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JayEnAar Profile picture
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Feb 3 • 6 tweets • 3 min read
This is wrong. Do not be fooled by this "attack on India" nonsense. Shorsellers get their fingers burned when they target a sound company and predict a drop in its share price. They target companies that are "over-valued" acc to the fundamentals. Read
It is as natural for Owners and CEOs of target companies to rant and rail angrily at Short Sellers. They don't want their misgovernance to be suspected let alone called out. Elon Musk famously fumed at savvy traders who shorted Tesla Stock.
He once famously referred to the SEC (Securities and Exchanges Commission) as the ShortSellers Enrichment Commission. President Hoover labelled the short sellers of 1929 'unpatriotic' much as #Sanghi PseudoNationalists now are draping Mr Adani in the #Tiranga.
But the fact remains that overvaluation will have at some point to be corrected. Excessive valuations allowed the Adani group to 'over-leverage', i.e borrow too much and grow too fast. They binged and engorged themselves on Govt mandated credit.
@HindenburgRes merely brought forward the day of reckoning. Their motive was profit. Of course it was. Is anyone motivated by loss? Even Mr Adani was motivated by profit. Every businessman is. Everybody who bought Adani Stock at INR 4000 was motivated by profit.
Indeed they were so motivated by profit that they held on to their stock instead of selling even as it plummeted.
Finally read my tweet thread:

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More from @GorwayGlobal

JayEnAar Profile picture
Feb 4
L'Affaire Adani Group
How the world is reporting the fallout from @HindenburgRes allegations
1. London's Financial Times looks at the challenge for India's institutions. Image
Here is the link:
ft.com/content/9840aa…
The FT says, apart from Adani business empire, "something bigger is on the line: India’s probity in corporate governance and pursuit of a development model in which the state has entrusted a few ultra-rich men with running India’s infrastructure and pioneering investments abroad. Image
Read 11 tweets
JayEnAar Profile picture
Feb 3
A Tweetorial on Corporate Bonds
In connection with the Adani #Hindenburg debacle.
In last few days Ive come across some surprising levels of misunderstanding about how bonds work. So here is a quick primer.
1. Why do companies issue bonds to raise financing for their operations?
A company (C) needs cash to set up, run, pay staff, buy stuff, pay bills, etc in order, hopefully to make a profit for its owners (shareholders). Two option to do this equity, i.e sell shares (= give away a share of the company in return for a cash price) or sell Bonds.
They can also take a loan from a bank, but I am leaving that out for now to keep things simple. Bonds and loans are slightly different form of debt finance.
Focus for now on Bonds. Keep it simple. Lets say C issues a 10-Yr Bond with a face value of 100 and a coupon of 7.5
Read 18 tweets
JayEnAar Profile picture
Feb 3
A twitter thread on short selling.
At a time when ppl in India, have woken up to "short-selling" thanks to @HindenburgRes expose of corporate fraud, it my be useful to see why short sellers are as useful for markets in general as they are painful for the target stock
In 2018 @economist wrote this excellent briefing on short selling. "Short-sellers are savvy investors who help to keep the market’s exuberance in check."
economist.com/finance-and-ec…
Why did Elon Musk and Tesla feature in this article. Because, Tesla stock "is one of the most heavily shorted companies in America", with "a quarter of its publicly traded shares lent out to facilitate short-sellers". Naturally, Elon Musk hates these “haters”, “jerks” etc
Read 12 tweets
JayEnAar Profile picture
Feb 3
Adani group is huge in terms of assets - albeit debt fuelled. Bit it is under pressure. Acc to @TheEconomist the group
- runs many of India's biggest ports (plus in AUS, SriLanka and Israel)
-warehouses a third of its grain
- operates a fifth of its power transmission
- runs airports that account for a quarter of its commercial air traffic
-produces a fifth of its cement
- had revenues of USD 25 Billion (0.7% of India's GDP)
- net profit of 1.8 billion
- accts for annual capex of USD 5 bn (7% of to total for India's 500 biggest non-fin firms
The big big question is servicing its huge loans and paying the coupon on its corporate bonds. Bond prices have plummeted indicating that the market demands a big risk premium. Yields have risen to 11%
economist.com/business/2023/…
Read 11 tweets
JayEnAar Profile picture
Feb 2
This is deeply deeply damaging news from Forbes.
"Elara Capital’s India Opportunities Fund, an offshore vehicle that holds $3 billion worth of publicly traded stock in Adani companies (including Adani Enterprises), serves as one of Adani’s “stock parking entities”
@FT quotes Lord Meghnad Desai - a Non exec director of Elara Capital. He told FT that the Hindenburg allegations were “very vague” but that he had contacted the financial regulator in Mauritius as well as Bhatt to seek more information.
@FT Desai: “My position is that whether the report [by @HindenburgRes] is correct or not, the market believed it. f it is correct that Elara was used as a vehicle indirectly by the Adanis then we have to worry about that. "
Read 5 tweets
JayEnAar Profile picture
Feb 2
The rout of the Adani business empire is causing ripples in London.
Jo Johnson is the brother of ex-PM BorisJohnson. Elara Capital "was one of the 10 bookrunners on the share sale that Adani’s flagship group abandoned on Wednesday".
Elara Capital was set up as a “leading investment bank”, for "Indian companies seeking to raise money overseas, in June 2022"
Who are Elara Capital@ and what do they do
Read 5 tweets

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