If Hindenburg Research’s report accusing Adani Group of fraud is on the money, then you would think that veteran activist investor Bill Ackman might be tempted to join in on short-selling the Indian conglomerate’s securities.
But he is not. Ackman, head of hedge fund firm Pershing Square Capital Management, said in a tweet that he finds “the Hindenburg report highly credible and extremely well researched.” Still, he stressed that he is not shorting Adani or dealing with it in any way.
Last year, Ackman publicly swore off activist investing, saying he had “permanently retired” from the fray. Lately, Pershing Square has shifted to buying stocks in companies he believes will do well, such as Chipotle. Pershing lost almost 9% in 2022, not a good year for hedge funds, but at least Ackman’s outfit did 10 percentage points better than the S&P 500.
In reaction to the Hindenburg blast, Adani stock has tumbled in India, where it is listed. That’s good news for Hindenburg, which has shorted the shares and other Adani securities. Hindenburg is a research and trading firm that invests its own money, according to Bloomberg News.
Too bad for Ackman that he didn’t enjoy such good fortune in his most antagonistic shorting crusade, against Herbalife Nutrition. Ackman likened the Hindenburg study to his own negative report on Herbalife in 2012, when he labeled the company a pyramid scheme.
Unfortunately for him, his $1 billion short campaign against the nutrition business went sour. He lost big-time and exited the short position in 2018 after his target’s shares had shot up almost threefold. (Irony: Herbalife shares are now on the downslope, having dropped below their 2012 level.)
Hindenburg has accused Adani of pulling off the “largest con in corporate history,” involving “brazen stock manipulation” and accounting fraud. Adani, controlled by one of India’s richest people, Gautam Adani, denied Hindenburg’s claims and threatened to sue.