Adani Enterprises (NSE: ADANIENT) shares are down 3% again today. Adani Ports (NSE: ADANIPORTS) has followed them down 2.5%. The reason to follow these two more closely than the other 8 in the connected empire is that Enterprises is the flagship company, Ports the most cash rich. So, any grand problems are likely to appear in these two rather than the others. And that is what that Hindenberg research alleged, that there were grand problems within the whole group.
It’s possible to take a number of different views about all of this. One is the obvious corporate one. Hindenburg are vile, attempting to profit by telling lies and no one should believe them in the slightest. That’s also, quite clearly, not what the market as a whole believes. For the share price movement has been such that at least some of the market does think there might be something there. Another view could be that Hindeberg are right and that we should all await the collapse of the empire in toto. That mjight not be quite right either given that the longer the survival of the group - even assuming the analysis is correct - then the more can be done to prevent that happening.
Adani Enterprises share price from Google Finance
As we’ve said before, people have been misunderstanding what the Supreme Court said about Adani: “Adani Enterprises (NSE: ADANIENT) shares rose 20% in India today on a delayed reaction to the Supreme Court's discussion of Adani and Hindenberg on Friday. In fact the share prices of all of the Adani Group companies rose on the day. A fair enough reaction given that all 10 of the listed shares fell substantially when the Hindenberg report first came out. We have to admit that we don't read the Supreme Court decision in quite the same way as the market does. We think it's a very limited discussion, not a general insistence that Hindenberg was or is wrong. We also have no view on whether Hindenberg is right either, we're just saying that this latest news isn't quite as exculpatory as the market seems to think.”
As we’ve also said there’s been a considerable recovery in the Adani price: “Adani Enterprises (NSE: ADANIENT) share price is pretty much back to where it was before there was that worry over SEC investigations. At which point we should probably try to make a decision here. Is it that the Adani Enterprises share price is volatile, or is it that it is resilient? Our decision there would then inform - change perhaps - any trading strategy we might have about it.”
The thing is, it isn’t back to where it was before the Hindenberg allegations. So, at least so far, those allegations have had a permanent effect on the varied Adani group share prices. The investment case thus still depends upon the truth of them or not. If Hindenberg is entirely wrong then we would expect to see, even if gradual, a recovery to old levels.
But there’s the thing. Are we all really, wholly, sure that everything Hindenberg alleged is wrong?