Infopost | 2023.01.24

Margin Call film conference room

Financial stuff from yesterday and today.

Hindenburg Research Soon we will release a report on what we strongly suspect to be the largest corporate fraud in history.

I enjoy a good Hindenburg post, the Nikola one may well be the anthem of the SPAC boom (or RTO take 2). The Lordstown one became a pandemic hobby for me. The Draft Kings exposť made a less convincing case to buy puts, though largely for cynical reasons.

The Adani post has a little of each.

Hindenburg Research The 7 Listed Companies Of Adani Group Are 85%+ Overvalued Even If You Ignore Our Investigation And Take The Companies' Financials At Face Value

The post starts with a pretty strong statement: Adani has fundamentals that rival Tesla's golden age. Beyond that, there's a whole lot of "these dudes have criminal records and/or a history of fraud accuasations" - the kind of stuff that would keep me out of a stock but not convince me to open a short position.

Hindenburg Research Adani fundamentals PE

A new Investopedia link

Investopedia Stock parking is the illegal practice of selling shares to another party with the understanding that the original owner will buy them back after a short time. The goal of stock parking is to conceal a stock's real ownership while maintaining the appearance of regulatory compliance.

The most voluminuous and Hindenburg-like portion of the post is about alleged stock parking on Adani's part. I wasn't sure what benefit there would be to owning more of a grossly-overvalued stock than what was on paper.

Hindenburg Research Publicly listed companies in India are subject to rules that require all promoter holdings (known as insider holdings in the U.S.) to be disclosed. Rules also require that listed companies have at least 25% of the float held by non-promoters in order to mitigate manipulation and insider trading. 4 of Adani's listed companies are on the brink of the delisting threshold due to high promoter ownership.

I guess the allegation is that the stock became grossly overvalued by having a tiny float.

Is there a put bandwagon?

Give me a ticker and a strike price, you think I'm reading all that?

INDA - from looking at their holdings Adani companies make up about 5.2% of this etf's total portfolio. Also may rattle other Indian companies maybe

As of this writing, INDA is +0.19% in after hours.

Michael Burry tweet January 23 2023 technicals dot com

Burry did another Tweet-and-delete. It wasn't obvious from the image, but those years say 2000, 2001, and 2002 (with SPX and the 50/100/200-day moving average). The dd is in the comments:

Oh, I got this.

50, 100, and 200 day simple moving averages on the S and P 500, circa 2001.

He is highlighting a crossover (50 crossing 100, bullish) and an almost crossover, 50 and the 200 (golden cross that mainstream financial media has an orgasm over once in a while, bullish)... so two typically bullish signals that ultimately failed and led to a nice horrific sell off.

That scenario is playing out in real time as we speak, with those crossovers already in play and the golden cross coming up next.

It is pretty cryptic if you don't know much about TA I suppose.

SOURCE: TA nerd since 2000.

I wouldn't read much into it, because, as he states... "maybe". Maybe it happens again, maybe it doesn't.

Flip a godamn quarter and make your bets.

EDIT: Nerd TA statistical gobblegook for those that actually read this: The dump he is referring to set the S and P back an additional 30%+.

Ah. Hmm. I'm not a technicals guy but I kind of feel like that dip on the left side of the circle could be considered the result of a macro event. Even if you think the market bounced back and continued doing its thing in spite of the permanent changes to geopolitics, the SMAs themselves were distorted in a way that didn't happen in 2023.