[SmartCat]

Originally Posted by NH08

In all this chaos, got my hands on Adani Ports at 400 today, the only company in Adani stable with a decent PE ratio. Now, keeping a watch on Adani Wilmar and Power. Hope these also become attractive enough.

Adani Ports has low PE, low debt, high RoE, reasonable revenue/profit growth and long history of dividend payouts. But it still reminds me of this scene from Hot Shots:

[Murli]

On a call with investors Thursday, Goldman Sachs trading executives expressed the firm’s view that Adani debt had hit a floor in the short term and bonds of Adani Ports & Special Economic Zone Ltd. have become interesting at the current price due to the value of that company’s assets, people with knowledge of the matter said. Before Adani pulled a stock sale, JPMorgan credit analysts said in a note to clients that they saw value in debt of some Adani operating companies.

Goldman said it had traded about $170 million of Adani bonds on Thursday before the call, attracting interest from global funds and distressed investors outside of Asia looking to scoop up the debt from an early stage, the people said.

Bonds of firms related to Adani plunged to distressed levels after the firm canceled a planned $2.4 billion offering Wednesday, even though it had secured money from the Middle East and India.

https://www.bnnbloomberg.ca/goldman-...ents-1.1878606

[V.Narayan]

Question for the experts - are there derivatives in USA with the Adani stock as the underlying asset? I ask because I am curious how Hindenburg has depth in a bond derivative market based on Adani debt that they claim they are shorting. I am no expert in this field but my limited understanding is that a bond price can sink till it is at a 0% rate of return; or can it sink further. Why would an investor be interested in a negative priced bond {or its derivative} when the upside is so limited. I can understand an equity share based derivative having a massive downside from Rs 3000 to Re 1 or lower - that Hindenburg could make a lot of money on. Grateful for some education on these. Of course I might be simply exposing my ignorance.

The other question on my mind is this - is Hindenburg working alone or does he have some collaborator working with him on this - not on the shorting bit but on the researching bit. Such voluminous research sustained over two years, across oceans, is hard to believe coming from a 10 employee outfit but it is well within the realm of a competent economic intelligence agency of a large country. It is just the sort of thing the Chinese like to do.

Adani & Co have adopted the high ground by refunding the FPO proceeds. Next they will early repay some small part of his debt to signal strength - that's what I would do in their shoes. Where they will get handicapped at least for the medium term will be in their ability to raise term debt in the $ market.

The piece I am not confident about is SEBI getting to the bottom and acting on it. One good thing to come out of this is that the Adani Group's dadagiri and extreme viciousness with other industrialist groups will tone down.

[ajmat]

Originally Posted by V.Narayan

The other question on my mind is this - is Hindenburg working alone or does he have some collaborator working with him on this - not on the shorting bit but on the researching bit. Such voluminous research sustained over two years, across oceans, is hard to believe coming from a 10 employee outfit but it is well within the realm of a competent economic intelligence agency of a large country. It is just the sort of thing the Chinese like to do.

Maybe Adani trod on someone’s toes in one of his emerging industries. Perhaps that person/ entity was well funded, well connected in the overseas capital market.

[SmartCat]

Originally Posted by V.Narayan

Question for the experts - are there derivatives in USA with the Adani stock as the underlying asset?

Hindenburg very likely shorted Adani group shares via the infamous P-notes (participatory notes)
https://en.wikipedia.org/wiki/Participatory_note

Participatory notes are instruments used for making investments in the stock markets. However, they are not used within the country; they are used outside of India for making investments in stocks listed on Indian stock markets, which is why they're also referred to as offshore derivative instruments.

I ask because I am curious how Hindenburg has depth in a bond derivative market based on Adani debt that they claim they are shorting.

No. Hindenburg said they are short selling US listed Adani group bonds directly (not derivatives of bonds). So just to be clear, Hindenburg is:

- Short selling Adani dollar denominated bonds
- Shorting Adani group stocks (using derivatives)

I am no expert in this field but my limited understanding is that a bond price can sink till it is at a 0% rate of return; or can it sink further.

Just like how stock price can go from 100 to zero, a bond price can go from 100 to zero too. So for a short seller, the payoff is the same, if his call turns out to be right. When you invest money in a bond, the risk is NOT limited to interest payouts. The bigger risk is in losing the principal entirely. Eg: Yes Bank AT1 bonds.
https://economictimes.indiatimes.com...w/74634741.cms

Hindenburg is playing on the fear in the bond market here. If enough investors panic and sell off Adani bonds (along with additional short selling pressure from Hindenburg's bond sales), they can make a tidy profit.

[Linuskm]

Originally Posted by V.Narayan

Question for the experts - are there derivatives in USA with the Adani stock as the underlying asset? I ask because I am curious how Hindenburg has depth in a bond derivative market based on Adani debt that they claim they are shorting.

CDS credit default swaps are a way to make money when bonds are failing. Think of it like a insurance taken in case the borrower has failed to honor the payments. You can trade a CDS for a higher price when the bond rating takes a hit.

[anandhsub]

Originally Posted by V.Narayan

bond price can sink till it is at a 0% rate of return; or can it sink further.

You are confusing a bond's price with its yield.

Currently Adani green bonds maturing in Sep 2024 are trading at a price of ~ 71 cents on the dollar which is an yield of close to 30%.

if you think Adani wont default then buying at 71 and holding to maturity ( ~ 18 months) will fetch you a 30% annualised rate of return.

What Hindenburg thinks is that Adani will default on both interest payments and the maturity amount due to which the price will go down to 0.

Shorting a bond is very similar to shorting a stock. Find someone to borrow the bond from sell it, and buy it back at a lower price and then give the bond back to the lender.

[aim120]

Originally Posted by ajmat

Maybe Adani trod on someone’s toes in one of his emerging industries. Perhaps that person/ entity was well funded, well connected in the overseas capital market.

I posted this earlier, this what the Irish Times journalist thinks.
https://www.nakedcapitalism.com/2023/01/246260.html

This mostly looks like western intelligence kind a work, since its going against US interests. Even the Grim Reaper aka Victoria Nuland was in India while this happened and when you come for talks, you need to have a upper hand in the negotiations.

Adani ports is going to be involved in Russia- Iran-India corridor, not only will this corridor not be trading in dollars, its fully immune from sanctions including from shipping insurance. Only weak link is India, which has not been sanctioned yet, while the other two countries cannot be sanctioned any more.

This looks like a soft warning for India's neutral stance and the proposed BRICS currency.

This along with the BBC hit job. I think its probably the Five Eyes intelligence working here.

[ninjatalli]

Originally Posted by V.Narayan

The other question on my mind is this - is Hindenburg working alone or does he have some collaborator working with him on this - not on the shorting bit but on the researching bit. Such voluminous research sustained over two years, across oceans, is hard to believe coming from a 10 employee outfit but it is well within the realm of a competent economic intelligence agency of a large country. It is just the sort of thing the Chinese like to do.

This slightly dated NYMag article might shed some light to answer your other question. Quoting the relevant portions. The latter part of the article details how Anderson (Hindenburg owner) got his first major break with the Nikola form report.

Anderson declines to describe his stock-trading strategies in detail, except to say he collaborates with a group of roughly ten “investors” — presumably wealthy individuals or financial institutions, although he won’t name names. For each investigation, he may take on one backer. The investor gets an advance look at the report that allows that party to take a short position, and Hindenburg takes a cut of the profits on the trade. Anderson says his investors sometimes pass along tips about potential targets. “We develop our own leads, and sometimes market participants share leads with us,” he says. But he claims nothing is spoon-fed: “We do our own research.” And if a lead doesn’t pan out, he says, Hindenburg doesn’t publish anything.

There is little doubt that short researchers often have undisclosed relationships with interested parties — for example, angry ex-employees looking to take down their old firm
...
the Department of Justice had initiated an “expansive criminal investigation” into allegations of “symbiotic relationships” between hedge funds and activist researchers and is examining prominent players in the industry.
...
The full scope of the inquiry is unknown, and Anderson says Hindenburg has received no indication it is a subject of the DOJ’s scrutiny.

Source: NYMag

[V.Narayan]

Originally Posted by SmartCat

Hindenburg very likely shorted Adani group shares via the infamous P-notes (participatory notes)
...

Originally Posted by Linuskm

CDS credit default swaps are a way to make money when bonds are failing.....

Originally Posted by anandhsub

You are confusing a bond's price with its yield.
....

Originally Posted by ninjatalli

This slightly dated NYMag article might shed some light to answer your other question....

A sincere thanks for taking the effort and time to put forth your explanations.

Originally Posted by ninjatalli

Anderson declines to describe his stock-trading strategies in detail, except to say he collaborates with a group of roughly ten “investors” — presumably wealthy individuals or financial institutions, although he won’t name names. For each investigation, he may take on one backer. The investor gets an advance look at the report that allows that party to take a short position, and Hindenburg takes a cut of the profits on the trade. Anderson says his investors sometimes pass along tips about potential targets.

Thanks for sharing. Akin to insider trading with a twist in my uneducated opinion.

Originally Posted by aim120

I posted this earlier, this what the Irish Times journalist thinks.
https://www.nakedcapitalism.com/2023/01/246260.html
This mostly looks like western intelligence kind a work, since its going against US interests....
Adani ports is going to be involved in Russia- Iran-India corridor, not only will this corridor not be trading in dollars, its fully immune from sanctions including from shipping insurance. Only weak link is India, which has not been sanctioned yet, while the other two countries cannot be sanctioned any more. This looks like a soft warning for India's neutral stance and the proposed BRICS currency. This along with the BBC hit job. I think its probably the Five Eyes intelligence working here.

Originally Posted by ajmat

Maybe Adani trod on someone’s toes in one of his emerging industries. Perhaps that person/ entity was well funded, well connected in the overseas capital market.

Originally Posted by V.Narayan

The other question on my mind is this - is Hindenburg working alone or does he have some collaborator working with him on this - not on the shorting bit but on the researching bit. Such voluminous research sustained over two years, across oceans, is hard to believe coming from a 10 employee outfit but it is well within the realm of a competent economic intelligence agency of a large country. It is just the sort of thing the Chinese like to do.

The talk in the Delhi circles, I mean the real Lutyens circle, is that notwithstanding Adani's misdeeds some sophisticated national intelligence agency with a geo-political agenda is involved. Of course Adani provided them with a platter to feast on. Senior Adani employees think it is the Chinese. But I tend to believe @aim120 is right that this could be a Western intelligence agency. Of course all this should not detract from his stock price fiddling.

[dragracer567]

It’s one thing about who’s right or wrong, but it’s really deplorable that the Adani group is using the nationalism card to deflect blame. Companies aren’t political parties for this card to work.

[neeraj0272]

The most basic issue that Hindenburg raised and indeed subsequent actions of the promoters with regard to FPO put a stamp on is the promoters involvement in stock price manipulation to jack up stock prices and then raise loans pledging these jacked up stocks and repeating this cycle until the time is right to sell gullible investors FPO at insane prices. These FPOs would have kept coming at regular intervals at astronomical prices but for Hindenburg.
I believe it was the objective and modus operandi of the promoters to earn their riches by such viscious tools. This is the same modus operandi of the startups and VCs which is also in vogue nowadays.
Meanwhile investors are happy playing musical chairs in their greed but when investors get caught they start crying!
I see media and public counting the 100 b lost or Adani slipping to 22nd in rich list but how does it matter if this wealth is ill begotten.
Bigger q is how the State has actively connived to let a businessman run such a con scheme.
LIC and SBI should explain whether their funding was used for running bonafide businesses or to manipulate stock prices through shell companies. Today both are saying that their investments are safe but does that mean their money is available for running unethical or illegal activities as long as their investment is safe?

I dont see media or public discussing the ethics or illegality as much as they are discussing the billions lost or position on the rich list.
Mean while some are batting for Adani saying that there are always crony capitalists or how Adani is important for infrastructure but this is far beyond crony capitalism. It is all about selling stock worth 100 or 200 to public at 3000 and make a killing. This is all Hindenburg alleged and this should be answered.

[deehunk]

There will soon be a film about this too depicting some rival country conspiracy in Bollywood, the hero is anybody's guess.

[AZT]

Originally Posted by aim120

I posted this earlier, this what the Irish Times journalist thinks.
https://www.nakedcapitalism.com/2023/01/246260.html

You should have probably added the main quote from the article

But what if the biggest promoter-political-capitalist of all were to come under unsustainable pressure? It is not only inequality and power imbalances that are at stake, but the financial stability of the Indian economy. …

Adani’s rise and the fortunes of Modi and the BJP are closely tied

This guy is corrupt and a leech and for the first time since 2014 he's seeing the outcome. The Ambani, Tata, and Birla groups on the other hand are unscathed and continue to add value to society. Not saints but all else aside, their existence is a net positive to society. Adani is more like a tumour which has grown too big, or rather allowed to leech on and grow.

The Indian economy is strong and will continue growing irrespective of whichever politician is in power. We need to separate the country from a business house. This whole Nationalism and International Conspiracy trope is being pushed out by the by the Adani PR team. Most blogs will publish anything you want as long as they get $$$.

[Torq]

Crony capitalism and what not.. Adani might not be the saint what the short term investors that may have profited multiple fold from, think of. He may not be the ethical/ moral industrialist we were hoping for to build our nation. Ill-begotten wealth, duping small investors.. Its never going to sit well with them. When the retail investors start dumping, entire index will feel the heat.

But is he a catalyst for some advanced geo-politico-economic war? Is India being targeted indirectly for siding with Russia, or rather not taking a firm stand against Russia in the R-U war? Simply bringing down Adani empire will trigger a massive sell-off at a lot of other indirectly related financial institutions too.

Andrew Korybko, a Moscow-based political analyst believes the BBC documentary is part of efforts to pressure Modi and writes:

It’s suspicious that the previously unpublished British Foreign Office report was highlighted by state-run BBC over two decades after it was written, shortly after the New York Times (NYT) implied that externally exacerbating communal tensions will be the West’s Hybrid War means of punishing India for [defying the West on their anti-Russian sanctions], and around the time that India secured its rise as a globally significant Great Power. These observations suggest that the documentary’s timing wasn’t coincidental.

This raises some interesting questions. The answers to which, we as common investors and aam junta will never get to know.