Adani Ports (NSE: ADANIPORTS) shares are up near 7% today. ADANIPORTS shares have risen on the news that the promotor - the Adani family and interests - has raised their stake in the company. The amusement comes, of course, from the way that the Hindenburg allegations are that the Adani family has long had a series of undisclosed cross-shareholdings. So we could - if we were feeling mischievous - suggest that the share price is now rising because Adani is openly doing what it was accused of secretly doing. That would be somewhat unfair too - the open increase of the shareholding position is completely different from a secret set of such holdings - not least in how they’re financed.
It’s worth returning to that original allegation: “Today we reveal the findings of our 2-year investigation, presenting evidence that the INR 17.8 trillion (U.S. $218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.” The specific detail for us today: “Many of the Vinod Adani-associated entities have no obvious signs of operations, including no reported employees, no independent addresses or phone numbers and no meaningful online presence. Despite this, they have collectively moved billions of dollars into Indian Adani publicly listed and private entities, often without required disclosure of the related party nature of the deals.” To strip it of necessary detail, the base allegation is that Adani group companies borrow and then spend that money on shares of other companies within the group. The borrowings and the holdings are not disclosed. This then creates a ramp on Adani Group companies.
Adani Ports share price from Google Finance
As we’ve noted before about Adani Ports these allegations are strongly refuted.
Which brings us to today: “Adani Group stocks witnessed decent gains in early deals on Monday as investor sentiment improved about the group stocks after the group promoter firm increased its stake in two of the group’s listed companies.”
There is an amusement about that, isn’t there? “The jump in the share price of the two Adani Group companies came after the promoter company boosted its holdings in them as part of its ongoing strategy to recover from the adverse publicity.”
Well, yes, we think there is. The allegation is that the share price is too high because of undisclosed promoter stakes. The share price rises on the revelation of disclosed promoter stakes. But it is, obviously, just an amusement. For this is the action we’d expect of an Adani Group that is entirely and wholly in the clear. The share price is down as a result of false allegations, why wouldn’t the promoters get richer by buying something artificially cheap? On the other hand it is also how stock pumps eventually unravel - people run out of the money necessary to keep buying the stock.
