NewsHindenburg Research's latest report sends LPP stock tumbling

Hindenburg Research's latest report sends LPP stock tumbling

The founder of Hindenburg Research is Nathan Anderson.
The founder of Hindenburg Research is Nathan Anderson.
Images source: © Getty Images | Bonnie Jo Mount

8:11 AM EDT, March 16, 2024

Publications by Hindenburg Research have already led to a $57 billion reduction in the fortune of one of the world's wealthiest individuals and have challenged the reputation of a legendary figure in the American stock market. The company, known for its investigative financial reporting, recently targeted the Polish firm LPP, known for brands such as Reserved, Mohito, and Sinsay.
On Friday, Hindenburg Research released a report on LPP, alleging that the company's products were still being sold in Russia despite its stated withdrawal from that market following Vladimir Putin's invasion of Ukraine. They suggested that LPP's sale of its Russian operations might have been merely symbolic. Following the report, LPP's stock price plummeted by about 35 percent on Friday.
In response, LPP's initial statement did not directly address the accusations but described the report as "part of an organized disinformation attack," alleging a five-month plan to manipulate its stock value. The company mentioned that it had previously informed relevant authorities about similar tactics aimed at other companies and suggested that these attacks might serve third-party interests attempting to influence LPP.
Later, LPP refuted claims regarding the nominal sale of its Russian business, clarifying that it no longer owned the Russian operations. In May 2022, it sold 100 percent of the shares of RE TRADING OOO, a transaction confirmed by a Russian court decision. LPP emphasized that it has ceased all commercial activities in Russia and has no control over the company that acquired RE TRADING OOO. The company reiterated its non-involvement in the Russian market, noting an ongoing transition period until 2026 for the buyer to gain full operational independence. LPP is reviewing Hindenburg's report but preliminarily contests the accuracy of its information.
By the afternoon, LPP announced plans to report the matter to the prosecutor's office.
Hindenburg Research, based in New York, has a history of publishing critical reports on corporations, accusing them of financial irregularities and stock market manipulation. The firm benefits financially from these exposés by betting against the stock prices of the targeted companies, a practice that raises questions about potential biases and conflicts of interest.
The company was established in 2017 by Nathan Anderson, inspired by Harry Markopolos, who exposed Bernie Madoff's financial fraud. Named after the 1937 Hindenburg disaster, it aims to unveil financial market disasters. Anderson, who has a background in international business and finance, gained significant attention with the 2020 report on Nikola, accusing it of overhyping its electric vehicle technology, leading to significant legal and financial fallout for Nikola.
Hindenburg's investigation into the Adani Group in early 2023 accused the conglomerate of extensive accounting fraud and stock manipulation, leading to a $57 billion decrease in Gautam Adani's net worth. Despite threats of legal action from the Adani Group, Hindenburg stood by its findings.
The firm also targeted legendary investor Carl Icahn, alleging stock price inflation and misinformation, which reportedly cost Icahn $15 billion. Despite these controversies, most companies targeted by Hindenburg have not pursued legal action, and the two lawsuits attempted were dismissed, underscoring the challenges of contesting Hindenburg's claims in court.
Hindenburg Research's impact on the businesses it investigates is profound, often leading to serious financial and reputational damage, as seen in the cases of Nicola, Adani, and now potentially LPP. It raises questions about market manipulation, corporate transparency, and the role of investigative financial journalism in holding powerful entities accountable.
See also