Our site runs on donations to keep it running for free. Please consider donating if you enjoy your experience here!

Disaster or Opportunity?

B Riley (Rily) common shares are taking a thrashing like we seldom see – now trading at $17.5 down over $7/share.

The baby bonds are all off around $2.50-$3/share.

Shares are all tanking badly on potential fraud mostly relative to the Franchise Group take private and the CEO of Franchise Group Brian Kahn. I posted links last week–here is a recent posting on Yahoo Finance.

My question is whether it is a super bargain now or will we see the fraud charges come to fruition? I certainly will not be involved, but maybe some brave souls will be.

34 thoughts on “Disaster or Opportunity?”

  1. Gave up on my RILYZ shares I had way back in February at 19. Took a loss but now I look like a genius (NOT).

  2. The way I look at it is we have no idea what’s really going on. If I need to gamble (I don’t) I’ll go for more even odds, like craps or blackjack.

    1. Or the Giants over the Cowboys

      … sorry off topic .. we all knew what was going to happen there

  3. There’s a big chunk short interest right now in RILY (25%), and Friday is options expiration. Much more volatility is coming.

  4. FWIW, Fido news shows 2 insider buys of common today, one Friday(who also bought today), one Thursday. Board members, it looks like.

  5. Wow the write ups are haunting. Looks bad. Not sure why the preferreds are holding up so well. I’d think $5-10 is next stop.

    While I try to avoid smaller companies I have been burned in disasters like this before. Their survival is an open ended question. One thing going for it is that Bryant Riley personally owns 6 million. shates. I can’t see him giving up…. And accepting some walk away structured buy out. HE’S GOT SKIN IN THE GAME.

    And if you were to ask me for an opinion I’d say do NOT average down here. Way to much reasons for tax loss sales, and people cutting and running.

    1. If you Prefer – I just stay away from these types of ‘bargains’ – one has no idea which way they will go. Good advice not to average down.

      1. Do you know when APOS goes X dividend? Thanks for telling me about this one. No Rily here I hope. I think I just cursed myself

        1. King,

          Sounds like a Dec 1 record date and thus a Nov 30 ex-date.


          Page S-26:
          Interest on the notes will be payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on December 15, 2023, to the persons in whose names the notes are registered at the close of business on the immediately preceding March 1, June 1, September 1 and December 1, respectively (whether or not a business day), subject to certain exceptions. Interest on the notes will be computed on a basis of a 360-day year consisting of twelve 30-day months.

    2. Tim imho the RILYS are a crap shoot; there are plenty of good opportunities out there without putting your investment at high risk ;

      1. If you want to play this kind of high risk stuff, you are probably better off going with Gridbird to the sports betting window.

        As least you would get to see the game that is being played.

        1. Private, I just covered my Iowa Hawkeyes 7.5 win total over this weekend. And I am going to need it to pay for my Patriots over bet. Because they are not getting to 7 wins thanks to worthless Mac Jones!

          1. What no coin on Mizzou v UTenn??? Thanks for not rubbing it in…..payback I guess….

            1. That was a complete stunner, a much needed payback as the Vols owed us one, or more…. I dont usually bet individual games. I wouldnt bet that beat down to have occurred anymore than I would betting on anything RILY. They damn near went bankrupt 10 years ago, and seem to be hellbent on attempting to revisit that. 2WR, isnt your portfolio about 50/50 split between TVE bonds and Rily Bonds? 😂

              1. Ha! Been out of all things RILY since Dec ’22. What I admired about them, their rogue approach to investment banking and company acquisitions just began to feel way out of control to me with a Michael Milken tinge to it… Oddly I dumped the bonds first in March and April ’22 and held on to the common until Dec…. seems like the bass ackward way to exit, but that’s what I did. So I missed all the carnage and actually made good money with them having bot in the teens via the back door in 2017 when I bot FBR at a discount to what RILY was going to pay for the common…. but wait! You forgot about my exception to the Peter Lynch “buy what you know” rule gem, QRTEP… I held on to 100 of those for no apparent reason but did get out of that too in the mid to low 80’s. So as you can tell, it doesn’t pay to have your wife be a QVC “best customer,” defined in QVC as the customers that buy over 20 times a year that make up about 18% of the account and 75% of the sales. 20 times a year, ha! We must be among the best of the best! I’m so proud..

  6. There may be more fundamental questions about FRG than any alleged wrongdoing by FRG’s founder.

    From The Other Website:
    “S&P downgraded Franchise Group… to “B-” from “B” on Friday, according to the report. The credit rating’s firm also cut the company’s second-lien term loan to “CCC” from “CCC+” ….”Overall we believe the company’s high debt burden following a management buyout earlier in the year has been compounded by weak operating performance and could lead to its capital structure becoming unsustainable,” S&P wrote in the downgrade on Friday.”

    I don’t know how important FRG is to RILY and I’m no day trader, but IMHO options may be a better choice for your shopping dollar rather than going full in and buying the RILY common.

    Just my opinion. DYODD.

    1. Unfortunately options pricing is pretty extreme, so I think it’s probably easier to make money trading the common.

    2. It is certainly interesting news and a name I generally don’t track at all. My question is centered on the possibility of selling near the money calls on RILY common given any rally in the stock at all.

      There seems to be 2 separate issues here from what I can tell:

      Issue 1 FRG
      RILY appears to have retained a $216M investment in FRG as a result of the August buyout. https://brileyfin.com/press-release?release_id=122609
      When I see a CCC- credit it am included to mark the equity at $0.

      Interestingly FRG’s portfolio of businesses included Badcock Home Furnishings. There is evidently some consumer debt securities related to this firm. The name Badcock messed me up for a while as it is is similar to Babcock and Wilcox (BW).

      Issue #2 BW
      On most recent 10Q they took a ~$75M M2M loss related to BW common stock. Based on quarter to date BW common stock performance – they are looking at another $85M M2M loss quarter to date.

      This company had about $460M equity at the end of the quarter, about $250M in unrestricted cash and a $140M debt maturity in May 2024.

      I am wondering if this company will need to recap the Balance Sheet.

          1. Citadel, I appreciate the link… I read it. I saw my posts and actually made a quick small ball buck on these back then. I have no memory of this as they arent on my screeners now. But they are there in the transactions history in account now I see. I guess I have gotten old, soft, and forgetful since then.

          2. Hey Citadel – I didn’t see it before. I am not defending the report. It is just part of the research that is out there.

            Yes you have a valid point on baby bonds, but I am not interested in their opinions on baby bonds. They did make a good call on B Riley and particularly on FRG. Yesterday when I was reading the 10Q and 10K statements I was wondering about the quality of the quality of asset backed securities based on furniture receivables myself:

            “Our assessment is that Badcock’s receivables are extremely low quality, especially with a looming recession. The proof is in the data. Badcock’s disclosures indicated that its allowance for doubtful accounts was $75 million for short term receivables (out of $500 million).60 Even though it sold $168 million in receivables to RILY, FRG’s provision for doubtful accounts has ballooned since purchasing Badcock. Prior to the purchase, FRG provision for doubtful accounts had a $2 million impact on
            operating income.61 By Q3 2022, that had swelled to $97 million”

      1. Correction the ~$75M charge was not associated with a particular investment in the press release or the Q document. It could be associated with any number of assets in the balance sheet. They clearly have a ~$85M M2M loss associated with the BW equity position in the current quarter.

      2. Riley must have a personal ‘rooster’ fixation with those names ! And furniture- maybe he wants to be a Buffett,

  7. Oh, it’s a great question Tim, because if the company survives some of those baby bond YTMs are very very juicy.

    I’m hoping to do some work on this over the next two days. Hopefully if there’s an opportunity it remains in the meantime…

    1. Okay, well, after a few hours of looking at it, I’m going to pass on anything RILY-related. Too many related party shenanigans and the auditors say internal controls are poor. That is a very bad combination for a turnaround.

  8. Tim- I am an attorney investigating a fix income case and would welcome the opportunity to speak with you.

    1. Catherine – I see you used your correct email for this comment—I will send you a note via email later today.

      1. Tim, Free advice (and worth every nickel).

        Don’t do it.

        No offense to Ms Pratsinakis, but no good comes from talking to a lawyer (esp. a litigator) who isn’t representing you. No upside to you – and too often it is the fast path to the bottom side of the bus.

Leave a Reply

Your email address will not be published. Required fields are marked *