Financial firm B Riley (RILY) is getting whacked again today – the common shares are down $3.75 to be at $26.27 which is down $15 in the last 5 days.
Their baby bonds and 1 preferred issue are getting spanked as well–down 1 to 4%.
This is purely a trust issue – ‘we don’t trust you Bryant Riley’. I have written very extensively about the incestuous relations that B Riley has at play. They have had their fingers in so many marginals ‘deals’ including one of the most recent which was the Franchise Group ‘take private’. Other deals are with Babcock-Wilcox, Synchronoss Technologies, Maven (Now Arena) and many others. The latest is that Brian Kahn who was the found/CEO of the Franchise Group may have been involved (a co-conspirator) in a major securities fraud. That article is here.
My initial clue as to problems stems for a number of years ago – my wife worked for a company that James Heckman ran – here. More is here. B Riley stepped in to ‘bail out’ a new company Heckman founded (Maven). After that point Rily seemed to be involved in many very dicey financing – some of you know the story. They were involved with iMedia (which had a baby bond outstanding) that filed for BK in July.
If you are a holder be very careful—I’m not saying that where there is smoke there is fire–but there might be.
Of course all parties are innocent until proven otherwise.
Here is a bullish article from SA on RILY:
https://seekingalpha.com/article/4653745-bullish-case-for-b-riley-financial-stock-and-baby-bonds#scroll_comments
Here’s another recent article with a cogent break down and explanation of RILY’s businesses. The bottom line is RILY isn’t going out of business anytime soon despite the short sellers best efforts, and the baby bonds maturing over the next 5-6 quarters represent some decent value.
https://www.valuedontlie.com/p/b-riley-rily-a-short-rebuttal
I don’t track RILY – but given what is happening I wanted to see if there is an opportunity here.
I noted the paragraphs pasted below concerning commitments to FRG and B&W in the recent 10Q. Interested in any thoughts that folks might have given FRG downgrades. RILY near-in debt maturity is $140M outstanding – these are the May 2024 notes currently trading at $22.40.
Also looking at the BW equity holdings outlined in the recent 13F and BW share price trajectory from $4.21 at 9/29 to $1 today it looks like this is another $87M M2M loss since the 10Q filing.
Unrestricted cash at 9/30 was $250M. Equity at the end of the quarter was $467M.
RILY Commitment(s) to BW cut and paste:
“On June 30, 2021, the Company agreed to guaranty (the “B. Riley Guaranty”) up to $110,000 of obligations that B&W may owe to providers of cash collateral pledged in connection with B&W’s debt financing.”
RILY Commitment(s) to FRG cut and paste:
“On May 10, 2023, the Company entered into certain agreements pursuant to which the Company had, among other things, agreed to provide certain equity funding and other support in connection with the acquisition (the “Acquisition”) by Freedom VCM, Inc., a Delaware corporation (the “Parent”), of FRG. The Company entered into an Equity Commitment Letter with Freedom VCM (“TopCo”), the parent company of the Parent, and the Parent, pursuant to which the Company agreed to provide to TopCo, at or prior to the closing of the Acquisition, an amount equal to up to $560,000 in equity financing. The Company and FRG also entered into a Limited Guarantee in favor of FRG, pursuant to which the Company agreed to guarantee to FRG the due and punctual payment, performance and discharge when required by Parent or its subsidiary to FRG of certain liabilities and obligations of the Parent or such subsidiary. On August 21, 2023, in connection with the completion of the Acquisition and the Company’s portion of the equity financing, the Company’s obligations pursuant to the Equity Commitment Letter and Limited Guarantee were satisfied.”
FRG downgrade CCC+ to CCC — what a drop- ha.
https://seekingalpha.com/news/4035607-b-riley-skid-continues-amid-sp-downgrade-of-franchise-groups-credit-rating?mailingid=33350467&messageid=2900&serial=33350467.646&utm_campaign=rta-stock-news&utm_content=link-1&utm_medium=email&utm_source=seeking_alpha&utm_term=33350467.646
And BW dipped below $1, but notes doing fine- level or up over a buck.
Hi, Tim:
A question on using the III site: what’s the best way to (quickly) get all past comments on a particular issuer, e.g., RILY? Thank you.
Robert – not sure of any way to get to them. I tried the search box but it didn’t help.
Well, that’s a disappointing result, but thank you for trying to help and for responding.
Any holders of BW PRA. Dropped over $4.00 today.
Geomarch–1 more company related to B Riley.
Well I got a comment deleted in a SA chat room because I commented RILY is dropping nicely. Most things are okay at the right price. Looking at lower $20s for any support for the common. RILYO, because it matures, so soon may be ok.
So many in SeekingAlpha (especially the service owners / moderators ) love B Riley no matter what shenanigans they pull.
RILYO at current 23.85 price div is 7% and matures May 2024.
Tim has date listed as May 2025. PROSPECTUS says May 2024.
Thanks danzeb–will check and correct
Got it corrected on 4 different spreadsheets–thanks for the headsup!
closed at $23.60 and I’m buying hand over fist on any drop!
So Tim, just trying to read between the lines Im going to go out on a limb and say your not interested in buying the common, preferred, or the debt, ha. Im your camp. I quick traded some of their bonds back in ZIRP, era. But havent had any of their stuff on my trading screens for several years. Just outta my personal comfort zone.
Grid–ha–you are correct!! I have pondered the baby bonds before – but I don’t think I ever owned any.
If there is anything to the Brian Kahn story – and if any money made its way into RILY coffers – Katy bar the door.
What exactly is Riley? A BDC, financial services, bank, wealth advisor, PE?
In the last 20 years one of the things that made me uneasy about BDC’s was when they had loans that were failing they would refinance them and start the clock over with a new loan. Seemed like they threw good money after bad as long as they made their management fees and commissions it felt like they were cooking the books and it was legit with the investors taking all the risks.
Katy bar the door… I got in trouble with my lady saying that, recently. I used that phrase, and she didnt know what it meant. I dug the hole deeper when I said, “You dont know what that means?”. Then she said, “It must be something only old people say”…..
Given that the origins of that phrase are likely in the 1400s, it would have been a bigger insult had she accused you of coining it!
My understanding is that it is based on a lady in waiting who used her arm in lieu of the piece of wood which was used to bar a door in order to keep assassins from getting at a king. An accomplice had removed the wooden bar which served that purpose so she improvised.
She ultimately failed in her effort and suffered a broken arm for her troubles, but she did inspire a phrase which is used even to this day by people (such as myself) who are of a certain vintage.
My mother is from as far back in the woods as you can get and I thought it was just an expression used by country folk which I picked up from her. But it actually came from royalty.
Enjoy your mule.
https://www.youtube.com/watch?v=8_mcvifJ5N0
Do you think we are dating ourselves just a little bit?
Well no need to have a bee in your bonnet about this phrase… Poor old Katy must have been using her arm as a Rube Goldberg contraption when she was courting disaster… what’s wrong with that? She was probably in her salad days when this all happened and was facing a fine kettle of fish so she was just using her noggin as well as her arm.
Grid, better to stick with ” the s–t is going to hit the fan ” , crude, but everyone can get that picture 🙂
FYI – Here is a cut and paste of a post from The Other Website. Mr. Riley seemed a bit surprised in the conf call about the allegations but comfortable with the denial. IMHO, If minimal DD was done on FRG during the acquisition (say, two minutes on Google) , some earlier allegations should have surfaced, see IBJ below.
In the rear view mirror, some of the small things mentioned in the IBJ article seem like red flags now- like offering to substitute guaranties (paper) for cash in escrow shortfalls. Given the RILY price drop and the circling sharks, the next logical question for RILY is whether there are more problems at FRG than unsold furniture.
+++++
“Not clear why these allegations should surprise anyone other than a Bloomberg reporter. Over 2 years ago, The Indianapolis Business Journal ran an article on investors unhappy with Kahn’s and Prophecy’s mismanagement of their funds. Oddly, Prophecy (which the SEC press release suggested was BFF with Kahn) was trying to recover the losses from its sub-adviser Kahn.
“Investors are puzzled and upset that the hedge fund, Prophecy Asset Management, which was supposed to spread out funds to dozens of separate money managers, instead concentrated the money with a single Florida manager whose performance tanked when the pandemic threw markets into turmoil early last year.
“That manager, Brian R. Kahn, served as a so-called subadviser for two Prophecy investment funds: Prophecy Trading Advisors, which started 2020 at $363 million, and Prophecy Special Opportunities Fund, which started that year at $50 million, according to records reviewed by IBJ.”
IBJ, : “NY hedge fund’s meltdown could cost clients of Carmel investment firm millions,” — February 19, 2021
In hindsight, I’d have to wonder how Kahn had time to run Franchise Group and a money management firm on the side at the same time. If I remember correctly, one of the big SA authors was a Kahn cheerleader, predicting Kahn could be the next Warren Buffett. I don’t recall any of the SA touts picking up on the litigation or the side business.
Just my opinion, DYODD.
BearNJ—yes the same ‘tout’ that has touted many, many reits down 50-75%. That one is a very gullible person.
Rily is also involved with Babcock and Wilcox. Great sounding name for a company, but loserville as a company. The common stock just dropped today over 50% to a $1.05 a share. I dont know how singed their fingers are from that investment.
I’m with you Gridbird. Made a few bucks years ago, sold it,band thought good riddance.
Dj, everything was safe then wasnt it. And these may be fine, now. I certainly dont know. But they always seem to be deep in the weeds with what they do.