The Ambanis are actually not very different from the Adanis, just better at hiding. Hindenburg might have take a short position based on numbers but its likely that as long as the current government stays in power its unlikely these two giants (whether they are really giants or no) will change as governments play a big role in such things. Like someone pointed out, it's more likely that their cons will outlast Hindenburgs short positions. Also we dont know the size of Hindenburgs short. For all we care they have shorted 10$ for this article. I am not defending Adani but I did make money on Adani Wilmar simply because compared to other FMCG stocks it was actually undervalued. If you look at some of the other fmcgs they are significantly more overvalued than Adani Wilmar was when it entered IPO. I gained almost 3x in a short while after which it hit the overvaluation equal to other FMCGs and I exited obviously because from a value stand point it made no sense even at IPO. So when Hindenburg says this will all crash, they are assuming everyone goes by the books in this world.
Mukesh Ambani changed the face of Indian telecom with Jio and its novel pricing model. Not to mention, Reliance has tons of businesses with actual real value, real history and real employees. Mukesh Ambani plays along with both the parties.
Gautam Adani is a Gujarati impex trader who won the lottery when his pony won the parliamentary race.
I would argue both families are extremely different, even if they seem culturally similar on the outside. That being said, I would say there are parallels to Gautam Adani and Dhirubhai Ambani (Mukesh's father, for those ootl).
From the article, Hindenburg’s short positions are outside India’s capital markets which (presumably) have better oversight/more skittish/sophisticated investors who would prefer not to do business with a sham company.
Betting against it is doing business with the company. Whether directly in the Indian market or in a market outside India. If I bet against a race happening in some other part of the world, I am in some capacity (indirectly) involved in the race. All they are doing is using analysis to predict a crash and betting against it.
I dont like the idea of 'This seems fishy so let's bet against it'. If something feels fishy stay away from it as much as possible. Michael Burry doesn't happen every day.
> Betting against it is doing business with the company.
What do you mean? I struggle to understand how betting against a company is "doing business" with them, it seems even less like "doing business" than having no relationship at all. You are actively signaling you expect them to fail.
I think 'with' was the wrong word here. Betting against a company is being in business around the company. Meaning you still trust the business, just trust it enough to fail. You can't not trust something and at the same time bet against it. You must trust one of the two if you want to be involved with the company.
A simple Google search indicates that you often don't need to cover a short if a company is delisted, and if it's not delisted then you can always offer over the current value (even if the current value is zero) to get some of the worthless stock, so I don't see how covering the short if the company implodes is a problem.
Unless you have expertise that it's not that simple? Or a source saying otherwise? (Not an attempt to be snide, but an honest opening for counter evidence, I'm not an expert in this).
In some markets, such as Hong Kong, instead of being delisted, suspected frauds are often halted (the stock cannot be traded). So you might end up paying the borrow fee for years, even though you were right about the company being a fraud.
If a company disappears tomorrow, how would you realize the gains on the short? If there is no liquid stock to trade, they're just paper gains. You'd have to wait until legal proceedings end.
What you are betting on in a short position is for the company to continue to exist, but at a lower valuation.
My naive understanding: In a short you borrow then sell immediately. If the company disappears you keep the money from the sale (which you already made) and never have to return what you borrowed.
I agree with you 99.8%. I think there would be a clause in any short contract where if you were unable to provide the stock at the end then you would be liable to pay the cash equivalent. If the stock had "gone to the moon" you would be bankrupt but if the stock had gone to zero then your payment would be zero (or maybe miniscule)
There is no such clause, and yes you would have to figure out how to obtain the delisted stock from other holders (who are generally not friendly towards you).
Hindenburg specialise in doing this. They know the endgame better than anyone. You can guarantee they have a plan which will result in them getting paid off if their short thesis is correct.
1) The Ambanis didn’t exist when the Ambanis were rising. This is similar to how everyone wants to be the next Amazon, ignoring the little fact that unlike when Amazon was growing, there already is an Amazon now.
2) The Ambanis were able to ride a wave of massive growth post liberalization to cover up their illegal dealings and essentially become legitimate. It’s not clear that there is any such wave of massive growth available to the Adanis to cover up their illegal dealings.
3) The Ambanis raised money illegally almost entirely locally, which meant they avoided international scrutiny, and they did so at a time when the Indian financial agencies were simply not mature enough. The Adanis will be raising foreign funds which increases scrutiny, but also Indian regulatory agencies are far more mature at this point.
4) The Ambanis valuation did collapse dramatically for a significant period of time. The difference is that the business has been split between the 2 brothers and one went to almost 0, while the other grew slightly. Their combined wealth, simulating the market cap of the company, has declined drastically from its peak level.
I was scrolling down the list of claims and then reached "Introduction" lol
I love short sellers, Citron did a little sting in my city, Hong Kong, trying to short Evergrande with an A to Z demonstration of how it was ponzinomics, to end up being sued by our regulator for stock manipulation and being condemned years later finally to not trade in HK for years. A little while later, Evergrande's Ponzi finally collapsed. Nobody here bothered to disprove the claim, they only cared about the share price dropping too fast.
Any company claiming short sellers are evil are lying to you: they d simply buy back the shares at a discount, if they were so sure of themselves.
>to end up being sued by our regulator for stock manipulation
It could be manipulation in principle, but the instances where regulators have been corrupted and use that as an excuse are really terrifying. See: Wirecard in Germany.
Citron also claimed that a certain stock (that was shorted at more than 100 percent of outstanding shares in 2021 at the time of their claim) would be "back to 20 USD fast, we will explain soon".
They never explained and the stock never went back down to 20.
Citron is definitely part of the scamming. The fact that a scammer (Citron) scammed another scammer (Evergrande) doesn't make them good guys.
Are you talking about gamestop? it's continually drifting downwards, but even if we ignore that how does making a wrong call make them scammers? TBF to them the company is absolute shit and only being propped up by dumb money turning into a cult. Really hard to blame them for not predicting that
If these companies assets or stocks go to zero or are locked due to fraud or something that makes the actual public stocks untradable, how do you get out of a short position? Borrowing and selling the stock means you can’t get it back to return to the original owner, and buying put options means you can’t sell the stock to the contract holder. Do you have to get out before it gets completely vaporized?
If stocks go to zero, it's generally easy to get your hands on them, since people holding those shares will want to realize capital losses for tax purposes. Even if the stock is delisted from exchanges, brokerages routinely "buy" such shares from their clients, and I'm sure they would make the shares available to anyone wanting to close out a short position.
> the company being vaporized is always a risk of shorting
why is that a risk tho? If you shorted something, the money is already in your hands (aka, you "sell" short presumably, where you make a buck selling it now, and have to put up cash in the future to make the short whole).
If in the future, the company vaporized, then wouldn't you no longer owe the shorted stock?
No, you still owe the stock, but if trading is halted or the stock's registration is revoked, you cannot close the position. That means that (a) you still owe (daily!) stock borrow fees, and (b) you are still required to keep collateral posted against the shares with your broker (because the stock is not trading, the last posted price can be considerably above zero, so this can tie up a non-trivial amount of money).
In recent memory, this has happened to Longfin Corp. [0], Cynk Technologies [1], China Biotics [2], and surely others. If it does happen before you can close out a short position, that's bad. You can be stuck that way for years [3].
The issue is one of margin calling, and other institutions being unwilling to lend you infinite amounts of money.
Even if your investment strategy is sound, if in the short term, you on paper owe stock that is "worth" billions of dollars, the institutions that you are owning this paper billions of dollars too, could be unwilling to just trust that you will be able to pay it.
Thus, they bake in contractual provisions, such as margin calls, which require you to automatically sell/buy the stock back, if you ever reach certain loss limits. Thus, forcing you to accept the loss now, even if your long term strategy is hypothetically profitable.
Or, at least that is the simplest/most common ways that this work. I am sure that margin calls are more complicated than that, for large financial institutions.
An unlisted stock is still a stock, you still have to have a borrow for it until the company is fully wound up (which could be years after being delisted).
The Adani Group is massive, transnational, and has resource partnerships that cross continents with multiple joint companies and government relations.
There are relationships with Indian banking giant ICICI that are questionable and that also cross continents.
And more (it's big wall map tiny font material here).
Point being, shaking up the Adani Groups reputation has flow on effects that can be capitalised upon in many ways by shorting many other associated companies that may fail due to governments losing confidence to proceed on large projects, choosing other partners, etc.
> something that makes the actual public stocks untradable, how do you get out of a short position?
If it's illiquid - you don't.
Jeopardy with market crashes isn't that you'll be forced to sell your stocks low but that there will be no one to sell to and you'll sit on assets devaluing to zero or close.
It depends what you mean by "untradeable". If the market or regulator decides that the stock cannot be traded at all, you might end up paying a lot of money in fees for years even if you were right.
But the put option will be hedged by options market makers taking a (net) short position in the stock.
So in so far as you have technical concerns about the risks of not getting completely paid on your short position if you have a borrow on a delisted bankrupt company whose shares are tied up in litigation, the market maker will have the same concerns about the same arcane risks and will pass the cost on to you in the form of a worse price on your option.
It might still be a better way for you to make this trade - the options trader has a whole settlement team to figure this out - but it's a service you're paying for.
1) Adani is very close to the current ruling party and the PM - deploying his extensive business network and assets (in various forms) to help get the PM elected (2014) and then re-elected. A bit of googling will reveal the vast scale of politico-corporate nexus between these two - extending all the way back to when they were chums in Gujarat - the Indian state of the PM
2) The only reason the Adani Group has not been hauled up in-front of multiple regulators and law-enforcement agencies on a constant basis is because of #1 above
3)Adani ports seem to be curiously immune to investigations despite literal TONS of drug seizures [1]
4) There were multiple stories of forced resignations being used by the companies across its workforce to trim costs during the pandemic and avoid paying hefty severance per India's strict labor laws
5)A lot of the public sector banks in India are purported to be under pressure to not recall loans or issue fresh loans on demand to him - essentially a federal backstop to all his liabilities - enabling crazy levels of debt
The article has lots of factual arguments going. But it misses the 1) point you mentioned. Regardless of whatever people like to believe, that guy isn't going crash and burn, go bankrupt or anything like that.
It's fairly simple for the government to bail him out. They already did that to Anil Ambani. It doesn't even have to be a direct payout, there are always 'projects' you can give and pay them some 1000% extra money compared what it would otherwise cost. In other words a government(tax funded) bailout is easily doable and will be done, when the need arises. In many ways the party is just giving money to itself(Electoral bonds).
Just to complete the argument, don't expect any backlash against the government either. The current ruling party enjoys nearly 'no prior conditions' based support from their constituency regardless of whatever they do, no matter big a disaster unfolds. And this is going to be the case for the foreseeable future(think decades).
To summarise, whatever fraud this is, no matter how big the impact of this on the Indian economy. In fact even if takes down the whole set up with him. He is just going to emerge from this fine. And the government will bail him out without any consequences for them.
> It doesn't even have to be a direct payout, there are always 'projects' you can give and pay them some 1000% extra money compared what it would otherwise cost. In other words a government(tax funded) bailout is easily doable and will be done, when the need arises. In many ways the party is just giving money to itself(Electoral bonds).
> Many of the slum’s thousands of cottage industries, which churn out textiles, leather and metal goods by the truckload, will also be relocated within Dharavi’s boundaries, even if they may have to downsize. Those considered to be polluting will be excluded. Whatever former slumland remains will be for Mr Adani. Superbly located on three suburban railway lines, an upcoming metro line and adjacent to Mumbai’s prime commercial district, it could be worth 30,000-40,000 rupees ($360-480) a square foot at today’s rates, reckons Gulam Zia of Knight Frank India, a property firm.
India's case is unfortunately a lot more worse. The reason why this sort of corruption gets an easy pass is because the public is not necessarily against corruption. They like to imagine themselves as temporarily embarrassed 'millionaires' type of section. While the discussion is always on the lines corruption being bad, its only used in the context of looking better.
Pretty much everyone wants a government job, or any job where they can make money through bribes. Major Indian cities run dozens of coaching class cram schools to prep people for civil services jobs. Becoming corrupt is an aspirational thing in India. This is an elephant in the room nobody wants to discuss. Your ordinary Indian walking on the street deeply aspires to be corrupt. Only thing next to this is the desire for managerial jobs in private firms. Because this is how you get by life giving orders and not doing any work.
The only reason why the protests against the previous governments was so intense was not because of corruption. The overall polarising movement that started in the 1980s from the destruction of Babri Masjid means there is a long running and developing trend among India's electoral masses to consolidate on the lines of religion. This means other things aren't all that important. This also means to win elections, you need money from all these big corporate payers. Their corruption goes ignored, and in many is even perfectly acceptable.
Its more an inequality story than a corruption story. Corruption is always a side effect of inequality.
If an ambitious, energetic kid is born in a slum or some backward area and doesn't see legitimate ways to access resources/climb the ladder, chances are very high the kid will take shortcuts. That's the nature of high energy, ambitious people. These people, purely based on the drive they have, influence the behavior of the rest that surround them.
When such people are identified early, and given the right guidance/resources the outcomes are totally different.
+100. The short sellers are going to find out, to their dismay, how deeply intertwined Adani group is with the ruling party. Call it what you will, corruption/nepotism/favourtism etc., the net result is Adani group and BJP need each other and there's no way in my life time the ruling govt is going to let it fail for all the reasons you mentioned above.
Wow. Adani is super scummy, and from research when they were starting construction on a big mine in Australia we knew they were structuring their tax affairs to not pay any tax here [1], but all this is something else.
They have been suing a climate activist here for millions of dollars, and as part of it they had private investigators following him, his wife, and his children, including photographing his children while they were alone on the way to and from school. They were “unapologetic” [2].
Although from what I read of Adani’s human rights abuses overseas (such as forcing native tribes off their lands to build mines and infrastructure, and complete disregard for the environmental effects of their operations poisoning nearby communities’ air and water/food sources) this is a tiny drop in the bucket of that company’s scummyness.
And despite the obviousness of the tax structuring and other, worse, scummy behaviour, the Australian Government at the time was determined to push ahead with clearing the path for Adani to operate what would have been one of largest, if not the largest, mines in Australia.
Yes. Our biggest problem in Queensland is that Labor aren't very good, but the opposition (LNP) is much worse and are basically just an absolute joke - they were a complete disaster last time they were in power (and voted out in a huge wipeout the very next election), have a lot of far-right crazies, are incompetent and extremely ideological. Minor parties like the Greens are getting more traction because of it, and there's been a big independent movement in the last few years across the country so perhaps that will dilute Labor's power somewhat. But we'll have to see next election...
That LNP government was absolutely amazing. They managed to go from absolute majority to losing an election in a single election cycle. Campbell Newman (the premier at the time) managed to pretty much piss off every voting bloc in the state. All done in three years. Cannot remember any other politician that was able to do that.
They went on big firing sprees around the public service, just absolute slash and burn style, huge spending cuts to the budget, reduction in services, and were getting ready to privitise a lot of public assets that bring in a lot of revenue (things that have been privitised in other states and have turned out to be disasters there, gouging people for essential services, like the power transmission networks). They under-invested in health, public transport, etc.
They'd been voted in I think because there was desire for change, and very quickly the public sentiment changed. Kind of like "oh crap, not like this"... It's very unusual for a Government to only have one term but they were booted out decisively. Since then the party seems even less competent... So they haven't been able to make much of an impact in the last few elections.
One more point is that the QLD Labour wing is much further to the right and much less progressive when it comes to coal and global warming. The vested interest in coal mining has limited a lot of the green energy push even as places like Brisbane and The Reef face some of the biggest challeges due to climate change.
They're also fully trans national scumbags and haven't limited their bad behaviour to just India and Australia, they don't mind a contraversal resource | energy project or three.
In one of those very odd Baader-Meinhof moments, I was reading about a different Indian mining company (Vedanta) today for the first time in my life. The controversies surrounding them look almost exactly like what you describe here with Adani.
I guess once you've spotted a scummy Indian mining company you start to see them all over?
> I guess once you've spotted a scummy Indian mining company you start to see them all over?
Non-Indian[1] mining companies operate in a similar way. When the mines they operate are in the global south, political and indigenous opponents to them have a habit of ending up in pieces.
Oh, it's not the executives in Toronto that are ordering organizers murdered and stuffed into oil drums - it's just the problem-solvers that their overseas branches happen to employ...
Just to be clear here, the Toronto TSX and TSXV exchanges are home to more mining companies than any other market in the globe; as such companies listed there aren't neccesarily majority owned or controlled by Canadian citizens (although there is a huge Anglo-Australian presence there).
That said, shitty behaviour in the "global south" (or towards indigenous land holders enclaved with the US, Canada, or Australia) is common enough across the board no matter the nationalities of majority owners and board members.
To my eye it reads as a dense bullet pointed list of assertions followed by dense unbulleted paragraphs addressing the allegations in terse detail using extracts from several years worth of company reports, quotes from past employees and associates, court findings, criminal investigations, etc.
It's terse, but it does flow through the narrative and lacks anything that screams machine generated (IMHO, of course).
The Hindenburg report is well researched. Shorting Adani stock won't be the thing that puts nails in Adani's coffin, but rather it is the waning confidence in Adani as these insights get absorbed by the market. It seems as though Adani is "too big to fail" which is actually helpful toward the effort to tank the shares. If Indian government is forced to bail out Adani, then the government won't do so under a structure that is beneficial to holders of today's shares. If taxpayers need to step up, then equity holders must share most of the pain.
That was quite a bit easier to digest, though. Can someone give me a more summarized version? I gave up after the ninth or tenth bullet item. Who's being defrauded and how?
Any shareholder in this fiasco who isn't a member of the family is the proverbial sucker at the table. Also, anyone who's lending money against inflated shares is going to lose everything.
Looks like Majority of the holding (72%) is by the promoters for one of the Company - Adani Enterprises Ltd. Lot of individual shareholders (Public) got greedy and started buying since last year. [1]
Also alleged are a vast array of offshore shell companies that are secretly controlled by insiders, making undisclosed transactions to wash money, shore up balance sheets, juice revenue numbers, and generally create massive financial interdependence between entities that are presented to the public as being unrelated.
OK, sure. That stuff is all questionably legal and bad for the market and they shouldn't do it.
I'm trying to find the (sigh) "Largest Con in Corporate History" promised in the headline. All I'm finding is accounting games and market cheating? I mean, these are routine crimes. In the US, the SEC prosecutes dozens of these every year (maybe it's easier to get away with it in India). Maybe there's an argument that the scale here is larger? If so the numbers aren't in the article.
These guys are amazing. My favorite is when they revealed Lordstown motors was operating on fake sales and a few one-off self immolating swap-em-up gutted oem trucks. They rekt their CEO Steve Burns who went on the news with a shiny clean and poorly fitting hard hat and vest that obviously had never been on a shop floor and he was promptly sacked.
Yesterday there was a submission about the BBC's documentary on the "supreme leader". I wonder what mental gymnastics we will see from people who were defending him, after this report. Most likely, they will never read this report.
They also threatened an environmental activist from Queensland, Australia by sending private investigators to stalk him and his nine year old daughter. They're beyond corrupt and are a criminal organisation.
The Mauritius connection is interesting. India and Mauritius have tax treaties[1] which are very advantageous to Indian companies seeking to do business abroad. I don't know the full details but I do know that international companies who have an India presence, are frequently set up with a Mauritius company owning the India entity and doing some sort of back to back billing arrangement.
He's too big to fail status in India, so it'll be interesting to see how their short position unfolds. They can keep the scam going for much longer than Hindenburg can keep their short I imagine.
According to Wikipedia Adani is in with Modi, the current Indian prime minster who likes to play favourites. Thus he could get quite a bit of protection at home.
It can. Indian Govt protects/can intervene through LIC India which invests in companies like this. In the past during major downturns, LIC with its huge cash pile acted as a backstop.
My understanding is that if an entity going down results in a widespread wealth destruction in the entire domain then it's deemed to be too-big-to-fail. It would in turn lead to social unrest threatening the stability of government. Like a huge lender going bust would lead to credit shrinkage leading to millions of small/medium businesses going bust.
Yup you're right. It's more like Adani's lenders might threaten social stability if Adani becomes insolvent. But I'm pretty sure the govt will give SBI a cash injection and have them loan that amount to Adani in the event that things actually get bad.
> But I'm pretty sure the govt will give SBI a cash injection and have them loan that amount to Adani in the event that things actually get bad.
It's exactly (in content) what I wrote to my friends while we were discussing this in WhatsApp.
"If push comes to shove RBI could well bail out Adani through some complicated deal....they'll bail out LIC and SBI for sure...through those entities I meant not directly"
I think it's usually that the company's failure would have too large an impact on the economy or other dependent companies, so it will get bailed out by the dependents or the government.
You don’t have to because you don’t matter. Enough people will just nod and accept the explanation for why their tax dollars are being given to billionaires that your voice doesn’t matter.
i might be the only one to think this, but the relationship between Adani and the current administration (mainly the PM) has been an open secret. iirc the book "billionaire raj" (2018) also talks about this.
besides the shady ways of raising initial capital, the main crux of the issue with the rise of both Ambani and Adani empires rely on getting favours from local administration. Adani was able to catapult to a big position in the country because of winning contracts from the state administration when the current PM was the CM of the state.
for now, this remains the reality for those who want to set up conglomerates in the country, especially involving infrastructure and commodities.
Ah, the guns of navarone of the indian protectioned industry versus the ships of international capital gang, what a battle.
Surely, they will try to subvert the indian government and take over local giants to establish a construct similar to the ccp to engage in rampant proxy colonialism.
How will it affect India’s economy if the Adani Group crashes? India8is currently one of the fastest growing economies and wondering what effect this may have on the economy.
I started reading but couldn't get my sleepy brain around how Adani manipulated the stocks. Sure, the valuations are astronomical but doesn't indicate that Adanis themselves are behind the rise? Can someone please post a TLDR?
As far as I understand, an overwhelming majority of the stock of the companies are not up for trade on the exchange but rather held by offshore entities in violation of the rules which makes it trivial to manipulate the price of the stock. These entities are owned by Adani or his associates.
When you have the PM in your pocket, you can do whatever you want.
Also, he might be a 3rd richest person on paper, but I call him a flight risk. Once Modi govt is kicked out, he’ll flee India, just like other scammers like Nirav Modi and Vijay Mallya.
This is something that is well known to Indian investors that most of Adani companies are vaporware that basically have no revenue and trade for price to sales ratio much higher than other companies.
However this guy and his family members are pretty well connected and would be fine as long as Modi is India’s PM. In fact it is even stated that this guy is basically a kingmaker as his massive inflated fortune funds the political contributions to the ruling BJP party.
Unless the corruption is so clear and irrefutable and the media actually presses hard enough that Modi decides it's time to throw Adani under the bus to save himself.
But that's a high bar I assume...
If the rest of the world weren't also so corrupt, it'd be fairly trivial to call out Adani and cancel all business with them and add some nice sanctions, but that's not the world we're in it seems.
I am afraid, now modi will ask to ban HN! He won't stand this insult on his biggest friend and greatest money source. Like the govt is trying to ban the BBC documentary..
> That is pretty much what Hindenburg does; they find frauds and short them.
While such firms certainly have an incentive to make the company they've shorted look bad, it turns out that it works best (and is easier) when the company they short actually is bad. Thus, they've found a way to make a business out of identifying frothy financial bubbles built on shaky-to-fraudulent fundamentals and popping them.
It's kind of a public service in the sense that it corrects the market when it goes awry and ultimately they are betting their own money that their investigation is correct.
Unless you're wallstreet trying to punish some poorly run companies and leadership by shorting them, and then having a reddit lynch mob coming after you.
Hindenburg don't seem to waste much time on merely "poorly run". They seem to go for frauds: stuff that whether you think it will go down right now or not, you can't deny that it should.
But yes, that is exactly what Hindenburg does – not sure if GC thinks shorting companies you think are frauds is a bad thing or what – as far as I'm concerned it is the best reason for shorts to exist! I'd have more questions if Hindenburg wasn't shorting Adani Group after this report.
Funnily thanks to the Hindenburg disaster the airship is much more popular worldwide (outside of Germany and maybe the immediate vicinity) than the person it was named after. Which is kind of unfortunate because Paul von Hindenburg is a fascinating figure with an enormous impact on world history.
Not only was he a highly successful field marshal on the Eastern Front in WWI (after being brought out of retirement to replace the panicking previous commander there), he later became de facto dictator of Germany for the remainder of the war (until it was time to surrender, then he threw the dumpster fire over the wall to the civilian politicians). (Of course as his second, Ludendorff, wouldn't miss to tell anyone after the war, Hindenburg's role was more one of moral authority, calming presence and coordination, the actual war plans being made by the people under him, most notably Ludendorff who was really pissed after the war Hindenburg took all the credit).
However he's even more interesting after WW1, when his popularity brings him to being elected as President, being in de facto control of Germany again thanks to a constitutional workaround, and then working to stop Hitler from getting to power before finally being convinced to give him the chancellorship. After his death, Hitler also took over the presidentship, and that was that. So Hindenburg was the only man who could stop/delay Hitler from taking power, and he failed.
There are a few of these outlets that do research into companies with questionable accounting/fundamentals and then monetize the research via shorting+publicizing.
Haven't seen many "manufactured fraud" allegations. In my experience the research is often quite in-depth and they tend to be proven correct in the end.
Given that we're reading this, it's probably priced in by now. But in principle the answer would be yes, but only with money you can afford to lose; any investment on a single-name stock is risky, and shorting is even more so.
In my experience narratives are as priced in as they are accepted, so in the interim between "you first hear of this" and "everyone believes this" there is opportunity - bearing in mind that the interim between those two things is shorter the more believable the new thing.
But for instance in the case of "there's a new plague and China is locking down" there were several months between first hearing about it and everyone recognizing it.
Naked short sure, but you could buy some out of the money calls to cap your max loss. It’d just eat into the profit margin of your total bet. If you’re going to keep shorting more on the way down it gets more complicated.
If the report is true, there maybe insufficient market capacity for the stock to move freely, any short position - including the one that Hindenburg made maybe blown up by determined opposition.
Hindenburg Research have a pedigree. I don't find these sorts of reports at all readable either, but that doesn't mean that the people they're aimed at (investors, etc) don't. I assume it's an industry style because it's worked for them in the past.
I don't think you not having heard of the guy mentioned makes it machine generated? You could Google him, he is very big fish but keeps a low profile in the media. Most of his wealth is also stocks so it's highly vulnerable to fluctuations.
Yeah. Back in the day you needed forced labour and violent conquest to become rich. Becoming the richest in the world through something as benign as fraud is relatively new.
I’ve actually noted a stark decline in the amount of Elon sycophantism on HN. Maybe it’s because he’s fallen out of the news cycle, but I haven’t heard a word out of his mouth, ironically, since he bought Twitter.
2) How much the value is actually created by owners vs other labor within the company?
3) Are all participants rewarded proportionally to the value they create, or is there a labor-value arbitrage going on?
One simplifying/ideological model attributes the company's existence essentially to the owners and posits therefore obviously they deserve all the value and/or that every employee is participating purely voluntarily and so whatever they agree to must necessarily be fair. Another only recognizes the labor theory of value and would find anything other than a coop immoral.
> 2. Your company produces something hugely useful / beneficial for society; in other words, it produces something hugely valuable.
2. Your company extracts value from everywhere it can, to the detriment of it's counterparties: employees, the environment, customers, partners, contractors
For one example: Amazon warehouse employees (contractors?) are not paid very well for very hard work. I'm sure someone has a comeback for this, but it is an example of value extraction.
Another: Amazon does not do a great job of policing counterfeits, to the detriment of customers.
Another: Sellers on Amazon have a variety of complaints, you can look them up.
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If the business existed for the purpose of being ethical, these conditions would not exist. The business exists for the purpose of extracting value.
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Edit: Put another way - If your company ONLY produces something highly valuable, then someone can simply create a competing product and undercut you.
An example of this is looking at drug prices when patents expire. Generic drugs can be sold for MUCH cheaper than the patent protected "name brand" drug. The product is highly valuable, but may not be high cost, unless it is protected in some way.
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Edit edit: If you want to defend these companies or capitalism in general, that's fine with me.
I would like to gently point out that sometimes we dance on very fine lines of morality in the course of doing business.
I used to work at a car part store and the majority of the staff was teenagers looking to get into the car world (either future mechanics, or car parts managers) but they WAY under paid us for the type of work. Repair shops looking for specialty parts that someone with mechanics experience should really be looking for, not some teenager asking "whats a brake rotor?". We had a revolving door of workers and our customers knew we were terrible and likely to get the wrong part. Getting screamed at by customers was daily because we had no idea what they were doing. However the exploitation was a trade off of, "I'll get a year experience and go to a dealership" or "I just need a filler job until I get a better job". It was ""exploitive"" but it was extremely helpful to me, it was the only job willing to let me be part time while in school that didn't involve hard physical labour. I did more exploitive jobs before, working 10+ hours hand shoveling snow in -40 for $10/hour. That company didn't last very long because they drained the whole city of potential employees and never knew who was gonna show the next day.
You can read this as dismissive, but it does show the strength of the drive to rationalize; which is one of my biggest problems with things like "rational skepticism". It's too easy to rationalize something you already believe, or a situation you just happen to find yourself in. It's too fun to 'debunk' things, and too much of a chore to actually change beliefs.
I realize the obvious counter "That's not real rational skepticism".
Whats your solution though? Strike? People will still apply and work there because it's bad, but not slave labour. Unionize? They'll entirely stop hiring people without experience and change their business model.
Their business model was to be the cheapest. Cheapest employees, cheapest parts. They filled the market share for people looking for cheap cheap parts. That involves crappy service.
If they raised their employee pay, the entire business model goes belly up. That means, no more cheap cheap parts for customers and no entry job positions for employees looking to break the field.
It was a delicate balance of ""exploitation"" and keeping them happy enough they are willing to stay.
If you have nothing to offer the company besides a pulse, you don't get to pick and choose. Why would that be fair to force a company to pay more for no reason? Sometimes you put up with bullshit for a couple years and then you get to be more picky.
You are addressing a seperate claim to the one made. The actual claim is that there are no ethical super-wealthy people, not that such a thing is a logical impossibility.
I guess my issue is that the claim was not demonstrated in any way whatsoever besides "because I say so", so I assumed that the poster must think that it is a logical impossibility – otherwise how could they be so certain?
You don't become super wealthy without doing something shady or being a greedy asshole. It's just not possible to beat out the competition and accumulate that much wealth without taking morally questionable shortcuts.
Here's a short list of things that super rich people do:
Thank you. I purposefully tried to make my comment as easy to agree with as possible but apparently there are a LOT of people in denial because it got downvoted to oblivion and flagged.
The company has no externalities or strategic competitors and doesn't leverage market dominance? Is it situated at the North Pole and run by a jolly old man in a bright red suit?
Well, there's plenty of ways to reduce one's wealth. Taxes, charitable donations (MacKenzie Scott), more ownership of the company by employees, and so on. But no, I don't think it is ethical for people to be billionaires.
What exactly are you objecting to when it comes to billionaires, though? The nominal wealth? The relative wealth? Whichever metric, where is the point where it goes into "immoral" territory and what is the justification for choosing that point over another?
I'm objecting to the idea, ethically, that a single person can own so much money. 1 billion is far beyond what anyone needs to have a comfortable life.
Whatever the line is, 1 billion is clearly on the other side of it. I'm not interested in sorites paradox-ing the question beyond that.
That's alright because most billionaires don't have that much money, they have wealth, which isn't really the same.
Also there's probably lots of billionaires here in Indonesia, where 1B IDR is only $67k USD. Do you object to Indonesian billionaires as well? Or does it only matter if you're a billionaire in USD? What if I'm a billionaire in GBP?
Do you really believe that everyone on earth should only be allowed to have exactly what is needed to "have a comfortable life" (which definition of comfortable we're following seems like another quandary that we'll ignore for the moment) and nothing more?
Yes, in general I think people shouldn't have more wealth than is needed to live a comfortable life, for some reasonable definition of comfortable. I'm not a communist -- I don't want everyone to have exactly the same level of wealth or anything like that. I think it's great that people are rewarded for pro-social activities (though capitalism has a very narrow definition of pro-social).
As I said before, I'm uninterested in sorites paradoxes.
I think the fundamental issue with your philosophy is that by focusing on people that "have too much" instead of primarily worrying about people having too little, you will end up in a situation where you actually have a harder time solving the latter because people don't bother to strive for the former.
Your viewpoint is a pretty standard neoliberal one. Personally I consider the existence of such massive inequality to in and of itself be a problem, separate from but related to the problem of poverty.
Which I must admit (to me) is a patently absurd viewpoint, and probably the entire source of our disagreement.
It is a moral issue when someone has great excess that could be redistributed to people who are not yet at the "comfortable life" standard (whatever has been agreed upon). However, if everyone is already at the comfortable life standard, what could possibly be your justification for saying that one guy having more than another is still immoral?
Earlier you said "I don't want everyone to have exactly the same level of wealth or anything like that", but honestly it sounds like you do. If your moral basis isn't "we need to fix poverty" but rather "delta bad", then your ideal must be for everyone to have the same, anything else is internally inconsistent.
And I will point out that despite the other half of your protestation ("I'm not a communist"), this is an unfortunate trait you share with most communist regimes of history – more interested in the "eat the rich" part than the "feed the poor" part.
