Meet the short seller taking on Adani

So the question is whether other investors will heed Hindenburg’s warnings about Adani, whose staggering wealth is affecting India’s economic and political life.

It’s hard to overstate how one-sided this fight is. Gautam Adani has spent four decades building a business empire spanning energy, agribusiness, real estate and defense, among others. He is seen as closely associated with India’s Prime Minister Narendra Modi, whose ambitious goals are closely aligned with the government’s priorities. The Hindenburg report came in just as Adani Enterprises opened a $2.5 billion stock sale to investors.

Anderson’s New York-based firm — technically a research and trading firm, not a hedge fund with outside investors — is less than five years old and puts its own money to work in the markets. Even in Manhattan’s financial circles, he’s not a big name.

And yet lately Anderson has managed to make a name for himself. Hindenburg, named after the German airship that exploded in 1937, has targeted around 30 companies since 2020. According to Bloomberg calculations, its shares fell an average of about 15 percent the next day and 26 percent half a year later, according to the news.

Anderson declined to comment on this story. But Hindenburg braces for a hit-and-run response from the Adani group.

Short sellers — and the controversies that often surround them — have been around for as long as stocks have existed. The Dutch briefly banned the practice in the 17th century after traders shorted the Dutch East India Company, reputedly the first company in the world to issue shares. Recently, US authorities have been investigating whether some shorts have occasionally colluded to target companies. Hindenburg has not been accused of wrongdoing, but some of his colleagues have announced their resignation.

“If I ever feel like most of the corporate fraud in America has been eliminated, I’ll probably announce that I’m going to grow tomatoes or something.”

Nathan Anderson in an interview with the New York Times in October.

Hindenburg’s MO is simple. Anderson and his team dig into companies looking for wrongdoing. A prominent example: The electric vehicle manufacturer Nikola, which Hindenburg called the “ocean of lies”. Last October, Nikola founder Trevor Milton was convicted of defrauding investors.

For all the noise Hindenburg is making, Anderson keeps a low profile.

He grew up in a small town in Connecticut and earned a business degree from the University of Connecticut.

During his studies he lived in Israel for a time and worked as a paramedic while taking courses at the Hebrew University. He later worked for a financial analysis firm before taking a job reviewing potential deals for wealthy families’ investment firms. His passion, he says, is “finding scams.”

Early on, he would spend hours investigating possible Ponzi schemes, occasionally teaming up with forensic accountant Harry Markopolos, who famously tried to warn federal authorities about Bernard Madoff. Anderson referred to Markopolos as a model.

Around 2014, Anderson began filing whistleblower complaints with US authorities in hopes of collecting bounties for exposing fraud.

One of his first major successes: Searching for hedge fund platinum partners with Markopolos. Seven executives were subsequently charged with fraud.

Today, Hindenburg employs about 10 people, a mix of former journalists and analysts. Sometimes hedge funds got involved in his trades.

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Even if Adani Hindenburg hits back and the odds are clearly in Adani’s favor, Anderson has no shortage of work left.

“There’s still a lot of scams out there,” Anderson said New York Times last October. “If I ever feel like most of the corporate fraud in America has been eliminated, I’ll probably announce that I’m going to grow tomatoes or something.”