Hindenburg Research founder Nate Anderson on Wednesday announced disbanding his US investment research firm. The company rattled the Adani Group in 2023 after publishing a report accusing it of “pulling the largest con in corporate history”.
The announcement came as a surprise, as the short-seller was pursuing probes against some of the biggest corporate moguls worldwide. Then what went wrong? Was it a threat from someone? A health issue? Or another personal issue?
The Hindenburg boss cited the toll of running the firm as “rather intense, and at times, all-encompassing” as the main reason for his decision.
Anderson decided to close his company last year and had already shared the news with his friends, family, and team. While specifying the main reason behind his decision, Anderson wrote, “There is not one specific thing—no particular threat, no health issue, and no big personal issue.”
Hinting at his “desire for relief”, he said in a blog post on Hindenburg Research web site: “at a certain point a successful career becomes a selfish act”. The intent behind opening Hindenburg was Anderson’s belief to “prove some things” to himself.
“I have now finally found some comfort with myself, probably for the first time in my life.” Sharing light on the cost of sheer “intensity and focus” to build the firm, Anderson said that he now views “Hindenburg as a chapter” in his life and “not a central thing that defines” him.
The Hindenburg founder also said in his message that the team was winding up the ideas in the pipeline and will now focus on documenting the ways Hindenburg worked.
The closure has also raised questions about the firm’s practices, its impact on markets, and the possible reasons behind this sudden move. Hindenburg Research made international waves with allegations against billionaire Gautam Adani in January 2023 that wiped billions from the market value of his group companies.
The Adani Group had earlier denied all allegations against it. Commenting on this, the Congress party general secretary in charge of communications, Jairam Ramesh, said its closure does not mean a clean chit for “Modani”. He added that the report covered only one part of securities law violations, that is, the “hydra-headed Modani Mega Scam”.
“The matter goes far deeper. It involves the abuse of Indian foreign policy to enrich the PM’s close friends at the expense of the national interest. It involves the misuse of investigative agencies to force Indian businesspersons to divest critical infrastructure assets and help Adani build monopolies in airports, ports, defence and cement,” Ramesh alleged.
Senior Advocate Mahesh Jethmalani and other prominent legal experts have strongly criticised Hindenburg Research’s decision to disband, branding it a “run for cover” in light of alleged connections to financier George Soros. Advocate PR Ramesh, a prominent lawyer and expert in SEBI-related matters, said, “The show-cause notice issued by SEBI and the ongoing investigations could have played a role in the shutdown of Hindenburg Research. It is crucial for authorities to thoroughly investigate whether there was any conspiracy to deliberately destabilise Indian markets.”
Former Chief Information Commissioner YK Sinha said, “If I say I was surprised, that would not be an accurate assessment because I think things have changed since this rather politically motivated report started coming out from Hindenburg.” He added that there was “an agenda behind…to bring down reputed groups and companies…”.
What did Hindenburg do?
The US-based investigation research firm engaged in activist short-selling. Its founder, Anderson, managed his company’s money and was a short-seller. Anderson used to bet against companies that might have accounting issues, mismanagement, or fraud, which he used to find usually after a long period of investigation, Reuters reported.
Short-selling involves borrowing a stock to sell it, expecting the price to fall. The short seller then repurchases the shares, pocketing the difference. The seller can be exposed to potentially unlimited losses if the price rises.