Hedge fund’s secret Adani short revealed in blow-by-blow account
A fresh war of words between the short seller — Hindenburg Research — and India’s markets regulator has thrown up an intriguing cast of characters behind the scathing report and related bets against the Adani Group that wiped out as much as $153 billion in market value last year.
The Hindenburg missive sent the Securities and Exchange Board of India, or Sebi, knocking on the door of the US research firm, seeking answers about its “misleading” report. While posting a rebuttal on its website on Monday, Hindenburg added a link to Sebi’s “show cause notice” — a 46-page letter detailing the innards of a well-planned transaction that shook India’s capital markets for months.
Among the new revelations, Sebi’s letter showed for the first time that Hindenburg shared its Adani research exclusively with Kingdon Capital Management LLC before it was published, and that the two firms had a profit-sharing deal. In the end, the New York hedge fund made three times more money on the short bets than Hindenburg itself. What’s more, Kingdon enlisted help from one of India’s biggest banks to carry out the trades.
The extensive notice — sent to Hindenburg, its founder Nathan Anderson, Kingdon’s founder-owner Mark Kingdon and Mauritius-based investor K India Opportunities Fund — is part of Sebi’s investigation into the trading activities surrounding Adani Enterprises Ltd., the flagship company for the billionaire Adani family.
Though Adani repeatedly denied Hindenburg’s allegations, the ensuing stock rout at one point wiped out
