Home Business Short-seller Muddy Waters takes short position in renewable energy firm Hannon Armstrong – report

Short-seller Muddy Waters takes short position in renewable energy firm Hannon Armstrong – report

6 min read
Comments Off on Short-seller Muddy Waters takes short position in renewable energy firm Hannon Armstrong – report

Article content

NEW YORK — U.S. short-selling firm Muddy Waters on Tuesday revealed a short position in energy company Hannon Armstrong Sustainable Infrastructure Capital.

Currently, seven brokerages rate the Maryland-based energy company “buy” or higher, three have it on hold and one on a sell rating, with an average target price of $55, according to Refinitiv.

The short seller, founded by investor Carson Block, questioned in a research note Hannon Armstrong’s accounting, saying the company inflates its earnings and cash flows. Hannon Armstrong, which invests in wind and solar projects, did not immediately respond to a Reuters request for comment.

Advertisement 2

Article content

The move comes as Muddy Waters’ founder Carson Block is being probed by the Justice Department as part of a wide-ranging investigation into short-sellers and hedge funds focused on suspected coordinated manipulative trading.

Shares in Hannon Armstrong were down roughly 8% in the morning trading.

“Hannon Armstrong is a prime example of how public market incentives can warp a company into relentlessly pursuing value destructive investments in order to feed a Wall Street growth narrative,” Muddy Waters wrote.

The short-seller said the Maryland-based energy company has changed its business model since its initial public offering in 2014 to an investment company in unimportant projects from a fee-based one.

Advertisement 3

Article content

Hannon Armstrong should have posted a net loss of $235.4 million last year, not a net income of $127.3 million, according to Muddy Waters.

The short-selling firm wrote Hannon Armstrong has booked tax benefits it is not entitled to, inflated gains on securitization and refinanced loans to its projects without proper disclosure to investors.

It also believes most dividends paid by Hannon Armstrong in the last eight years were financed by debt or equity issuance – only 9% of the dividends came from its cash flow.

Currently, seven brokerages rate the stock “buy” or higher, three advise on holding and one on selling, with an average target price of $55. (Reporting by Carolina Mandl Editing by Marguerita Choy)



Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Source link

Load More Related Articles
Load More By James Tisdale
Load More In Business
Comments are closed.

Check Also

India Mulls $2.5 Billion Aid to Manufacture Grid-Scale Batteries

Article content (Bloomberg) — India’s power ministry is proposing a nearly $2.5 billion in…