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Carson Block's next big short idea

Carson Block speaking the SOHN Conference in New York on May 4th, 2016.
David A. Grogan | CNBC
Carson Block speaking the SOHN Conference in New York on May 4th, 2016.

Carson Block's new short idea is a bank he says is susceptible to construction losses.

Block is chief investment officer of activist investment firm Muddy Waters Capital. Block is known for his short selling research, which led to several government fraud investigations and financial restatements.

Short Bank Of The Ozarks (OZRK)

"We are short the stock," Block said at the Ira Sohn Investment Conference on Wednesday. "The company trades at a growth stock valuation" which will re-rate lower as earnings growth deteriorates, he added.

The bank's loans are "about 90 percent in real estate lending" and "35 percent of their loan book is in construction lending," he said. Block stated the company aggressively built the book since 2011 in maturing markets.

"Construction loans are really risky. When things stop, banks will get stuck with unfinished projects. If this happens, Ozark will take losses," the manager said. "Their balance sheet could come under severe pressure in the worst case," Block concluded.