nice if we could focus the discussion on the oligarch Adani and his financial shenanigans, not to mention his corrupt ties with the right-wing Modi government (and apparently other governments too).
posted by splitpeasoup at 8:57 AM on February 8, 2023 [10 favorites]
An interesting point for me in the Tooze podcast above, was that the revelation of Adani’s financial corruption and use of foreign market holding companies to manipulate his stock price was met with a resounding “yes, and?” from the Indian press/public (step in to correct me, India Mefi, I’m going on the podcast). I wish people were more critical of the source of stock evaluations, there’s definitely scope for it
posted by The River Ivel at 9:03 AM on February 8, 2023 [2 favorites]
posted by The River Ivel at 9:03 AM on February 8, 2023 [2 favorites]
"On January 24, New York-based Hindenburg Research published" oh come on.
2023 - the year of balloonnews and balloonadjacentnews tags on posts
posted by inflatablekiwi at 9:09 AM on February 8, 2023 [5 favorites]
2023 - the year of balloonnews and balloonadjacentnews tags on posts
posted by inflatablekiwi at 9:09 AM on February 8, 2023 [5 favorites]
If you are convinced by the research, you sell. If you think they are blowing smoke, you buy and crush them
I think that's kind of an optimistic view. I believe people are a lot more twitchy about selling signals in a overheated bull market.
You don't have to yell "fire!" in a crowded room, you can just say "hmm, do you smell smoke?"
posted by JoeZydeco at 9:20 AM on February 8, 2023 [1 favorite]
I think that's kind of an optimistic view. I believe people are a lot more twitchy about selling signals in a overheated bull market.
You don't have to yell "fire!" in a crowded room, you can just say "hmm, do you smell smoke?"
posted by JoeZydeco at 9:20 AM on February 8, 2023 [1 favorite]
I used to follow Hindenburg Research on the bird site for shits and giggles, they've got an uncanny track record and if you catch their tweet storm announcement fast enough you could likely make a pretty penny on shorts. There's no mercy for whoever they set their sights on, and their research is thorough.
posted by furtive at 10:14 AM on February 8, 2023 [1 favorite]
posted by furtive at 10:14 AM on February 8, 2023 [1 favorite]
For another look at Adani: ‘It was a set-up, we were fooled’: the coal mine that ate an Indian village, by Ankur Paliwal, The Guardian:
Over the last three decades, Adani has built his mammoth conglomerate by penetrating almost every sector of India’s economy, from sewage treatment to data processing, edible oil to solar panels, transport to media. Even the apples on sale in my neighbourhood in New Delhi have Adani’s sticker on them. Among these many ventures, few are more profitable than coal. Until a few years ago, more than 90% of India’s coal has been mined by government-owned companies. However, in recent years, prime minister Narendra Modi’s administration has increasingly turned to private companies to do this work. One of the chief beneficiaries of this shift has been Adani.posted by kristi at 10:29 AM on February 8, 2023 [4 favorites]
As Gautam Adani continues to expand his empire, his influence at the top levels of Indian government has come under scrutiny. Adani works very closely with influential political figures, journalist Paranjoy Guha Thakurta told me before an Indian court issued a gagging order against him for apparently defaming the billionaire. “Call it crony capitalism, call it oligarchy, call it regulatory capture, this is the story of Adani in a nutshell,” he said.
...
... many displaced Adivasis told me that they now felt they had been played by Adani and the local government. “It was a set-up,” said Patar, “which fooled us into giving our land.”
It sounds like Adani isn't just "close to" Modi, he's one of the major vehicles for Modi's economic development policies. From a Bloomberg op-ed (archive link):
posted by Gerald Bostock at 10:30 AM on February 8, 2023 [1 favorite]
Adani’s companies have not just been entrusted with a wide swathe of India’s infrastructure. They have become the government’s first choice as partners in multiple sectors that framers of our industrial policy have decided are priorities for India’s growth. [...]This reminds me of the globalization-era pattern of having foreign companies come in, develop infrastructure and capacity, and extract massive profits for private gain ... except instead of foreign direct investment, some local billionaire with close ties to the local political elite is doing it, while still relying on massive loans from global investors. Adani has made billions building Modi's national projects; I wonder who's on the hook for servicing his debt?
Our worry is not where the Adani Group is picking up the capital in service of these ambitions. India is not necessarily short of capital to achieve some of these ends. It is, however, certainly short of implementation capacity. This is what Adani’s companies has promised to supply. The public sector is too inefficient to build what India needs; the rest of the private sector is too concerned about political risk. [...] Nobody else in Modi’s India has this specific mixture of confidence in government support, ability to navigate byzantine regulations, and willingness to risk enormous sums of money.
posted by Gerald Bostock at 10:30 AM on February 8, 2023 [1 favorite]
Always love when fossil fuel and/or shipping ponzi schemes collapse. It'd rock if crashes much lower and does real lasting damage to those industries. :)
As an aside, shale oil was always a ponzi scheme too with EROIs like 1.5 : 1. I think shale oil maybe flush with investor money right now, but the last shale round burned many investors, and so shall this one.
posted by jeffburdges at 10:37 AM on February 8, 2023 [4 favorites]
As an aside, shale oil was always a ponzi scheme too with EROIs like 1.5 : 1. I think shale oil maybe flush with investor money right now, but the last shale round burned many investors, and so shall this one.
posted by jeffburdges at 10:37 AM on February 8, 2023 [4 favorites]
It's clearly possible Hindenburg would do "defense work" for the U.S. government, but if so here then I'm loving Biden's streak so far. That said..
An Indian coworker said he wanted to short Adani many months ago, and that Adani's business always had some ponzi-like quality, so really even casual market participants saw something fishy here, and no particular reason to believe espionage involvement.
posted by jeffburdges at 11:16 AM on February 8, 2023 [1 favorite]
An Indian coworker said he wanted to short Adani many months ago, and that Adani's business always had some ponzi-like quality, so really even casual market participants saw something fishy here, and no particular reason to believe espionage involvement.
posted by jeffburdges at 11:16 AM on February 8, 2023 [1 favorite]
If a stock price can be changed by better information, then that stock price should be changed by better information.
The Efficient Market Hypothesis requires perfect information but this is the real world so we'll have to settle for better information. Better information has a cost to develop. If Hindenberg's business model allows them to generate income to pay to develop better information then there's an overall benefit.
posted by happyinmotion at 11:47 AM on February 8, 2023 [4 favorites]
The Efficient Market Hypothesis requires perfect information but this is the real world so we'll have to settle for better information. Better information has a cost to develop. If Hindenberg's business model allows them to generate income to pay to develop better information then there's an overall benefit.
posted by happyinmotion at 11:47 AM on February 8, 2023 [4 favorites]
God's speed Hindenburg Research. Bring this planet-fucker down!
Adani is a big-wig here in Australia amongst our richest planet exploiters and arsehole politicians. He's also a cunt who allows the targeting of innocent disabled family members of activists against his grotesque Carmichael Mine, which is slated to kill the Great Barrier Reef and destroy untold sacred sites.
A collection of Guardian articles on Adani's Carmichael Mine.
I hope he is eaten inside out by rare intestinal worms.
posted by Thella at 11:54 AM on February 8, 2023 [17 favorites]
Adani is a big-wig here in Australia amongst our richest planet exploiters and arsehole politicians. He's also a cunt who allows the targeting of innocent disabled family members of activists against his grotesque Carmichael Mine, which is slated to kill the Great Barrier Reef and destroy untold sacred sites.
A collection of Guardian articles on Adani's Carmichael Mine.
I hope he is eaten inside out by rare intestinal worms.
posted by Thella at 11:54 AM on February 8, 2023 [17 favorites]
You don't have to yell "fire!" in a crowded room, you can just say "hmm, do you smell smoke?"
You have to be credible, too. Muttering about smoke under your breath may startle the herd for a brief moment but in order to spark the kind of selloff Adani's seen you need to a) be loud b) have done your homework and c) have a track record.
Hindenburg has a, b & c which is why Adani's not only on fire, but actually burning down.
[This story is no longer really about the short sellers anymore anyway. It's about the rotten muck that's under the big rock they lifted up as the fire got started. And it couldn't have happened to a nicer fuckwit.]
posted by chavenet at 12:17 PM on February 8, 2023 [6 favorites]
You have to be credible, too. Muttering about smoke under your breath may startle the herd for a brief moment but in order to spark the kind of selloff Adani's seen you need to a) be loud b) have done your homework and c) have a track record.
Hindenburg has a, b & c which is why Adani's not only on fire, but actually burning down.
[This story is no longer really about the short sellers anymore anyway. It's about the rotten muck that's under the big rock they lifted up as the fire got started. And it couldn't have happened to a nicer fuckwit.]
posted by chavenet at 12:17 PM on February 8, 2023 [6 favorites]
Oh hey...I photographed this guy for the NYT a couple months ago (and the pictures are used in more recent reporting). As is typical with a photo assignment, I knew absolutely nothing about the story after I got the call during breakfast that I'd meet him in a hotel room in Boston a few hours later, other than knowing they'd need as much variety in the portraiture as possible in the short window. I did a little research before meeting and as it happens, I'd visited the port neighboring Adani Port in Gujurat about 20 years ago and we (me, him, and his wife) had a good laugh about how I had the spiciest food of my life (a bright orange biryani) at a hotel restaurant in nearby Gandidham. That story bought me a few more minutes to get additional variety (settings, moods, expressions) in the pictures.
posted by msbrauer at 1:22 PM on February 8, 2023 [19 favorites]
posted by msbrauer at 1:22 PM on February 8, 2023 [19 favorites]
I used to follow Hindenburg Research on the bird site for shits and giggles
I have to admit, as I read through their site, I'm enjoying their house style. "How A Spoon-Bending Turkish Magician Built A $600 Million Nasdaq-Listed Scam Based On A Lifetime Of Lies" is an example: the headline promises....the article delivers. Fun stuff.
posted by gimonca at 2:21 PM on February 8, 2023 [5 favorites]
I have to admit, as I read through their site, I'm enjoying their house style. "How A Spoon-Bending Turkish Magician Built A $600 Million Nasdaq-Listed Scam Based On A Lifetime Of Lies" is an example: the headline promises....the article delivers. Fun stuff.
posted by gimonca at 2:21 PM on February 8, 2023 [5 favorites]
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posted by mhoye at 6:57 AM on February 8, 2023 [24 favorites]