Climate-Change Investor Tumbles as Short Seller Blasts Firm (1)

Short seller Carson Block is betting against Hannon Armstrong Sustainable Infrastructure Capital Inc., a company that invests in projects tackling climate change, saying its financial statements are “effectively meaningless” because of “complex and misleading” accounting practices.

Block’s Muddy Waters Capital said in a report Tuesday that Hannon Armstrong inflates its reported earnings through a loophole in the “arcana of accounting for renewables subsidies,” and that most of its income is both non-cash and unrealizable. Hannon, for example, books non-cash, paid-in-kind interest payments, which are IOUs from borrowers, as interest income, according to the short seller.

The company’s shares dropped ...