NEW YORK - Gautam Adani, Jack Dorsey, Carl Icahn. Nate Anderson has picked them off one by one.

In mere months in 2023, he erased as much as US$99 billion (S$132 billion) of their combined wealth while knocking US$173 billion off the value of their publicly traded companies.

In an era when prominent short-sellers have retreated from the limelight – fretting lawsuits, short squeezes and government probes – the deft researcher has emerged as the gutsiest bear around.

Allies say he is risking civil suits, physical attacks and potentially even overseas arrest.

The surprise is that Mr Anderson, 39, who runs tiny Hindenburg Research with a team of about a dozen researchers, likely reaped quite small profits from those fights.

Take his report on May 2, accusing Mr Icahn’s holding company, Icahn Enterprises, of overvaluing assets. Within four weeks, the stock’s plunge erased US$17 billion of the billionaire’s wealth.

Yet the combined gain for all investors who shorted the shares before the report would have been about US$56 million if they timed their exits perfectly, according to data from S3 Partners.

And that is not counting the cost of setting up the bets.

In going after Mr Adani’s empire, Mr Anderson shorted bonds.

Veterans steeped in that market say it would have been so difficult to build a sizable position that he probably notched a smaller gain.

And his bet against Mr Dorsey’s payments venture, Block, may have been even more modest, based on market data.

While Mr Anderson declined to comment for this story, the few interviews he previously granted and his talks with confidants – who agreed to speak on condition they not be named – make clear that money is not his main motivator.

The investor, who lives in a rented, two-bedroom luxury apartment in Manhattan, has said he makes a “very good living”.

What drives him is exposing what he sees as misbehaviour and knocking down companies he deems offensively overblown.

One competitor calls it the classic mindset of a short-seller: A compulsion to understand how the world is screwed up and call it out.

This year has brought Mr Anderson an unusual amount of attention.

In January, he rattled international markets by going after the Adani Group – 10 publicly traded companies run by the man who was then the world’s fourth-richest.

Adani Enterprises, the conglomerate’s flagship, lost about half of its market value in days.

In late March, Mr Anderson shorted Block, which tumbled more than 16 per cent by the end of that week.

In May, he took aim at Icahn Enterprises, watching the stock plunge as much as 59 per cent that month.

All three reports – vigorously disputed by the companies they targeted and the men who run them – met or surpassed Mr Anderson’s typical impact on prices.

Since 2020, Hindenburg has taken aim at about 30 firms, knocking their stocks down about 15 per cent on average in the day that followed.

“If you have a track record of being trustworthy then that builds a lot of credibility and the market reacts to that,” said business professor Ian Appel at the University of Virginia’s Darden School, who has studied hedge funds and activist short-selling.

Though losses later eased in all three cases, the stocks were lower as at last week’s close than before Hindenburg’s reports.

Infinite downside

Activist short-sellers are, putting it mildly, controversial.

The mere appearance of research from a prominent bear can send a stock into a tailspin before the market can debate its merit, which can be especially hard on small investors who cannot react quickly. Companies and shareholders have increasingly cried foul, prompting US congressional hearings.

Concerned about market manipulation, the United States Department of Justice has swept up communications between short-sellers in recent years, prompting some, like Citron Research founder Andrew Left, to pull back from the business. None has been accused of wrongdoing.

Mr Anderson is now an outlier of that shake-out.

After a few below-the-radar jobs on Wall Street, he tried earning a living by submitting tips to the US Securities and Exchange Commission’s whistleblower programme, hoping to collect rewards from successful federal investigations.

But he struggled to make ends meet. So he published more reports online. By early 2020, markets were softening and Hindenburg’s impact and reputation were growing.

Yet even if it reaped millions on trades, that is small by the standards of major Wall Street firms. And it is pennies compared with the dollars lost by shareholders.

What makes short-selling such a hard, almost ridiculous, way to earn money is the topsy-turvy nature of the trade. It usually starts with finding a pile of shares to borrow and sell, with the aim of buying them back later for less to book a profit.

The upside is capped at 100 per cent and the downside is potentially unlimited.

Companies have mounted more vigorous responses in recent years, squeezing short-sellers in the market or taking them to court. The broader market has generally been buoyant. One bearish investor described it as “sadness upon sadness upon sadness”.

Then, in 2021, retail stock jocks famously organised on message boards to drive up heavily shorted names like GameStop, squeezing bears and costing some billions.

Mr Gabe Plotkin’s hedge fund Melvin Capital Management ultimately shut down.

It is impossible to pinpoint how much Mr Anderson earned on the Adani short, given he has said only that he shorted US-traded bonds, non-Indian traded derivatives and non-Indian-traded reference securities. One trader calculated that given the relatively small number of US dollar Adani bonds, he could have shorted about US$50 million of the instruments – at most.

But borrowing bonds for a classic short sale can be problematic for prominent bears, because in debt markets it is customary for the borrower to reveal their name as part of the transaction.

Who would want to lend their holdings to someone famous for driving down prices?

Mr Anderson could have shorted stock futures through Singapore, but only one Adani Group company – Adani Ports & Special Economic Zone – has futures trading in the Republic, and the volume is thin.

Open interest in those derivatives on the day Mr Anderson announced his short was worth less than US$50 million.

One market participant suggested Mr Anderson could have gone to a non-Indian bank and entered a swap agreement, with the bank essentially placing a position in Indian traded futures on his behalf. That would have put more money to work. BLOOMBERG