The Adani case: who is behind Hindenburg Research?


Hindenburg Research is a so-called short seller or short seller. The head of the New York investment firm is a 38-year-old named Nathan Anderson. He's currently challenging what was once the third richest man in the world.

6. May 1937: The airship Hindenburg explodes in Lakehurst near New York. 36 people are killed. The tragic event prompted the company founder to name his company Hindenburg Research

It is a financial affair that is second to none. Hindenburg Research, a small financial house from New York, accuses the Indian industrial mogul Gautam Adani of nothing less than the “biggest fraud in economic history”. For decades, Adani is said to have committed “brazen stock manipulation” and financial fraud with his company, the Adani Group, a commodity and industrial conglomerate. Shell companies in the Bahamas, family members in top positions in the group of companies and falsified balance sheets are said to have veiled reality, covered up debt and thus pumped the share price up to 85 percent.

The group has lost more than $86 billion in market value since the roughly 100-page report was released last week. Adani's personal net worth has also come under severe pressure. In just seven days, his wealth has shrunk by $50 billion. The man, who last year was considered the second richest person on earth and wealthier than Bill Gates and old investor Warren Buffet, has now slipped to 15th place on the well-known Forbes list.

Gautam Adani, head of the conglomerate of the same name, until recently the third richest person in the world

The shortseller from Connecticut

The credit for all of this is Nathan Anderson, a 38-year-old Connecticut shortseller who until recently was an unknown in the financial world. This may also be due to the fact that Anderson, who describes himself as a financial forensic scientist, has no classic Wall Street career to show for himself. The short seller studied international economics, but then worked as a paramedic in Israel, according to the Reuters news agency. It was only when he returned to the USA that he laid the foundation for his current detective work.

Anderson got hired by FactSet Research, a data company specializing in financial metrics. “I quickly realized that the company was doing a lot of standard analysis, there was a lot of compliance,” he later told The Wall Street Journal. He left in 2010 to develop proprietary hedge fund and investment strategies for boutique investment houses (focused on a specific segment, such as corporate finance) and wealthy families. He only founded Hindenburg Research in 2017.

The Hindenburg Research company logo

His great role model, even then: Harry Markopolos. The securities manager is considered one of the most successful US investigators in matters of financial fraud. The 66-year-old has made a name for himself with his research into Bernie Madoff, whose investment company turned out to be a Ponzi scheme in 2008, making it the biggest investment scam in US history to this day.

Impressive successes

With Hindenburg Research, a small investment firm specializing in short selling, Anderson is now targeting scammers like Madoff. In fact, he can already show impressive success in exposing supposedly successful companies. Anderson sounded the alarm particularly during the corona pandemic, when a wave of startups went public through so-called SPAC mergers and quickly recorded massive price gains. His research revealed that many of these companies not only had no profits, but often not even viable business models, even though they were worth billions in market value.

Adani Group logo, here in Mumbai

Hindenburg now employs around ten people, including former journalists and financial analysts. Over the past few years, they have published dozens of investigative reports targeting companies such as bitcoin mining company Riot Blockchain and gold producer Pershing Gold. At least 16 of them, as can be read on the company's website, are said to have led to official investigations and criminal charges.

The Nikola Motors case

Among Hindenburg's biggest coups are the revelations about Nikola Motors, a maker of hydrogen-powered trucks. In September 2020, Hindenburg released a report that accused Trevor Milton, the founder and then chairman, of years of spreading untruths about the company's core technology to attract investors. Ten months later, the New York State Attorney's Office indicted Milton on four counts of securities fraud. Nikola stock plummeted 94 percent.

Nikola Motors truck (photo from 2017)

Lordstown Motors also staggered a little later for similar allegations. In a report from March 2021, Hindenburg accuses the electric car manufacturer of forging orders and glossing over the production schedule. To this day, the company and its stock market value have not recovered from the allegations.

Hindenburg lives up to his name. Eventually, Anderson named his company after the German airship that exploded in New Jersey in 1937, killing 36 passengers (article image). “We view the Hindenburg as the epitome of a man-made, entirely preventable disaster,” the company's website reads. “We're looking for similar man-made disasters floating around the market and try to clear them up before they attract more unsuspecting victims.”

And now Adani

Anderson now senses such a fraud at the Adani Group. The allegations are so serious that the shares of the company conglomerate continue to fall despite a 413-page counterstatement in which Adani rejects Hindenburg's accusations as unfounded, unmotivated and even as an attack on India in general. Anderson, on the other hand, rubs his hands: as a short seller, he earns his money by betting on falling prices. The further the market value of a company falls, the more it profits. Hindenburg tweeted, “Fraud cannot be cloaked in nationalism or a bloated response that ignores every important allegation we have made.”


Short sellers like Hindenburg argue that their work plays an important guardian role. In fact, it is thanks to investigations like this that, for example, the balance sheet fraud involving the American energy company Enron was uncovered or the bubble on the US mortgage market was predicted, which subsequently weighed on the entire global economy. “Critical, hostile research is necessary because Wall Street is a finely tuned machine designed to sell securities to the public, regardless of quality,” Hindenburg wrote in a 2021 report. “In the corporate world fraud abounds and investors have little protection.”

So far, the track record has proved Anderson right. Research by the data provider Refinitiv shows that hardly any company that has fallen on Hindenburg's target in the last two years has been able to recover from the corresponding short attack. Only three companies returned positive stock returns months after the publication of such defamatory reports. Twelve other companies are still struggling with losses of between 19 and 99 percent.

It is far from clear whether Gautam Adani will recover from the attack. What is clear, however, is that Anderson may already have solid gains on his short positions. Last year alone, short sellers made $300 billion in bets on falling prices, according to financial data provider S3 Partners. Hindenburg says they stand by the published report and would “welcome” litigation. For its part, Adani Enterprise canceled a planned $2.5 billion share offering in the wake of the attack. It remains exciting.