Hindenburg Research says something 'big' soon India: Who after Adani?

Hindenburg Research, the US-based short seller famous for revealing issues with the Adani Group, has hinted at another major report involving India. In a recent post on X, Hindenburg said, "Something big soon India," leading to widespread guesses about which company could be its next focus.
On January 24 last year, Hindenburg Research released a report that strongly criticized the Adani Group just before Adani Enterprises was set to sell shares. The report caused the Adani Group's stock market value to drop by $86 billion and led to a major sell-off of its bonds listed overseas.

A Quick Recap: The Hindenburg Report

Back in January 2023, Hindenburg Research published a critical report on the Adani Group, just before the company was set to sell new shares. The report accused Adani of engaging in “the largest con in corporate history,” which caused panic among investors. Stocks in the Adani Group crashed, and the effects were felt not just in India but around the world.

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SEBI’s New Revelations: The Kingdon Capital Connection and Kotak Mahindra Investment

SEBI has now revealed that Hindenburg Research had a secret deal with Kingdon Capital Management, a hedge fund based in New York. According to SEBI, Hindenburg shared an early version of its report on Adani with Kingdon Capital two months before it was made public. This early warning allowed Kingdon Capital to make huge profits by betting against Adani’s stock before the report caused the market to crash.

SEBI’s findings show that Kingdon Capital invested $43 million in short positions against Adani Enterprises Ltd (AEL), meaning they were betting the stock would fall. When the report was released, the stock did indeed plummet, and Kingdon Capital walked away with a $22.25 million profit.

SEBI also uncovered chat messages between employees of Kingdon Capital and traders at Kotak Mahindra Investments Limited, further backing up their claims of insider trading.

What Does This Mean for Adani, Hindenburg, and Investors?

This new information from SEBI could be a major boost for the Adani Group, which has claimed all along that it was unfairly targeted by Hindenburg. For Hindenburg Research, these revelations raise serious ethical questions about their methods and relationships with hedge funds. It also highlights the risks of short selling, where investors bet against companies in the hopes of making a profit.

Hindenburg has hinted at another major reveal related to India, which has sparked even more speculation. Whether this is an attempt to shift attention away from SEBI’s findings or part of a broader strategy remains to be seen.

One thing is clear: the Adani-Hindenburg story is not over yet. As more details come to light, this saga will continue to be closely watched by investors and financial experts around the world.