The Adani Group Is Just the Latest Target for Nathan Anderson’s Hindenburg Research

The Adani report has shined a spotlight on Hindenburg Research, a small short seller with an impressive track record of uncovering serious wrongdoings at high-flying companies.

Hindenburg disaster
The Hindenburg disaster at Lakehurst, New Jersey, which marked the end of the era of passenger-carrying airships. Sam Shere/Getty Images

Gautam Adani, Asia’s richest man and the founder of Indian industrial conglomerate Adani Group, is losing billions of dollars by the day as he scrambles to quell allegations of fraud against his business empire. The accusations come from Hindenburg Research, a small investment firm specializing in short selling that has a brief but impressive track record of uncovering serious wrongdoing at high-flying companies.

Hindenburg was founded in 2017 by Nathan Anderson, a little-known former Wall Street hedge fund manager. Anderson, 38, developed an interest in looking for potential Ponzi schemes in the early 2010s and occasionally partnered with Harry Markopolos, the financial fraud investigator known for uncovering Bernard Madoff’s crimes, according to a New York Times profile of Anderson in 2021.

Anderson named his firm after the German airship that blew up in 1937 in New Jersey and killed 36 passengers. “We view the Hindenburg as the epitome of a totally man-made, totally avoidable disaster,” the company says on its website. “We look for similar man-made disasters floating around in the market and aim to shed light on them before they lure in more unsuspecting victims.”

Hindenburg belongs to a small niche of investment firms known as activist short sellers, which aim to uncover financial wrongdoings at publicly traded companies while betting against their stock prices with short positions. These firms often target companies whose stock prices rise significantly in a short period of time, hoping their revelations of wrongdoing would lead to a sharp drop in share price they can turn into profit.

Before starting his own business, Anderson developed hedge fund strategies for several boutique asset firms including Blue Heron Capital, Tangent Capital and ClaritySpring, according his LinkedIn profile. Anderson established a name for himself during the pandemic when a wave of startups went public through SPAC mergers and enjoyed massive capital gains often with little real business progress. Anderson’s research revealed many of those companies had no revenue or viable business models despite claiming massive market value.

Adani Group is Hindenburg’s latest target

Adani Group is the latest target in a string of public companies investigated by Hindenburg in the past five years. In 2021 and 2022, Adani Enterprises’ share price skyrocketed more than 800 percent, making Adani the richest person in Asia and the third richest in the world at the end of last year.

On Jan. 24, Hindenburg published a report accusing Adani Group of pulling a decades-long accounting fraud scheme that helped its founder amass astronomical wealth. The allegations triggered a selloff of shares of Adani Enterprises, the flagship company of Adani Group, and wiped out $70 billion in the conglomerate’s market cap in just a week. In an attempt to calm investors, Adani on Jan. 29 issued a 413-page rebuttal, denouncing Hindenburg’s accusations as baseless and ill-motivated. Few believed him, it seems, as Adani’s share price continued its decline after the report’s release.

Hindenburg employs about 10 people, mostly former journalists and equity analysts, according to Bloomberg. To date, the firm has published investigative reports on dozens of companies, including Bitcoin mining company Riot Blockchain, gold producer Pershing Gold and electric truck startups Nikola and Lordstown. At least 16 reports have led to regulatory probes and criminal charges, according to Hindenburg’s website.

The most high-profile case so far is its exposé of Nikola Motor, an upstart manufacturer of hydrogen-powered trucks. In September 2020, Hindenburg released a report accusing Nikola’s founder and then chairman Trevor Milton of lying about the company’s core technology for years in order to attract investors. Ten months later, Milton was indicted by federal prosecutors on four counts of securities fraud and wire fraud. In October 2022, Milton was found guilty of three counts of fraud.

While a short seller’s report doesn’t always lead to the arrest of a CEO, it can often trigger a temporary stock selloff of a company, enough to allow the report’s author to bag the profit from its short position against the company. In March 2021 report, Hindenburg accused another EV maker, Lordstown Motor, of fabricating orders and lying about its production timeline. The allegations caused Lordstown shares to tumble more than 10 percent on the first trading day after the report came out.

The Adani Group Is Just the Latest Target for Nathan Anderson’s Hindenburg Research