In a reply to a show cause notice from SEBI, Hindenburg Research has clarified its short position on Adani Group, refuting earlier reports of a significant financial windfall. The research firm stated that it barely broke even.

What Happened: Hindenburg Research, on Monday, clarified its stance on the Adani short, revealing that it had only one investor partner and did not make hundreds of millions as previously reported. The firm’s statement was in response to a show cause notice and media leaks suggesting a massive financial gain from their Adani shorts.

In the reply, the research firm said that previous media reports have quoted sources close to SEBI and the ED, suggesting that it had 12 or even 16 investor partners involved in the report. According to these sources, these parties collectively generated hundreds of millions in gains. It clarified that this was not the case and it had only one investor.

The research firm disclosed that it made approximately $4.1 million (around ₹34 crore) in gross revenue from gains related to Adani shorts through that single investor relationship. After deducting legal and research expenses, the firm stated, “We may come out ahead of breakeven on our Adani short.” The company made around $31,000 (around ₹25.73 lakh) through its own short of Adani U.S. bonds held into the report. 

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Hindenburg also underscored the risks it took to publish its research on Adani, given the increasing threats to press freedom in India. “There was never a point where the Adani thesis was financially justifiable for us. It was even less justifiable from a personal risk and safety perspective,” the firm stated.

Despite the challenges, Hindenburg expressed pride in its work on Adani, saying it is “by far the work we are most proud of.”

Why It Matters: The Hindenburg report on Adani Group had made several damning allegations against the conglomerate, sending its stocks into freefall. However, more than a year later, most of the conglomerate’s stocks have nearly recovered their losses since the Hindenburg shock, with some like Adani Power and Adani Ports even reaching new heights.

The Securities and Exchange Board of India (SEBI) has been accused by public interest litigation petitioners of ignoring critical alerts from the Directorate of Revenue Intelligence (DRI) regarding alleged stock manipulation by the Adani Group.

Gautam Adani, chairman of the Adani Group, had called the Hindenburg report a “malicious and deliberate attempt” to damage the group’s reputation.

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