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.
As we've said before the basic Adani problem: “Adani Enterprises (NSE: ADANIENT) is down 5.8% today, leading the pack of all ten Adani listed enterprises down. The problem is a continuation of the claims that Hindenburg made in its shortselling report on the entire Adani Group. Hindenburg didn't pull any punches, describing the entire corporate structure something of a sham. We don't need to go that far, we can just observe that interesting questions about debts, corporate cross shareholdings and so on were asked. Adani insists that it has answered all such questions and there is nothing to see here. “
That is the basic problem. Hindenburg made claims, do we believe those claims or should we not believe them? We get conflicting information, for example from the Supreme Court: “Adani Enterprises (NSE: ADANIENT) is up another 16% on Tuesday to give a 45% rise over five days. The cause of this is, as we said about Adani Ent on Monday, the Supreme Court finding concerning the Hindenberg short sellers report. The market is taking the SCs report as stating that there is no substance to the allegations contained in that Hindenberg report. Thus the significant and continuing re-rating of the Adani Group listed companies in general. Adani Enterprises is benefitting the most as it is also the one of those 10 listed companies which suffered the most from the initial allegations.”
This has been going back and forth for some months now. A new unturning of a stone, the Adani Group share prices all fall, then a counterclaim or just the passage of time and they recover.
Adani Enterprises share price from Google.The latest was that the SEC was investigating what Adani had told American investors about the Hindenberg claims: “Adani Enterprises down 7% - Adani stocks down across the board - on SEC enquiries. Both the SEC and the US Attorney's office in Brooklyn are chacking what Adani Group companies said to investors over the Hindenberg short selling report”
Here we are a few days later and that share price fall in ADANIENT seems to have been recovered. So, what should we think about the share prices of the Adani Group?
As we say, one possibility is that they're volatile - any new claim means another slump. At some point the slump won't be recovered from either. Alternatively we can think that prices are resilient. While they might get hit occasionally by claims they do return to their objective value. Sadly, just one of those areas where views can differ. As yet there's no proof either way.
