New Delhi. The difficulties of Asia’s richest man Gautam Adani have increased. American research firm Hindenburg Research has made big revelations about the Adani group. He alleged that Adani Group’s shares are overpriced. He has also made serious allegations regarding irregularities in the accounts of Adani Group. After this disclosure, selling in the shares of Adani Group dominates. The shares of Adani Group are continuously falling. There is a steady decline in the market cap. A report put a loss of over 5.5 lakh crores in Adani’s market cap. In such a situation, it is also interesting to know that how the company itself earns? What is the source of income of Hindenburg? How does this research firm earn billions from a single report?
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How does Hindenburg earn
Hindenburg is a short selling company. It is also an investment company. According to the company profile, the research firm is an activist short seller. Now to understand short seller first let us understand what is short selling. The company has clearly stated that it is an activist short seller company. Before we explain short seller to you, let us explain what is short selling. Buying a stock at a low price and selling it at a high price when it rises is considered a hit formula for earning in the stock market. In the business world, this is called a log position. Investors adopt this method when there is a possibility of market going up. On the contrary, when there is a possibility of a recession or a fall in the stock of a company, then the method of short position is adopted. That is, when the investor feels that the shares of this company will fall in the coming days and will benefit from it, then he adopts the method of short selling. Now, activists who are short sellers repeatedly try to convince investors that the company is overvalued or in debt. Short sellers frequently raise concerns about debt and overpricing or malpractices in the company on which they focus. Many times the shares of that company get busted and these short selling companies get profit from it.
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Make big money from reports
Hindenburg also earns in the same way. Hindenburg has taken a short position in the bonds of Adani Company in the US and he himself has informed about the same. Hindenburg has come out with this report after taking a short position in Adani shares. Let us understand this with an example. Suppose a short seller expects that the price of a stock is going to fall, then he borrows the stock from a broker and sells it to other investors. The profit between this high and cheap will be to the short seller.
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In the past also these companies have been ruined
Adani is not the first company about which Hindenburg has come out with a report. Even before this, he has issued such reports against many big companies. This company targets any company and removes flaws in it. When the company’s shares fall due to this report, it earns this profit by buying them. Adani’s shares have fallen by 25 per cent due to Hindenburg’s report. Even before the negative report of Adani Group, Hindenburg has issued reports against many companies. In the year 2020, about 16 reports were released. Due to these reports, the shares of the companies fell by an average of 15 per cent. Hindenburg has filed reports against companies such as Nikola, SCWORX, Genius Brand, Ideanomic, Vince Finance, Genius Brands, SC Wrox, HF Food, Bloom Energy, Aphria, Twitter Inc.
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