On January 24, Hindenburg Research published a report on Adani Group. After which it is just being discussed from the Parliament to the road. After Hindenburg’s report, Adani’s shares have declined significantly and the market value of this group has also fallen drastically. Along with this, the investors have also suffered huge losses.
One name that has been discussed the most in the whole case is Hindenburg. The question arises that how does Hindenburg earn billions by selling shares of other companies? How did Hindenburg benefit from the fall of Adani’s shares?
First they know what work this company does?
Hindenburg is an American investment company that does forensic financial research. According to the website of Hindenburg Research, this company researches the investment, equity, credit and derivatives of any other company and by analyzing the nuances of the stock market and with the help of many sources It brings the fraud happening in any company to the fore.
What does Hindenburg gain by doing this?
If reports are to be believed, Hindenburg is a short seller. If understood in simple language, there are two types of investors in the share market. Understand that in the stock market, you buy shares of that company whose share prices are going to increase in future. When the stock prices go up, you sell them.
But, short selling is the opposite. In this, buying and selling of shares of any company is done when their prices are likely to fall in future. In such a situation, the short seller sells them despite not having shares with him. But, he does not buy and sell shares, but sells them on credit.
For example, when a short seller expects a stock of Rs 100 to reach Rs 60, he borrows the stock from a broker and sells it to another investor, who is ready to buy it at Rs 100. . And when this share falls to Rs.60, then the short seller buys it at Rs.60 and returns it to the broker. In this way, he gets a profit of Rs.40 on each share.
It is considered like a gamble. In which if your guess is correct, then there is only benefit, but if not, then there will be no significant effect. Hindenburg is accused of doing the same thing. It is said that Hindenburg also earns such profits by dumping the shares of the company.
Hindenburg investigates a company on such occasions
- irregularities in accounting
- ‘Disqualified’ persons on important posts
- undisclosed transaction
- Illegal, unethical business or financial reporting practices of any kind
Now know who is behind this company?
Hindenburg Research was founded in 2017 by Nathan Anderson. Anderson, who received a graduate degree in International Business from the University of Connecticut, started his career with FactSet Research Systems, a data company. Here his work was related to investment management companies.
He then started his short-selling firm Hindenburg Research in the year 2017. According to a Bloomberg report, Hindenburg has presented research reports of 30 companies since the year 2020 and the shares of that company fell by an average of 15% on the very next day of the report’s release.
In the same report, it was told that in the coming six months, the shares of Hindenburg’s reported companies registered an average decline of more than 26 percent. Hindenburg also gives a list of reports in its website, which it has published since September 2020 till now.
Why was it named Hindenburg?
On May 6, 1937, a German air spaceship named Hindenburg crashed in the air near Manchester, America. This accident was so terrible that more than 30 people died in it. In memory of this incident, this company was also named Hindenburg.
The purpose behind this name was to open the pole by keeping an eye on the disturbances that happen to make profit in the stock market just like Hindenburg. So that crashes caused by scams in the stock market can be prevented.
