How the World’s 3rd Richest Man Is Pulling the Largest Con in Corporate History

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by trustingtrust on Tuesday January 24, 2023 @11:25PM (#34514399)

The Ambanis are actually not very different from the Adanis, just better at hiding. Hindenburg might have take a short position based on numbers but its likely that as long as the current government stays in power its unlikely these two giants (whether they are really giants or no) will change as governments play a big role in such things. Like someone pointed out, it's more likely that their cons will outlast Hindenburgs short positions. Also we dont know the size of Hindenburgs short. For all we care they have shorted 10$ for this article. I am not defending Adani but I did make money on Adani Wilmar simply because compared to other FMCG stocks it was actually undervalued. If you look at some of the other fmcgs they are significantly more overvalued than Adani Wilmar was when it entered IPO. I gained almost 3x in a short while after which it hit the overvaluation equal to other FMCGs and I exited obviously because from a value stand point it made no sense even at IPO. So when Hindenburg says this will all crash, they are assuming everyone goes by the books in this world.

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by Sai_ on Wednesday January 25, 2023 @01:13AM (#34514990)

From the article, Hindenburg’s short positions are outside India’s capital markets which (presumably) have better oversight/more skittish/sophisticated investors who would prefer not to do business with a sham company.

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by trustingtrust on Wednesday January 25, 2023 @01:22AM (#34515045)

Betting against it is doing business with the company. Whether directly in the Indian market or in a market outside India. If I bet against a race happening in some other part of the world, I am in some capacity (indirectly) involved in the race. All they are doing is using analysis to predict a crash and betting against it.

I dont like the idea of 'This seems fishy so let's bet against it'. If something feels fishy stay away from it as much as possible. Michael Burry doesn't happen every day.

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by arcticfox on Wednesday January 25, 2023 @01:37AM (#34515141)

> Betting against it is doing business with the company.

What do you mean? I struggle to understand how betting against a company is "doing business" with them, it seems even less like "doing business" than having no relationship at all. You are actively signaling you expect them to fail.

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by trustingtrust on Wednesday January 25, 2023 @02:00AM (#34515257)

I think 'with' was the wrong word here. Betting against a company is being in business around the company. Meaning you still trust the business, just trust it enough to fail. You can't not trust something and at the same time bet against it. You must trust one of the two if you want to be involved with the company.

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by Thorrez on Wednesday January 25, 2023 @02:25AM (#34515415)

I don't think you're trusting the company when you bet against it. You're trusting the stock market and brokerage you're using to do the short.

If the company completely disappears tomorrow, your short will be profitable.

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by smabie on Wednesday January 25, 2023 @02:44AM (#34515550)

Well, then you couldn't cover your short position.

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by Thorrez on Wednesday January 25, 2023 @03:08AM (#34515691)

Why would you need to? Who wants it back?

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by jimmydorry on Wednesday January 25, 2023 @10:54AM (#34519783)

Nobody, but you would continue paying fees on your short position and there would be no liquidity to close it out.

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by kbenson on Wednesday January 25, 2023 @02:23PM (#34522916)

A simple Google search indicates that you often don't need to cover a short if a company is delisted, and if it's not delisted then you can always offer over the current value (even if the current value is zero) to get some of the worthless stock, so I don't see how covering the short if the company implodes is a problem.

Unless you have expertise that it's not that simple? Or a source saying otherwise? (Not an attempt to be snide, but an honest opening for counter evidence, I'm not an expert in this).

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by dklsf on Wednesday January 25, 2023 @11:07PM (#34527565)

In some markets, such as Hong Kong, instead of being delisted, suspected frauds are often halted (the stock cannot be traded). So you might end up paying the borrow fee for years, even though you were right about the company being a fraud.

See https://www.reuters.com/article/muddy-waters-asia-short-sell...

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by viknesh on Wednesday January 25, 2023 @02:57AM (#34515629)

If a company disappears tomorrow, how would you realize the gains on the short? If there is no liquid stock to trade, they're just paper gains. You'd have to wait until legal proceedings end.

What you are betting on in a short position is for the company to continue to exist, but at a lower valuation.

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by seanhunter on Wednesday January 25, 2023 @03:31AM (#34515834)

Hindenburg specialise in doing this. They know the endgame better than anyone. You can guarantee they have a plan which will result in them getting paid off if their short thesis is correct.

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by Thorrez on Wednesday January 25, 2023 @03:08AM (#34515688)

My naive understanding: In a short you borrow then sell immediately. If the company disappears you keep the money from the sale (which you already made) and never have to return what you borrowed.

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by adaml_623 on Wednesday January 25, 2023 @03:36AM (#34515868)

I agree with you 99.8%. I think there would be a clause in any short contract where if you were unable to provide the stock at the end then you would be liable to pay the cash equivalent. If the stock had "gone to the moon" you would be bankrupt but if the stock had gone to zero then your payment would be zero (or maybe miniscule)

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by MagnumOpus on Wednesday January 25, 2023 @06:12AM (#34516950)

There is no such clause, and yes you would have to figure out how to obtain the delisted stock from other holders (who are generally not friendly towards you).

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by fakedang on Wednesday January 25, 2023 @07:15AM (#34517350)

Mukesh Ambani changed the face of Indian telecom with Jio and its novel pricing model. Not to mention, Reliance has tons of businesses with actual real value, real history and real employees. Mukesh Ambani plays along with both the parties.

Gautam Adani is a Gujarati impex trader who won the lottery when his pony won the parliamentary race.

I would argue both families are extremely different, even if they seem culturally similar on the outside. That being said, I would say there are parallels to Gautam Adani and Dhirubhai Ambani (Mukesh's father, for those ootl).

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by nindalf on Monday January 30, 2023 @06:26AM (#34578385)

I'm the biggest hater of Adani, but this is simply not accurate.

He may have only reached where he has through bribery and stock manipulation ... but he's still build real infrastructure that India relies on. Ports, electricity transmission lines, solar power plants - all of this is critical. Especially because these areas suffer from chronic underinvestment.

[ Parent | on HN ]

Re:How the World’s 3rd Richest Man Is Pulling the Largest Co... by rhaway84773 on Thursday January 26, 2023 @12:02AM (#34527854)

The Ambanis are very different than the Adanis.

1) The Ambanis didn’t exist when the Ambanis were rising. This is similar to how everyone wants to be the next Amazon, ignoring the little fact that unlike when Amazon was growing, there already is an Amazon now.

2) The Ambanis were able to ride a wave of massive growth post liberalization to cover up their illegal dealings and essentially become legitimate. It’s not clear that there is any such wave of massive growth available to the Adanis to cover up their illegal dealings.

3) The Ambanis raised money illegally almost entirely locally, which meant they avoided international scrutiny, and they did so at a time when the Indian financial agencies were simply not mature enough. The Adanis will be raising foreign funds which increases scrutiny, but also Indian regulatory agencies are far more mature at this point.

4) The Ambanis valuation did collapse dramatically for a significant period of time. The difference is that the business has been split between the 2 brothers and one went to almost 0, while the other grew slightly. Their combined wealth, simulating the market cap of the company, has declined drastically from its peak level.

[ Parent | on HN ]