SAN FRANCISCO – Over the past few years, stock researcher and investor Nathan Anderson has made a name for himself with his analyses that send stocks sinking.

Now, the activist short-seller behind Hindenburg Research is going after his biggest game yet – what Hindenburg is calling, with characteristic chutzpa, “the largest con in corporate history”.

His target: Indian industrialist Gautam Adani, a figure even richer than fellow billionaires Bill Gates and Warren Buffett, with a net worth of US$113.4 billion (S$148.8 billion), according to the Bloomberg Billionaires Index.

Hindenburg on Tuesday levelled a series of extraordinary allegations about the sprawling Adani Group conglomerate – the result, it said, of a two-year investigation into what it is characterising as a brazen scheme of stock manipulation and accounting fraud dating back decades.

The report, which the Adani Group on Wednesday dismissed as “a malicious combination of selective misinformation and stale, baseless and discredited allegations”, promptly wiped US$12 billion off its market value. Indian markets were shut on Thursday for a holiday. 

The Adani Group on Thursday said it is evaluating relevant provisions under US and Indian laws for “remedial and punitive action” against Hindenburg Research.

It is a remarkable turn for Mr Anderson, who first got Wall Street’s attention with takedowns of electric-vehicle (EV) makers Nikola and Lordstown Motors. Little Hindenburg has never swung at a company as big and powerful as the Adani Group. Mr Anderson briefly bet against Twitter as Mr Elon Musk was buying the company and then turned bullish on the stock last July.

So the question is whether other investors will heed Hindenburg’s warnings about Mr Adani, whose dizzying wealth cuts across India’s economic and political life.

It is difficult to overstate just how lopsided this fight is. Mr Adani has spent four decades building a business empire spanning energy, agribusiness, real estate and defence, among other sectors. He is considered to have a close relationship with Indian Prime Minister Narendra Modi, with his ambitious goals closely aligned with the government’s priorities.

Mr Anderson’s New York-based firm – technically a research and trading outfit, not a hedge fund with outside investors – is less than five years old and wagers its own money in the markets. Even in Manhattan’s financial circles, he is hardly a big name.

Yet, Mr Anderson has managed to make a mark lately. Hindenburg, named after the German airship that blew up in 1937, has targeted about 30 companies since 2020. On average, their stocks fell about 15 per cent the next day, and were down 26 per cent six months later, according to calculations by Bloomberg News.

Mr Anderson declined to comment for this story. But Hindenburg Research is bracing itself for a blow-by-blow response from the Adani Group.

Short-sellers, and the controversies that often surround them, have been around for as long as there have been stocks. The Dutch briefly outlawed the practice in the 1600s after traders shorted the Dutch East India Company, purportedly the first company in the world to issue shares. Lately, the United States authorities have looked into whether some shorts have occasionally colluded to attack companies. Hindenburg has not been accused of wrongdoing, but some of its peers have been sounding the retreat.

Hindenburg’s modus operandi is simple. Mr Anderson and his team dig into companies and look for malfeasance.

One high-profile example: electric-vehicle maker Nikola, which Hindenburg called an “ocean of lies”. Last October, Nikola founder Trevor Milton was convicted of defrauding investors.

For all the noise that Hindenburg makes, Mr Anderson himself keeps a low profile.

He grew up in a small town in Connecticut and earned a business degree from the University of Connecticut.

During college, Mr Anderson lived for a time in Israel, working as a paramedic while taking classes at Hebrew University. He later worked for a financial analytics company before taking a job checking out potential deals for the investment firms of wealthy families. His passion, he has said, is to “find scams”.

Early on, he looked into potential Ponzi schemes and occasionally teamed up with forensic accountant Harry Markopolos, who famously tried to warn the US federal authorities about Bernard Madoff. Mr Anderson has called Mr Markopolos a role model.

Around 2014, Mr Anderson started filing whistle-blower complaints with the US authorities in the hope of collecting bounties for unearthing fraud.

One of his first big takedowns was looking into the hedge fund Platinum Partners with Mr Markopolos. Seven executives were subsequently charged with fraud.

Today, Hindenburg employs about 10 people, a mix of former journalists and analysts. Sometimes, hedge funds have joined in on its trades. BLOOMBERG