[amit1agrawal]

Keeping aside how good or bad the Adani group is, If Hindenburg was here to change the world with their honest research, then they should not be in the business of short-selling. Period. The timing also makes me suspicious of their real intent.

[Sran]

Many posts about short selling not being illegal and raising questions why a small firm consisting of 25 years old are auditing the company, themselves fail to answer whether it is illegal for a small firm of 25 year old auditing? Is there any law that says only big 4 can audit big companies? Hindenburg itself is a small research company with less than 10 employees. Then there are people who are singing praises for how the big 4 have ideals and best hiring practices. Lets not forget the erstwhile part of big 8, Arthur Anderson, which had 28,000 employee and failed to properly audit both Enron and Worldcom, making American pension funds loose some 20,000 crore rupees directly. Here is famed another one big 4, KPMG: The USA’s accounting watchdog has fined KPMG $7.7m and sanctioned four of its auditors over a series of international offences. The watchdog claimed hundreds of KPMG’s UK staff cheated on exams, including the tests auditors are required to pass to maintain their professional certifications. The US Public Company Accounting Oversight Board (PCAOB) fined KPMG $2m over claims the firm’s UK business failed to detect or prevent the widespread sharing of answers from 2018 to 2021. https://www.cityam.com/kpmgs-uk-busi...ating-scandal/

Ernst & Young, one of the top accounting firms in the world, is being fined $100 million by federal regulators after admitting its employees cheated on their ethics exams. Ernst & Young also had internal reports about the cheating but didn't disclose the wrongdoing to regulators during the investigation. The SEC said that the cheating went on for many years, going back to 2012.https://www.npr.org/2022/06/28/11080...n-ethics-exams

KPMG has settled allegations that they discriminated against Asian job applicants in their Short Hills, New Jersey office location. They settled these allegations with the U.S. 80% of PwC employees are under the age of 36 and there have been lawsuits about age discrimination.

For ten years, auditors at Ernst & Young certified Wirecard's annual financial statements. They failed to uncover that a network of fraudsters were using accounting tricks to write billions into Wirecard's books over several years. Hundreds of Wirecard employees lost their jobs, and thousands of investors lost a total of 40,000 crore rupees. Why didn't the auditors recognize the fraud?

21 Scandals, Settlements and Corporate Crimes of Big 4 Accounting Firms in 2019. Yes only in 2019. https://facelesscompliance.com/7604/...-firms-in-2019

Read more about the big 4 business practices in detail here. Data from the Public Company Accounting Oversight Board, the U.S. auditing regulator, suggests that auditing firms fail at an alarmingly high rate, with 20% of the Deloitte audits examined deemed inadequate, along with 23.6% at PwC, 27.3% at EY, and 50% at KPMG. https://www.whistleblowers.org/high-...ounting-firms/

I mean who can forget the bright employees of big 4s, PwC in this case, when they handed over wrong academy awards in 2016. Look how bright their employees are who can't even hand over proper envelopes.

In India, Deloitte used to audit IL&FS and failed miserably and whistle blowers blamed Deloitte, its sole auditor till 2016 of being in cahoots.

Satyam's audit was done by PwC and what happened for years, the books were cooked and PwC had it jaws on floor when it was banned for a year.

IFIN scandal done by KPMG, for which its affiliate was banned for 5 years. Then comes E&Y affiliate Batliboi and co. LLP, which is banned by RBI.

Please avoid making sweeping statements about Big 4s hiring and auditing practices.

I have high hopes from educated users here but they go into moralistics rants instead of looking or understanding the bigger picture. Creating infrastructure needs trillions of rupees. How is government going to raise it? This is where corporates come in. World bank or IMF have quotas and so does Asian development Bank. Why do you think Indian government needed to be in SCO run by China or create BRICS, to create easy inflow of required funds. West is not going to provide easy and cheap loans or handout cash. We have to be economically viable. Adani's are not raising money from Indian banks, they are raising it globally through bonds and securities. These are through lawful means by issuing bonds and pledges. Adani's total borrowing from Indian financial institutions is not more than 70,000 crores(10 billion dollars) i.e around 40% of its total debt. Then We have third class people who want ever increasing MSP and do not care about rising costs that they pass. USA helped fuel its economy on child labour for 100s of year by paying them little and making it lawful for corporates to employ young person as low as 14 years of age.

Adani is not someone who has no assets. They are a high asset company with ACC alone worth 6-8 billion dollars. What do you think suddenly Mundra port would go useless? The transmission line contracts that they have would remain unpaid by the state governments or GoI? These are assets and Adani has hundreds of them. Adani's do not have telecom companies that are high risk or airlines which burns through cash which both Birla or Tata have.

The question is then why would a notorious short seller who themselves are under investigation by their countries justice department publish a dubious report? We need money to fuel our growth, trillions of it. Would you like Govt-sec being traded and shorted which in turn could fuel inflation and that too after covid? Why South Korea freed corrupt Samsung chairman and why it backs Hyundai, because it helps them in growth. Do you think Dow and 3m or PG&E, even after killing and maiming lakhs of their own countrymen are running without American sovereign support? The fundamental thing is money and how to get it. Is USA SEC sleeping when the crypto scam is happening and are they not having dinner and being in bed with corrupts? Goldman sachs and BCG mangers are being given plum posts in us gov for decades and they in turn write the rules. US has announced a trillion dollar infrastructure fund, they can print it out of thin air but maybe they want their own capital out flow restricted to some other country like India.

Now a new name has surfaced, investor Bill Ackman, not many may that he works closely with short sellers especially notorious Citron capital. Just to ruin a company, he spent over 50 million dollars in 2015, lied about the company, for which he is still under American FBI investigation because he was short 500 million dollars on that company and with the help of Bloomberg he did it. The same Michael Bloomberg who he financed for American Presidential elections few years later.

As someone posted Patriotism is the last refuge of .... , understand that it's not a gotcha moment. The context in which Samuel Johnson said it was about a political Party known as "Patriot party"during his time. Its use though has been historically diluted and deformed from how it was said and meant and this is what is happening now. A tidbit, before his "dictionary" i.e.1775, English language didn't had formalised spellings.

[Dr.Car]

Originally Posted by V.Narayan

What will be the end result - some damage control by Adani; some softening of their debt:equity; some footwork by those close to the group; infrastructure projects will continue largely unfettered; Adani Group will become a few ounces more careful with their brazenness and Hindenburg will seek its next target. Don't expect anything dramatic.

Well, does this mean that all the talk about PSUs getting to an extent of irreparable damage is unlikely to happen?

[download2live]

What a thread ! From a pure financial point of view I hope some of our members made some serious cash on its meteoric rise.
When a company is shorted you have to understand that there is a huge and very complicated machine which is starts off in background.

The usual weapons are deployed: Twitter, Reddit threads and media.

The way short attack works is something to be seen. I invested in a company which came under a short attack. There were people (bots farms?) paid to monitor Reddit, Twitter and other such social media outlets. Any positive discussion was immediately shot down with downvotes and negative comments. The data was cherry picked to paint and image of doom and gloom.

Finally it was the Director of the company who came to rescue and started buying shares. The attack lasted a whole year and finally shorts reduced their positions. Not at the great profits they expected though. The losers were people who got influenced and sold out.

It was a revealation to me to find later that actually big investment banks were also involved in short attack. Then there were bots deployed who were manipulating the share prices using some legal loopholes and algorithmic magic. I never knew that fake orders can be put up and non-existing shares can be traded to influence market. I have kind of given up on this now.

My advice to investors trying to make sense of truth using social media/media articles is simple: Stay away. You cannot beat the system. Do not listen to what they say. Try to find what they are doing. Unfortunately that is something which is not possible for a common man.

Warren Buffet is the guiding light here. Do Adani businesses have a moat? Will it be difficult for someone to break into it and replace?

[dailydriver]

Originally Posted by download2live

Warren Buffet is the guiding light here. Do Adani businesses have a moat? Will it be difficult for someone to break into it and replace?

Isn’t at least a part of the perceived problem and the concomitant discussion focused on the fact that the protagonist’s political clout is the unassailable moat that has brought him/his business so far?

[extreme_torque]

Originally Posted by Sran

Many posts about short selling not being illegal and raising questions why a small firm consisting of 25 years old are auditing the company, themselves fail to answer whether it is illegal for a small firm of 25 year old auditing? Is there any law that says only big 4 can audit big companies?

You mean the next best thing to big 4 is a non descript finanical firm with barely any employees and a few 20 odd year olds. Does that fill you in with confidence or have you made up your mind already?

Originally Posted by Sran

Hindenburg itself is a small research company with less than 10 employees.

OpenAI of the ChatGpt fame has 375 employees. I dont think number of employees was ever a concern if the firm in question had a claim to fame especially when auditing a large conglomerate with a complex corporate structure spannning various tax heavens and dubious/suspect locations. If you were traveling in a jumbo jet, would you be confident travelling in it if the software flying the autopilot was written by a non descript small firm which no one has ever heard of?

Originally Posted by Sran

I have high hopes from educated users here but they go into moralistics rants instead of looking or understanding the bigger picture.

Please explain the bigger picture to us because our objections including our understanding sounds like "moralistic rants" to you? A large international conglomerate is being run like a family business with most people in key decision positions being the family members themselves which have been subject of serious prior financial fraud. Is this moralistic rant? If a business can run with impunity along with the backing of the administration - where does it leave the rest of us which has to abide by the rules? How does it foster innovation, create competition and distribute wealth evenly? Might is right is a serious slippery slope.

Originally Posted by Sran

Adani's are not raising money from Indian banks, they are raising it globally through bonds and securities. These are through lawful means by issuing bonds and pledges. Adani's total borrowing from Indian financial institutions is not more than 70,000 crores(10 billion dollars) i.e around 40% of its total debt.

Only 40%? Enough said.

Originally Posted by Sran

The question is then why would a notorious short seller who themselves are under investigation by their countries justice department publish a dubious report?

Short selling is legal, using shell companies to increase promotor holdings to manipulate stock market and insider trading is not. Why dont you tell us what your objection with the report is apart from calling it dubious?


I am deliberately left the "straw man" parts of the post because it doesnt concern the subject in question or the research that is being talked about in this thread. Lets just concentate on this report and please explain what is your objection with the findings? I am genuinely curious as to how do you reconcile with this.

[neeraj0272]

https://twitter.com/OzonizerR/status...TjQ6AnYyw&s=19

"The difference here is Adani is tasked with building large scale infrastructure (the kind of relationship they have with the government is questionable and worth a different debate). But if they manage to deliver even 50% or the infra they’re taking on, they may create value"


Looks like Adani has been commissioned to build Tajmahals for New India.

And I am sure that these kind of people will be satisfied with the delivery rate of even 0.50% with the only caveat being that deliverer should be their chosen one.

[thanixravindran]

I received this from WhatsApp on the debt structure. If it is true 30% exposure to US bonds, is this where the short positions are? I read news reports of few cents movement in the bonds in last few days. Can someone explain what happens next? Will there be no fresh loans for working capital or there will be any fire sale of bonds?

[Arun_S]

Having learnt lessons from Satyam and Unitech, I try to look for decent ethical practices in a company, some how i was not comfortable with this rocket raise of share prices so stayed away.

As per Akshat Shrivastava if anything happens to Adani, all our other stock investments will be blocked for atleast 2 years, this is my biggest my concern now.

Looks like all those invested in markets need to pray for Adani .

[RaghuVis]

A day after wiping out 90 billion dollars in the stock market, not sure how to react after seeing this in today's newspaper!

[SmartCat]

Originally Posted by thanixravindran

I received this from WhatsApp on the debt structure. If it is true 30% exposure to US bonds, is this where the short positions are? I read news reports of few cents movement in the bonds in last few days. Can someone explain what happens next? Will there be no fresh loans for working capital or there will be any fire sale of bonds?

If there is a firesale on Adani bonds, the existing bondholders will see mark to market losses - that is, loss on paper. It is a bit like you buy a stock for Rs. 100 and now it is trading at Rs. 80. Here, Rs. 20 per share is MTM loss. But you will actually lose money ONLY if you sell your shares at Rs. 80.

But unlike a stock, the bond price is guaranteed to go back over the purchase price, provided Adani continues making interest/principal payments.

For Adani, negative sentiment on its bonds will make it difficult to raise further capital via bonds, loans or equity. Even if they manage to raise capital via debt, it will be at a higher interest rate - because now the risk for lenders is higher.

[Hayek]

Originally Posted by SmartCat

If there is a firesale on Adani bonds, the existing bondholders will see mark to market losses - that is, loss on paper.

Most bond holders are institutions, who have to mark to market daily. So for them, it is a real loss. The bigger issue is if the rating agencies conclude that there is some truth here and down grade - which will lead to even steeper losses and higher funding costs. So Adani needs to respond more clearly than they have so far, and demonstrate why the allegations are false. Else they will have real losses here.

[whitewing]

Originally Posted by Sran

...
The question is then why would a notorious short seller who themselves are under investigation by their countries justice department publish a dubious report? We need money to fuel our growth, trillions of it. Would you like Govt-sec being traded and shorted which in turn could fuel inflation and that too after covid? ...

Civilized society can exist only if there is rule of law.
Short selling is not banned in the USA, if Adani had a problem with the possibility of being exposed to that, the should have only listed their debt on the Indian markets, where perhaps would be able to manage the situation better.

I think in broad strokes, short sellers can hurt legitimate businesses. However in this case (which is currently being discussed), the short seller has opened a can of worms that has been long due. I still wonder why SEBI has taken the time it has "investigating" this issue, while an independent firm has been able to a large degree demonstrate that there is undeclared promoter holdings.
If not for this report, what else would have brought in focus and action on this front?

I'm sure Adani's have enough heft to defend themselves via legal action if the the report is misplaced. How much time does it take for the Adanis to say that the bunch of holding companies are controlled by the Adanis and that they have not indulged in round tripping?

There should be a disincentive to people who take any available (illegal) means to make money and avoid tax - the cost of which eventually gets borne by the normal taxpayer like you and me.

BTW: The little I read about these "Investigation" by SEC on the short sellers, there are no accusation of wrongdoing only "requests for information".

[V.Narayan]

Originally Posted by Dr.Car

Well, does this mean that all the talk about PSUs getting to an extent of irreparable damage is unlikely to happen?

Doctor, Adani's public issue, now open, will go through albeit with a lot of help from New Delhi. Forget Adani, even the Govt of India would not want the issue to fail given its size and focus on infrastructure. This would have been so even if this was say the Tata Group doing the issue. I do not see Adani defaulting on their loans despite the high leverage. Contrary to popular belief a large if not a majority of the group's debt comes from private sector banks such as ICICI, HDFC etc. I realize several posts here are predicting the collapse of Adani, India's stock markets, PSU banks but with my limited experience as an investor I don't see any of that happening. My conversations with the lead investment officer in two of the best known wealth management teams share this view.

Originally Posted by download2live

When a company is shorted you have to understand that there is a huge and very complicated machine which is starts off in background.

The way short attack works is something to be seen. I invested in a company which came under a short attack. There were people (bots farms?) paid to monitor Reddit, Twitter and other such social media outlets. Any positive discussion was immediately shot down with downvotes and negative comments. The data was cherry picked to paint and image of doom and gloom.

It was a revelation to me to find later that actually big investment banks were also involved in short attack. Then there were bots deployed who were manipulating the share prices using some legal loopholes and algorithmic magic. I never knew that fake orders can be put up and non-existing shares can be traded to influence market. I have kind of given up on this now.

Thank you for your post and explaining what happens in straight simple terms. I have been trying to put across on this thread that while Adani are no saints, Messers Hindenburg are no Robin Hood though their PR tries to position them as one.

Originally Posted by whitewing

I still wonder why SEBI has taken the time it has "investigating" this issue, while an independent firm has been able to a large degree demonstrate that there is undeclared promoter holdings.

Dear @whitewing, a very good question that would be on several minds. This is so because SEBI has to investigate and prove matters beyond all reasonable doubt that can withstand impartial judicial scrutiny. SEBI for all its faults, is a national institution that has to be held accountable to a higher standard than social media kangaroo courts {like this thread} and click-bait titles {like Hindenburg's}. Hindenburg is answerable to effectively no one and so long as their homework can pass the minimum SEC smell test for research reports they are fine. Would you want a court to declare you guilty, without a proper investigation, on basis of say some accusation hurdled at you on social media or the press by some one? There is a sea of a difference between national institutions such as SEBI/SEC and robber barons like Hindenburg. How do we, as impartial observers, know whether what Hindenburg is claiming is true or not. Their saying so doesn't make anything true. Please let's not assume that pearls of truth fall from the tongues of the likes of Hindenburg. As I have said in each of my posts Adani have more than their fair share of skeletons, the market suspected this & most investors acted accordingly a long while ago. Hindenburg know Adani or any other target will not drown themselves in the US court system so they can fire their accusations without sharing the documents to back their allegations and clock in their shorting gains. Ideally Madhavi Buch should say Dear Hindenburg please share your hard evidence so I can do my investigation. That is when the real fun will start.

All,

Most countries built world class infrastructure of scale only when private entrepreneurial talent and leadership was married to Govt policy/fiscal support and with banks. Even the Govt PSUs {e.g. NTPC or ONGC} that built great infrastructure did this only with active support from the Govt and financial institutions. The Japanese, Koreans, Chinese & Americans all evolved their own practices around this. Corruption in one form or the other crept into each case. India needs to evolve its own practices and mechanisms of building world class infrastructure on a large scale and fast. Like it or not the Adani or Reliance or Vedanta model are nascent reflections of this. Better to make it formal, set some governance parameters and get many others to participate.

One thing good that will come out of this is that some of our industrialists who over use their political clout will get less brazen and cocky about they way they go about their business.

[sbansal]

Adani stocks are debt bubble, they are supported by high stock prices, if adani stocks correct by another 20% and LIC and SBI don't immediately stop it, they will carsh like anything.

PS: I am an investor in adani power and still holding it ��