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Speaker 1: So it's always good to have Carson Blanc here at

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Speaker 1: seven point thirty one, Lexington, Carson, you blasted up here

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Speaker 1: from the robin Hood Investors conference downtown.

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Speaker 2: Thank you for doing so. I know the crowd there.

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Speaker 1: Was waiting with baited breath to hear word.

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Speaker 2: Of a new short. Did you disappoint them? Well?

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Speaker 3: I copped to a big mistake that we'd made.

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Speaker 2: And I think probably a.

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Speaker 3: Number of times when you've interviewed me in the past,

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Speaker 3: you've asked how I ever made a mistake, And so

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Speaker 3: I started out by saying, it turns out that we did,

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Speaker 3: and the mistake was when we shorted Sun Run in

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Speaker 3: July of twenty twenty two. The root cause of that mistake, though,

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Speaker 3: was that we weren't cynical.

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Speaker 2: Enough and hard to believe candidly, you know, I.

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Speaker 3: No, I like Legitimately, I kicked myself because what we

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Speaker 3: realized only a few months ago is that Sun Run

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Speaker 3: when it talks about the number of subscribers it has,

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Speaker 3: and this is what the street hangs its hat on.

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Speaker 3: How many subscribers and what's the value of the subscriber. Now,

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Speaker 3: previously we'd attack the value the subscriber as fantastical thirty

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Speaker 3: year models that just use assumptions that don't pass the

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Speaker 3: laugh test. But the number of subscribers, we just assumed

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Speaker 3: that it was a good number. Well, it turns out

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Speaker 3: that sun Run reports subscribers also to US government agency

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Speaker 3: called the Energy Information Agency, and as of the end

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Speaker 3: of Q two, Sun runs telling the street it has

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Speaker 3: seven hundred and twenty five thousand subscribers, but it's telling

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Speaker 3: the US EIA that it only has six hundred thousand.

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Speaker 3: And when we look at things from a balance sheet

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Speaker 3: movement perspective, yeah, we think that that seven hundred and

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Speaker 3: twenty five thousand subscriber numbers is a bad number, that

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Speaker 3: it doesn't actually tie, doesn't have a relationship to the

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Speaker 3: gap financials.

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Speaker 1: I do have to mention that when you first shorted

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Speaker 1: this stock again back in July of twenty twenty two,

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Speaker 1: sun Run took a look at your assertions, let's say,

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Speaker 1: which concerned tax credits and customer valuations and said that

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Speaker 1: they were grossly false and inaccurate.

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Speaker 2: I have not yet responded to this.

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Speaker 1: Latest allegation of if I'm understanding you correctly overstating the

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Speaker 1: number of subscribers that they have or at least you've

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Speaker 1: identified a discrepancy.

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Speaker 2: That's correct.

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Speaker 3: They gave the pro former response back in July and

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Speaker 3: they have not yet responded to this.

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Speaker 1: How much juice is there left in this trade? The

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Speaker 1: stock is down, or was at least before today, by

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Speaker 1: about two thirds since you originally disclosed the short.

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Speaker 3: Yeah, so that's a great point or great question. But

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Speaker 3: the thing is, if you take that delta, the difference

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Speaker 3: between what Sunrun says we have in number of subscribers

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Speaker 3: and what the EIA shows, and you multiply that by

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Speaker 3: Sunrun subscriber value, that ends up being about one and

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Speaker 3: a half billion dollars of market cap, which would be

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Speaker 3: about over sixty percent of the remaining market cap. So

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Speaker 3: it's a real number. And this is a company with

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Speaker 3: massive amounts of debt.

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Speaker 2: You're not accusing it of being a zero though.

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Speaker 3: Look, I can't understand why you'd want to be long

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Speaker 3: this thing any I mean, even if you're like, even

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Speaker 3: if you just look at the gap financials, it's always

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Speaker 3: had significant negative viba DA, it's always incinerated cash. The

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Speaker 3: only reason to belong this is because you think that

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Speaker 3: these long term contracts, eventually the cash flows that come

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Speaker 3: off them will provide some value, and we challenge that,

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Speaker 3: and we thought that that those values were you know,

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Speaker 3: should be marked down by seventy five to ninety percent.

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Speaker 3: And now we also look at them like we think

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Speaker 3: the subscriber numbers also greatly overstated. So yeah, with the debt,

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Speaker 3: I mean in a real like in a sane world,

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Speaker 3: and we're not there yet hopefully returning there.

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Speaker 2: It's a zero Carson.

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Speaker 1: You know what people say when you double down on

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Speaker 1: an existing short, They say, you've run out of ideas?

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Speaker 2: Have you? Are there more shorts to come? Yes?

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Speaker 3: There are actually, and so we we anticipate doing several

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Speaker 3: more ideas this quarter. And it's not that Sunrun is

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Speaker 3: an unloved idea, it just uh, you know, look, I

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Speaker 3: really wish we'd come across this back when. But but yeah,

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Speaker 3: we're not out of ideas.

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Speaker 2: It's still a dysfunctional world.

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Speaker 1: I like to think of sun Run as part of

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Speaker 1: a bigger short thesis you have, which you have called

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Speaker 1: or termed the ESG hustle.

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Speaker 2: Explain.

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Speaker 3: Yeah, it turns out and when we first started shorting

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Speaker 3: companies that were deemed to be ESG, we didn't have

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Speaker 3: this theme in mind that ESG is the space for grifters.

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Speaker 3: But looking back on companies, we've shorted, others have shorted

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Speaker 3: it really esg's just really attracted some of the most

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Speaker 3: aggressive managements and companies in the space. And I think

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Speaker 3: that that's because when you have an economy or these

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Speaker 3: industries that are driven by subsidies, it's not actually the

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Speaker 3: companies that do things the best or create the most

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Speaker 3: value that win. It's the companies that are best able

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Speaker 3: to vacuum up the subsidies.

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Speaker 2: And so I kind of feel like they're probably.

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Speaker 3: There's probably a graveyard of former competitors to Sun Run

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Speaker 3: and some of these other ESG names that went under

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Speaker 3: because they weren't willing to be as aggressive in hoovering

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Speaker 3: up subsidies as these companies are.

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Speaker 1: How much of this would you say is a stimulus bubble,

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Speaker 1: you know, too much capital chasing too few ideas, or

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Speaker 1: and how much is it companies doing bad things right,

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Speaker 1: either praying on investor ignorance or gaming these stimulus programs.

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Speaker 3: Well, they're not mutually exclusive if we're talking stimulus in

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Speaker 3: the form of monet for example. Okay, Well, so I

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Speaker 3: would say your first question, we really have to look

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Speaker 3: at monetary stimulus, because the reality, I mean my observation

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Speaker 3: is that when you have lower interest rates, you.

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Speaker 1: Have lower levels specifically referring to the reduction.

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Speaker 3: Yes, but I want these these definitely dovetails. So when

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Speaker 3: you have lower interest rates, you have lower levels of

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Speaker 3: honesty in the markets, because this rising tide pushes up

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Speaker 3: the most aggressively managed or messaged boats. But then when

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Speaker 3: you overlay the fiscal stimulus, where there's real money that

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Speaker 3: to be to be attained by getting these tax credits.

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Speaker 2: Then you get the double whammy.

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Speaker 3: And the government isn't really paying attention. And I think

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Speaker 3: we know that from looking at spending across the DoD.

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Speaker 3: I mean, our government doesn't seem to care about who's

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Speaker 3: abusing these systems.

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Speaker 2: So that's why it's a great grift. I'd like to

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Speaker 2: think that they care. We'll have to see if they

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Speaker 2: take action.

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Speaker 1: Carson before we finish, I can't help, I can't resist.

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Speaker 1: I would have to say asking you about Carl Icon. Carl,

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Speaker 1: of course, is one of the most famous short sellers.

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Speaker 1: But last week you may have seen this at the

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Speaker 1: thirteen d Monitor conference, he was blasting the shorts. One

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Speaker 1: short seller in particular, whom he didn't name, for spreading

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Speaker 1: rumors that he described as basically untrue.

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Speaker 2: Whose side are you on in this fight?

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Speaker 3: Well, I'm not on carl Icons and I'm friendly with

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Speaker 3: Nate Anderson of Hindenburg.

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Speaker 2: Nate did great work there.

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Speaker 3: I think it's been I think it's been vindicated and validated.

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Speaker 3: There's obviously sour grapes and it's sad. I mean, there's

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Speaker 3: a lot to admire, especially from the perspective of a

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Speaker 3: short activist. There's a lot to admire about Carl Icon

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Speaker 3: over the course of his career. Unfortunately he ended up

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Speaker 3: on the wrong side of this and that's, you know,

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Speaker 3: his own fault. Hopefully someday the tables don't turn on me.

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Speaker 3: In a similar way, there.

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Speaker 1: Are people delighting in the schadenfreud at Carson. It is

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Speaker 1: great to see you here. Thanks as always for coming

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Speaker 1: up to Bloomberg. That was Carson Block of Muddy Waters

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Speaker 1: Research