Hindenburg founder to close short seller behind $136 billion Adani stocks sell-off

BENGALURU – Hindenburg Research’s founder said he would disband the firm whose reports sparked heavy selling by investors and investigations by the authorities, wiping billions from the market values of companies including India’s Adani Group and US-based Nikola.

Mr Nathan Anderson, who started Hindenburg in 2017, cited the toll of the “rather intense, and at times, all-encompassing” nature of the work as the reason for his decision, in a Jan 15 website post.

Short sellers like Mr Anderson, who managed his firm’s own money but not that of others, bet against companies they believe have accounting issues, mismanagement or fraud, which they find usually after a long period of investigation.

Short selling involves borrowing a stock to sell in the expectation the price will fall, then repurchasing the shares and pocketing the difference. Should the price rise, the seller can be exposed to potentially unlimited losses.

Mr Anderson, who did not immediately respond to a Reuters request for comment, said there was no specific reason for his decision, “no particular threat, no health issue, and no big personal issue”.

“The plan has been to wind up after we finished the pipeline of ideas we were working on,” he said. “That day is today.”

In 2023, another famous short seller decided to shut down his firm. Mr Jim Chanos, best known for his bets against energy trader Enron many months before the company’s December 2001 bankruptcy amid an accounting scandal, closed his hedge fund, saying its business model had come under pressure.

‘Shook empires’

Hindenburg was named after the high-profile disaster of Germany’s Hindenburg airship in 1937, which ignited as it flew into New Jersey.

After finding potential wrongdoing, Hindenburg would publish a public report explaining the case and bet against the target company, hoping to make a profit. Other investors would often make their own trades based on Hindenburg’s research.

On its website, Hindenburg said it looked for “man-made disasters,” such as accounting irregularities, mismanagement and undisclosed related-party transactions.

One of Hindenburg’s reports was a

bet against Indian conglomerate Adani Group

in 2023 that led to more than US$100 billion (S$136 billion) in value wiped off the group’s shares.

The short seller accused Adani Group of using offshore tax havens improperly, which the company denied.

US prosecutors announced in November that Gautam Adani, the billionaire chairman of Adani Group and one of the world’s richest people, had been indicted in New York over his role in an alleged multi-billion-dollar bribery and fraud scheme.

Hindenburg also went after electric truck maker Nikola in 2020, in one of its best-known shorts.

The short seller said Nikola deceived investors about its technological developments. Mr Anderson challenged a video Nikola produced showing its electric truck cruising at high speed, when, in fact, the vehicle was rolled down a hill.

A US jury convicted its founder Trevor Milton of fraud in 2022 over allegations that he lied to investors.

In 2023, the firm shorted Mr Carl Icahn’s Icahn Enterprises and the Jack Dorsey-led Block.

“We shook some empires that we felt needed shaking,” Mr Anderson wrote, adding that nearly 100 people had been charged by regulators “at least in part” because of Hindenburg’s work.

Mr Anderson, a University of Connecticut graduate who started his career in finance at a data company, said in his post that the intensity and focus of his work came at a cost, and he was missing “a lot of the rest of the world and the people I care about”.

“I now view Hindenburg as a chapter in my life, not a central thing that defines me,” Mr Anderson wrote. “So over the next six months or so, I plan to work on a series of materials and videos to open source every aspect of our model and how we conduct our investigations.” REUTERS