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id: 170

HASI Muddy Waters Revelation Case

  • In July 2022, Muddy Waters in its report alleged Hannon Armstrong of misleading financial statements.
  • $HASI fell by 19%, losing $769M+ shareholder value.
  • Investors may suspect HASI of misleading, which led to thier losses.
On July 12, 2022, Muddy Waters Research published a report summarising: "We are short Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) because its accounting is so complex and misleading that its financial statements are effectively meaningless."

The report stated:
  • HASI is a prime example of how public market incentives can warp a company into relentlessly destroying value to feed a Wall Street growth narrative. 
  • Most of HASI’s income is both non-cash and unrealizable:
  • It has little relationship with cash to be received in the future. 
  • HASI misleadingly inflates GAAP earnings in three ways:
  1. Through a loophole in the arcana of accounting for renewables subsidies, HASI books non-cash unrealizable income relating to third parties’ tax credits that will be reversed;
  2. HASI produces non-cash income by manipulating the discount rate it applies to residual assets to implausibly low levels, thereby inflating its gains on securitizations; and,
  3. HASI books interest income from non-cash “Paid in Kind” (“PIK”) interest payments, which are essentially IOUs from stressed borrowers.
After this report, $HASI fell by 19% and lost over $769 million of its market capitalization, seriously damaging shareholders.

Considering alleged facts, Investors may have reasons to suspect Hannon Armstrong of manipulative financial reporting, which led to thier losses.

The case is already under investigation by at least one of the reputable law firms.
Case Status
Attorney Investigation
Alleged Offence
Misleading Statements
Financial Misrepresentation
Failure to Disclose
Suspected Party
Security Type
Trade Direction
Shock Event Date
12 July 2022
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