Gone, Gaya… FPO seems in trouble now!!
I haven’t done any research but I personally feel Adani stocks are overvalued bubble that will burst. The real question is if he has used debt to do all this. If yes , then we might be in a too big to fail scenario. P/E ratio should give insight to this.
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Hmm. US is surely a free country where more than regulations or governing bodies, contracts can be made with investment banks (even by individuals) that can be made iron clad by lawyers. And from the wording of it - this does sound like an Adani $ denominated/traded bonds given to market maker (investment bank) and Hindenburg buying insurance (paying premium) on that bond expecting 1:20 returns. Something similar used by Michael Burry in 2008 called - credit default swaps. Disclaimer: Though I am not sure about this.
Check out this video - (Has much needed clues for the possible trade/instrument used)
Yup, I remember that scene. Thanks for pointing out . we are certainly now Adani Crisis now. In capitulation phase. Our market is holding tight
Our markets are fine, but adani stocks are falling. So how is this an attack on India?.
Adani must answer.
So reliance brought the nifty up and now Adani is going to push it down huh 
Hindenburg reaction on Adani stock
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I am not sure of the allegation - the truth may be revealed 3 to 6 months from now. But what i noticed is that there was a margin call due to the sudden fall in prices & adani group had to prepay a loan.
There might be a credit risk which will impact their credibility to raise further loans. And the existing ones may get repriced.
So for all traders & analyst its going to be wait & watch
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Norway Pension fund has exited this group entirely.
Too many things happening…
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The over leveraging is not a scam in itself, what they did was legal and legitimate.
But the recent act of price rigging & raising subscription levels for FPO will be a question in itself!
We all were witness - FPO price was higher than CMP by a huge percentage, still they were able to raise funds !
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Lot of things happens in background, Tax saving, Valuation hype, investors entry/exist, reputation risk management where things seems against logic. I just keep away with the stocks in High drama news as its better not to play the game which we can’t win and understand!! Market has lots of game better play the game which we understand and can win!!
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Before 2 years, most of his stocks trading at lower prices, no point of fishy at that time, and if they are researching from 2 years, why they came now, if they just have to allege, they should have told more time before, and even if they alleged, what’s the proof they given?
They are just 5 people organisation, already running in controversies in their country, should be investigated but adani grp not considered fishy before that.
All knows that adani stocks are already running overpriced, if not today, they definitely have to fall tomorrow…
And there of plenty of stocks, who grown at such rate, what’s new with it…?
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if new investors stay away, its a problem for existing investors & company won’t be impacted.
but if adani can’t pledge their shares to get loans, thats a problem.
because, all adani’s growth is debt fuelled, so growth projections has to be adjusted
I can understand retail investor due to their naivity may participate in investing in the group. What I do not understand is the anchor investors, these names are well known such as
Maybank Asia, Goldman Sachs, Nomura Financial, Societe Generale, BNP Paribas, Citigroup, and Morgan Stanley.
They have the best of minds in the world and market intelligence. Inspite of this, were they not aware that the FPO was overpriced. How did they commit to this FPO.
I have a doubt. Around two third of Adani’s loans arw from foreign banks. In case of loans from an Indian bank, one could argue that since Adani is close to ruling party, there might be pressure from Government to ignore red flags and sanxtion his loans. But didn’t the foreign banks do their due dilligence?
Proves the point that Ivy league education, faster access to better data and intelligent minds doesn’t guarantee stock market success.
Proves the point that all those complicated financial math jargons doesn’t guarantee stock market success.
Proves the point that a stock price is a function of perception and not reality (we r yet to know what is the story climax).
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foreign banks (or for that matter anyone) only care about returns, they dont care about ethics.
For example,
if you look at US politics in the last 100-200 years (predominantly oil & railroad companies), the companies with political connections dominated their fields and built monopolies. also, any companies which does not buy politicians and influence laws have very less chance of success.
Going by this history, if i get a chance of investing in a company which has strong political ties i would definitely invest in it, because chance of making money is very high.
Also Adani itself did not cheat investors of their money, atleast not yet. They were alleged to manipulate books to inflate their valuations, use that valuation to get loans, use the loans to fuel growth (buying established companies etc.,).
Since, indians are used to scams, they immediately assumed adani was cheating investors of money, which is not the case.
its a lot like Softbank investing in Uber.
Their fundemental assumption is growth will catch up to PE.
You can look at Tesla PE over the years.
funds were buying Tesla when it was 500PE, and in 1 year Elon doubled the growth, immediately making Tesla 250PE stock.
These hedge fund investors were hoping to do something very similar.
After nearly 20 years, amazon is still 50-60PE stock, which means investors are hoping amazon will double in next 5 years, so that the valuation can be more reasonable then.
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