Dear friends,
During the course of 2022 there was a name that was frequently in the front pages of financial press. A person who in regular intervals made headlines, loved by some and hated by others, and who concentrated in his name the love and envy of a whole nation. No, we are not talking about Vladimir Putin. The focus of today’s post is Gautam Adani. Most of you will ask, Gautam who?
In the past 12 months Mr. Adani kept rising in the list of the Top 10 richest people in the world. For those not living in Asia he is not a household name. He made his fortune in diamonds, and from there expanded into financial services, ports, fossil and renewable energy, and so on. The inevitable parallels were drawn between an Asian self-made man overtaking European and American moguls and Asian economies doing the same to European and American ones. In September 2022 Mr. Adani surpassed Jeff Bezos as the second richest person on the planet with a worth of approx. 150 billion USD.
But then suddenly it all turned sour. Like Icarus who was flying too close to the sun, the Adani stocks came crushing down. A fund called Hinderburg Research, which has made a reputation from short-selling stocks, issued a lengthy report in which it is essentially accuses the Adani group of accounting fraud, misrepresentation vis-à-vis investors, co-operation with convicted criminals, and bribing of government officials. After tripling in 2021 and then doubling again in 2022, the Adani stocks have shed close to 60 billion USD or approx. 25% of the group stocks value on average, just a week after the revelations. Unfortunately, those who thought that they had bought the stocks of an established company are now realizing that not all investments are the same. Not all jurisdictions are the same. Not all paper profits are the same. Not all accountants and banks are the same. Not all castles are built on solid ground.
Could this have happened in an asset class like Real Estate? Is it possible that the owner of a house wakes up one day to find out that the value of his property is down 25% overnight because of someone’s report? That the rental income that was coming in the bank account steadily was fake? That the bedroom and the toilet were fake? Of course not, that is the value of Real Estate after all. It is a real asset, which you can touch and feel, with real income streams, and rising yet not volatile prices. To be honest, it is very rare for Real Estate to go up 100% or 200% in a year too, but that stability is a positive trait not a negative one.
If you want to build your wealth on solid foundations with no nasty surprises, reach out to Artemis Assets with your investment plans.
Until the next one!
