Hindenburg research makes the news again

Brut India

The long and SHORT of Hindenburg Research..

Transcript

00:00Who is Hindenburg? Has anyone washed it with milk?

00:02Hindenburg's report.

00:03An American short-seller, Hindenburg Research, and they came out with a report...

00:07Hindenburg has come out with fresh allegations in relation to the Adani Group.

00:11But what is this research outfit whose revelations have caused

00:14losses of about 53,000 crore rupees to Adani stocks' investors?

00:18Hindenburg is a forensic financial research firm

00:21that looks for financial flaws and irregularities in companies.

00:25It is relatively small according to the Washington Post,

00:27and at 7 years old, relatively young as well.

00:30It was named after the Hindenburg Airship,

00:33which caught fire and crashed over New Jersey in 1937.

00:37Slowly the big ship warps in and the ground crews rush for the mooring lines.

00:42In another 10 minutes or so, the great aircraft would have been snugly docked.

00:46But as the passengers crowded the windows to watch,

00:49a roar and a burst of inflammable hydrogen gas blazed up in less than a minute.

00:54The About Us tab on the Hindenburg website says that this airship crash,

00:59which claimed 36 lives, was a totally man-made, totally avoidable disaster.

01:04The website says that several hydrogen-based aircraft had crashed

01:08leading up to the tragedy in New Jersey,

01:10and yet the owners of the Hindenburg Airship went ahead with their operation.

01:14The hundreds of tons of fuel oil burns for an hour or more,

01:19with its dense black smoke making a fall over the tragic scene.

01:22The Hindenburg website says,

01:25we look for similar man-made disasters floating around in the market.

01:28They say their goal is to shed light on them

01:31before these companies attract more unsuspecting victims.

01:36A man named Nathan Anderson founded Hindenburg in 2017.

01:39Anderson grew up in a small town in Connecticut,

01:42studied international business at a university there,

01:44and volunteered as an ambulance medic in Jerusalem for some time,

01:48seeking a more diverse set of life experiences, he told the Financial Times.

01:52After returning to the US,

01:53he worked in broker-dealer firms in New York and Washington

01:56before starting Hindenburg Research.

01:58A 2021 article in the Financial Times said,

02:01his team at Hindenburg comprised just five full-time employees

02:05and a handful of contractors.

02:06Small is the new big.

02:08The article said Anderson had put his career on the line

02:11by doing critical research that has the power of influencing markets.

02:14Anderson, according to the American press,

02:16has a gift for a type of stock trading called short-selling.

02:20This has allowed Hindenburg to get very famous and very successful.

02:25How do they do it?

02:26Short-sellers bet against stocks or other assets.

02:29Some short-sellers simply bet on the fall in a company's stock price.

02:33But the ones who are known in the market as activist short-sellers

02:36release research about irregularities in a given company.

02:39These reports about alleged wrongdoing trigger a selling spree,

02:43allowing firms like Hindenburg to deploy their short-selling chops.

02:47So does that make them a force of good or corporate predators

02:50who not only hurt the companies they target,

02:53but also the small-time investor like you and me in the process?

02:56Well, according to the Washington Post,

02:58corporate executives see activist short-sellers as unsavory actors

03:02trying to profit by destroying companies.

03:04But then there are those who believe these guys

03:07are beneficial for the system overall

03:09because they expose alleged corporate irregularities.

03:12And that's that.

03:13Hindenburg first released a report against the Adani Group in January 2023,

03:17alleging that the group made improper use of tax havens and manipulated stocks.

03:22This report had caused India's market regulators,

03:24Securities and Exchange Board of India to open an investigation,

03:28which was still going on.

03:29A fresh Hindenburg report on 10th August 2024

03:32alleged that SEBI chairperson Madhumi Puri Butch and her husband

03:36previously had investments in offshore funds also used by the Adani Group.

03:41This is an explosive allegation

03:44because it alleges that the umpire herself is compromised.

03:48The couple denied the allegations accusing Hindenburg of character assassination.

03:53The Adani Group also denied the allegations saying

03:56Hindenburg selectively picked out publicly available information

04:00to come to predetermined conclusions.

Category

Transcript

Recommended