The short seller that took on Gautam Adani made surprisingly little money

By Diksha Madhok, CNN

New Delhi (CNN) — When Hindenburg Research published a report into Gautam Adani’s sprawling business empire in January 2023, accusing Asia’s then richest man of fraud going back decades, the impact was immediate and explosive: over $100 billion was wiped off the value of his companies.

Eighteen months on, Adani — who has denied any wrongdoing — has largely recovered from the broadside and the tiny US short seller has revealed how much it made betting against the Indian billionaire: just over $4 million.

That figure, disclosed for the first time by Hindenburg, was published on the company’s website on Monday, along with details of a letter it said it had received from India’s markets regulator.

According to the New York-based firm, the Securities and Exchange Board of India has alleged that Hindenburg’s report on Adani contained inaccurate statements meant to “mislead readers.” CNN has asked SEBI and the Adani Group for comment.

This is “an attempt to silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India,” Hindenburg said in its statement.

In its blistering report last year, Hindenburg had accused the Adani Group of “brazen stock manipulation” and questioned the “sky-high” valuations of the ports-to-power conglomerate’s firms. Hindenburg said it had taken a short position in the group’s companies, meaning it would benefit if their shares fell.

The short seller, named after the 1937 airship disaster, said in Monday’s statement that it made just $4.1 million in gross revenue through gains related to Adani short positions from a relationship with unnamed investor and about “$31,000 through our own short of Adani US bonds.”

“Net of legal and research expenses (including time, salaries/compensation, and costs for a 2-year global investigation) we may come out ahead of breakeven on our Adani short,” it added.

Hindenburg’s report caused one of the most stunning upheavals in India’s corporate history. The Adani Group immediately denounced the accusations as “baseless” and “malicious,” but failed to halt the staggering stock market meltdown that followed.

Adani’s personal fortune was also hammered, collapsing by more than $80 billion in the month following the release of the report.

But the group has made a remarkable comeback since then. Shares in most of Adani’s 10 listed firms have rallied this year, and the infrastructure tycoon was briefly back as Asia’s richest man. He is currently in second spot, behind fellow countryman Mukesh Ambani, according to Bloomberg’s Billionaire Index.

SEBI launched a probe into the group after the Hindenburg report, but in January India’s top court ordered the market regulator to wrap up its investigation quickly and said that no further probes into the group were needed.

“In our view, SEBI has neglected its responsibility, seemingly doing more to protect those perpetrating fraud than to protect the investors being victimized by it,” Hindenburg said on Monday.

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