‘Take whatever they say with caution,’ Zerodha’s Nikhil Kamath warns against Hindenburg’s short selling motives

Zerodha co-founder Nikhil Kamath has said that whatever New York-based short seller Hindenburg Research says should be taken with a word of caution as they are biased. In an interview with India Today’s Global Business Editor, Udayan Mukherjee, Kamath said, “Hindenburg is not doing this from the goodness of their heart to inform people better but because they have a short position on the stock.” He also said that whatever Hindenburg says, he would “take it with a certain amount of caution” because they are “bound to be biased.” 

Short selling occurs when an investor borrows a security and sells it on the open market, planning to buy it back later for less money. Short sellers bet on, and profit from, a drop in a security’s price. 
 
Hindenburg released a report last week accusing Indian billionaire Gautam Adani of “pulling off the largest con in corporate history.” It accused Adani Group of stock manipulation, accounting fraud, among other things. This report led to a massive turmoil in the public markets. 
 
On Budget day, February 1, shares of Adani Enterprises crashed 34.72 per cent to hit a day low of Rs 1,942. The stock, moreover, is down over 49 per cent from its 52-week high of Rs 4,189.55. 
 
Kamath also said that there is a need to go into great detail into each of the Adani companies to understand what really happened. However, as per him, the age-old adage of innocent until proven guilty still holds true.
 
Gautam Adani, in a video statement early Thursday morning, said that investor interest is paramount, which was why they cancelled the Rs 20,000 crore-worth follow-on public offer (FPO) after it was fully subscribed. He said that it would “not be morally correct” to proceed with the FPO, considering the volatility in the market. Adani also said that in his over four decades as an entrepreneur, he has been blessed with overwhelming support from all stakeholders. 
 
The tycoon also pointed out in his video statement that the decision to withdraw the FPO might have surprised many but the group’s board had opined that proceeding with the FPO would be morally wrong. “In my humble journey of over 4 decades as an entrepreneur I have been blessed to receive overwhelming support from all stakeholders particularly the investor community. It is important for me to confess that whatever little I have achieved in life is due to the faith and trust reposed by them. I owe all my success to them. For me, the interest of my investors is paramount and everything is secondary,” he said, adding that they decided to insulate the investors from the potential losses. 
 
The events of the last few days have resulted in Adani, once Asia’s richest man, slipping in the billionaire rankings. According to the Forbes real-time billionaires list, Adani is now the 15th-richest person in the world, with a net worth of $74.7bn. He was third on the list last week.

Also Read: Adani Group debt: RBI asks banks to furnish exposure details; here’s what Kotak Securities says