For the Forensic Investor

PLEASE DO NOT TAKE THIS WRITING AS A NEGATIVE–BUT INSTEAD SOMETHING TO PONDER–AND FOR THOSE WITH THE TIME TO DO SOME FORENSIC RESEARCH MAYBE THEY WILL FIND SOME INTERESTING DATA. MAYBE ALL IS FINE–BUT I ‘SMELL A RAT’ SOMEWHERE IN HERE.

B. Riley Financial (RILY) has been taking down quite a lot of debt and most recently sold 2 million shares of preferred stock. As I look on their last 10Q I see a line entry for $250 million in “loans receivable” listed in their assets–up from $38 million a year ago. I am not certain what this is all about.

We know that B Riley has bought some strange businesses over the last number of years such as magicJack which has proven to be successful–at least that is what has been reported.

But really B Riley caught my eye when they floated theMaven (MVEN) a $68 million loan back in June. For those not familiar with theMaven it is an internet platform where writers publish their articles etc. Brad Thomas originally claimed he was moving his ’empire’ to theMaven and even did a video of himself interviewing Jim Heckman–the founder of theMaven. I had contact with Brad and explained what to expect if he went that route. Of course Brad ignored me and started at theMaven–then after a few months he found out exactly what I had conveyed to him and he left them.

Has Bryant Riley been caught up in the glitz and glamour of Jim Heckman? The slick talking of Ross Levinson?

I watch Jim Heckman because my wife worked at one of his previous companies which went belly up. I have a decent idea of how this guy operates.

So since I am always squeezed for time I invite others to do a little research for all of us.

This is not about theMaven this is about how many millions in loans is B Riley making to theMaven. Given that B Riley has only $250 million in equity will a $50 or $100 million write down on loans cause a little consternation?

Here are some starting points.

Click here to google Jim Heckman and Ross Levinson. This will give you days and days worth of entertaining reading.

theMaven SEC filings provide lots of insight into what they are up to–they have recently purchased theStreet (Jim Cramers company) and licensed Sports Illustrated–all on borrowed money. Mind you that theMaven has not made a quarterly SEC 10Q filing for 1 1/2 years.

Thats all one needs to do some decent research. THIS IS NOT A WARNING—this is just a ‘I smell a rat’–and for folks holding B Riley baby bonds and preferred you may want to do some reading.

37 thoughts on “For the Forensic Investor”

  1. Tim,
    I don’t know much about Rily but I know Brad better than I would want to. He may be clever on some basic ways but he is fair from bright. Moreover, he is in my view a user of the worst type. No use offering any advise as lives in his own world which revolves around himself. Just my views. SC

    1. sc–way back in 2012-2013 Brad and I had various discussions relative to websites–he never listens to others.

      1. Tim
        Brad converses but does not listen and does what is good for Brad at all times. You deserve better than him. Life is short, stick with people who are honest and treat others as they want to be treated. best and thanks all your work. SC

  2. I did my deep dive into RILY some years ago, so any opinion I have is dated.

    When I had my look I potted RILY into the category of companies I would not trust. That’s looking at the business, the management, the board, the financials, all of it. Just too squirrelly for my liking. Nothing has changed that I’m aware of. This isn’t hard and fast data, just my well-practiced gut.

    I take all kinds of investment risks but the one risk I rarely take is managements I don’t feel I can trust. I chose to invest elsewhere.

  3. Quick question: does RILY own all of the $68M in loans or have they syndicated some portion of that?

    A few points:

    * I don’t find it unusual that RILY (as maven’s major private equity source of funding) has seats on the BOD. I’d find it more unusual if they didn’t.

    * Heckman doesn’t seem to have a terrible track record. Bear in mind that in the start-up world, you win some and you lose some. You could argue he’s been more successful than Mark Cuban who was a one-hit wonder and his company, after being sold to Yahoo, turned out to be a total flop.

    “Heckman is a media industry veteran. He had helped Rivals.com raise $70 million in venture capital, but the site hit a wall during the dot-com bust and eventually sold to a Tennessee company, which was then sold to Yahoo in 2007 for a reported purchase price of $100 million.

    That deal came after Heckman had left to create Scout.com in 2001, a competitive site to Rivals.com that was sold to News Corp in 2005. He then went on to start online advertising startup 5to1.com, selling that company to Yahoo in 2011. After that, he led global media strategy for Yahoo, working closely with ex-Yahoo CEO Ross Levinsohn.”

    * I haven’t been able to find a ton of info on Maven’s investments but the below doesn’t seem like a bad use of $45M. Lots of potential to unlock the dormant value in the SI brand.

    “Earlier this year Maven paid $45 million against future royalties for the rights of Sports Illustrated, which includes a revenue-sharing deal that will last at least a decade, according to regulatory filings.”

    * There seems to be a legit opportunity to turnaround this storied franchise:

    ““The big picture story is that by virtually every business measure — subscriptions, online traffic, revenue, etc — SI has been trending down over the last five years,” Greg Witter, a spokesperson for Maven, told GeekWire in an email. “Our aim is embrace the heart and soul of SI — incredible storytelling — and elevate it to compete in today’s world with investment in technology and 200 front-line reporters covering teams on a daily basis.””

    * The below brands they bought have real value and in the right hands, you could easily find ways to increase their value and monetize them further. They probably bought Jim Cramer’s company for 1/100th of its peak value. It used to be a really good website that I subscribed to many years ago. They should turn TheStreet.com into a competitor to Seeking Alpha. Jim Cramer is an incredible brand and marketer and they need to monetize that.

    “Maven has a coalition of more than 300 brands, including History, Maxim, Yoga Journal, SKI Magazine, and others. It purchased finance media company TheStreet earlier this year. ”

    * What Riley’s investments (like MagicJack and Netzero) all have in common is they are cigar butts. Brands with obsolete products that nevertheless flow cash due to legacy ops. They’ve revamped those businesses to extend the cigar butt. The Maven seems to be investing along the same lines. They’ve bought a bunch of underperforming brands, some of which are obsolete (Maxim…the 1990s called and said you escaped), that nonetheless should be flowing some amount of cash. If they find new ways to monetize these brands and extend the cigar butt on others, it seems totally viable and possibly lucrative.

    That said, it’s a very good question why Maven has no revenue. Sports Illustrated, The Street, History channel, etc. should be flowing some revenue. So there are some legit questions here about the financials.

    PS — Tim, great sleuthing here. Thanks for bringing this to our attention.

    1. Landlord–I think you have hit upon all the points that Heckman and Levinson point to as they hunt for money.

      Unfortunately for Heckman et al, the ability to make money today online is miles away from what it was 20 years ago.

      I think if you read the insider trading lawsuit you will find the true colors of these folks–and it mirrors my wife’s experience working for Scout–in fact a few months ago we came across her stock option promise letter from Heckman–of course we tossed it.

      On the other hand they could totally pull a rabbit out of their hat–but I would be shocked if they did–but it could happen. I think we will have a better idea in about 6 months or a year. This will take a while to totally play out.

      1. Tim, it’s entirely possible that Maven won’t be successful. Private equity like Riley invests in those sorts of risky ventures all the time with the thinking that if they like the assets, it doesn’t matter if the company fails. They call it “loan to own.” If Maven can’t make a profit then Riley may be able to do it themselves (after zeroing out the common and preferred equity). They could also liquidate and/or restructure the company. Even if that doesn’t make them whole, they’ll make money in liquidation and restructuring fees.

        Private equity is no stranger to shady business dealings. They’re usually the sharks that come out ahead leaving everyone else holding the bag. Bryant Riley is a pretty savvy operator and I suspect he knows what he’s doing. But definitely a risk worth monitoring closely.

        Will be interesting to see what becomes of Maven. The founders remind me of this guy from the shipping industry, although more corrupt:

        https://twitter.com/supermugatu/status/1139545059752337408?lang=en

    2. Landlord – one thing I would be wary of. You said:

      ” Lots of potential to unlock the dormant value in the SI brand. Earlier this year Maven paid $45 million against future royalties for the rights of Sports Illustrated, which includes a revenue-sharing deal that will last at least a decade, according to regulatory filings.”

      I am not so sure on this. One of the first things the Maven did was lay off a ton of journalists at SI sparking a revolt. If you really want some color, read the Deadspin article in the second link.

      https://www.npr.org/2019/10/03/766929743/new-owners-of-sports-illustrated-set-massive-layoffs-journalists-rebel

      https://deadspin.com/inside-themavens-plan-to-turn-sports-illustrated-into-a-1838756286

      The concern I would have is how to unleash value in the SI brand by turning it into some low end content mill

  4. On the flip side:

    Ford Equity Research upgrades B RILEY FINANCIAL INC from 3 to 2.
    — 4:00 AM ET 10/04/2019
    On October 4, 2019 Ford Equity Research upgraded B RILEY FINANCIAL INC (RILY) from 3 to 2.

    Refinitiv/Verus upgrades B RILEY FINANCIAL INC from HOLD to BUY.
    — 3:30 AM ET 09/30/2019
    On September 30, 2019 Refinitiv/Verus upgraded B RILEY FINANCIAL INC (RILY) from HOLD to BUY.

  5. Also found another recent distressed company they are invested in or creating a financing package for Barneys that is going bankrupt and wants to close some stores, but after bankruptcy stay open with a smaller footprint. If you have TD Ameritrade: https://research.ameritrade.com/grid/wwws/research/stocks/news/article?c_name=invest_VENDOR&docKey=1-DN20191010009669-7ME6MPETJ07QUHT349AN5H8FUH

    So i do not know if they have existing finance terms with them, or are trying to get involved with the bankruptcy and financing post bankruptcy. It is not clear to me from the article unless i dig more.

    Disclaimer. I dont own any B Riley bonds or investments. I have been watching from a distance. It just seems “not normal” to me.

    This is related to other articles that I have been reading lately. Investment funds and firms are reaching for yield. In order to keep status quo, you have to invest in risky investments, OR… start cutting dividends/interest payments/distributions. But who wants to invest in a fund that cuts its distribution? So they add more leverage, and adjust their investments to generate nav increases or keep the appearance of so.

    1. Mr Lucky, The article provides further insight to the mindset of these folks as hard-money opportunists. The ethics behind the squeeze they’re putting on Barneys, the decision making behind magic-jack, theRaven and others combined with the equity issuance bonanza; I wouldn’t be leaving any grocery money here.

    2. “Also found another recent distressed company they are invested in or creating a financing package for Barneys that is going bankrupt ”

      Liquidating and restructuring retail stores is the thing their Bankruptcy/Liquidation business line does the most. They’ve been involved in a ton of retail bankruptcies and liquidations including Gymboree, Payless, Bon Ton, Sears, etc. It’s a booming business for Riley.

  6. Tim,

    Will you be selling RILYZ in the enhanced portfolio, or just “keep an eye” on it for now?

    1. dan–for now I am just going to keep a short leash on these things–this could take a year to play out–and maybe all really will be fine.

  7. The latest issuance could also be funding the common stock purchase of GSL. http://www.globalshiplease.com/node/11766/html

    This was dated a few weeks ago. I think this means that all of the Rily companies, they purchased about 20% of the recent GSL common stock offering. I believe GSL issued about 17 million common stock, so the %’s are based on that offering.

    B. Riley Financial, Inc., a Delaware corporation (“BRF”),
    B. Riley FBR, Inc., a Delaware corporation (“BRFBR”);
    B. Riley Capital Management, LLC, a New York limited liability company (“BRCM”)
    BRC Partners Management GP, LLC, a Delaware limited liability company (“BRPGP”); and
    BRC Partners Opportunity Fund, L.P., a Delaware limited partnership (“BRPLP”)

    Bryant Riley seems to be the CEO, CFO, etc of all of them.

  8. Well damn. I wrote a big long post with excerpts from the 10-Q but something must have happened as it didn’t post

    The gist was:

    1. the Maven’s statements are unaudited and old (latest is 6 months ending June 30 2019)
    2. the Maven has going concern risks
    3. One BRiley exec and one BRiley board member became board members of the Maven in the last year or so when they started doing these transactions
    4. BRiley has loaned the Maven various sums, entering into a number of new agreements rolling over the previous amount outstanding til getting up to the current $68 million
    5. the Maven did issue some privately placed preferred stock and said they used it to partially pay down the obligation to BRiley. they were unclear if they used the full amount or not – but its possible they paid down up to $18.5 million of the $68 million via this mechanism

      1. Thanks Tim

        And a correction on my post above – should read 2018, not 2019

        1. the Maven’s statements are unaudited and old (latest is 6 months ending June 30 2018)

  9. Tim, this is exactly why I won’t touch any of the B. Riley bonds or preferreds.

    About 15 years ago, my next door neighbor used magicJack to make free calls to his brother that lived in Alaska. Today, almost all regular cell phone plans have unlimited calling with no additional fee – so I’m not sure how magicJack is going to be relevant in five or ten years from now.

    Looking at the 10-Q for TheMaven for 6/30/2018, they had about $300k in revenue for the first six months of the year (yes, only $300k) and about $7.7M in operating expense for a net operating loss of about $7.4M. Add in some other expenses for the first six months of the year and the total loss was almost $8.8M. Certainly not a company I would loan any funds to.

    1. kaptain–yes the original Maven plan was to have advertising and then all of the ‘Mavens’ on subscription—guess that was working good so they found some money for Sports Illustrated and theStreet buyouts so they will start to show revenue–how much and for how long is anyones guess.

  10. Tim, as you note, the Maven has not made current 10-Q filings. The most recent is for the 6 months ending June 30, 2018 (although it looks like it was only recently filed as the subsequent events notes cover transactions in 2019)

    A couple of things – I am cuttung and pasting pertinent parts from the 10-Q:

    1. The condensed consolidated financial statements of the Company at June 30, 2018, and for the three months and six months ended June 30, 2018 and 2017, are unaudited.

    2. The Company’s condensed consolidated financial statements have been presented on the basis that the Company is a going concern. . . . the Company has had nominal revenues to date, and has experienced recurring net losses from operations and negative operating cash flows. . . . .From July 2018 through July 2019, the Company has raised aggregate net proceeds of approximately $112,815,000 through various debt and preferred stock private placements . Notwithstanding these recent financings, the Company does not have sufficient resources to fully fund its business operations through June 30, 2020. . . .As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the accompanying condensed consolidated financial statements are being issued. In addition, the Company’s independent registered public accounting firm, in their report on the Company’s consolidated financial statements for the year ended December 31, 2017, has also expressed substantial doubt about the Company’s ability to continue as a going concern.

    3. B. Riley FBR, Inc. . . .acted as placement agent for the Series H Preferred Stock financing . .. In consideration for its services as placement agent, the Company paid B. Riley FBR a cash fee of $575,000 (including a previously paid retainer of $75,000) and issued to B. Riley FBR 669 shares of Series H Preferred Stock. In addition, entities affiliated with B. Riley FBR purchased 5,592 shares of Series H Preferred Stock in the financing. John A. Fichthorn joined the Board of Directors of the Company in September 2018 and was elected as Chairman of the Board of Directors and Chairman of the Finance and Audit Committee in November 2018. Mr. Fichthorn currently serves as Head of Alternative Investments for B. Riley Capital Management, LLC, which is an SEC-registered investment adviser and a wholly-owned subsidiary of B. Riley. Todd D. Sims also joined the Board of Directors of the Company in September 2018 and is also a member of the Board of Directors of B. Riley. Mr. Fichthorn and Mr. Sims serve on the Board of Directors of the Company as designees of B. Riley. Since August 2018, B. Riley FBR has been instrumental in providing investment banking services to the Company and in raising debt and equity capital for the Company. These services having included raising debt and equity capital to support the acquisitions of HubPages, Inc. and Say Media, Inc., the ABG-SI LLC Licensing Agreement, and the acquisition of TheStreet, Inc. These services have also included raising debt and equity capital for refinancing and working capital purposes through the sale of the Series I Convertible Preferred Stock, the 10% Original Issue Discount Senior Secured Debentures, the 12% Senior Secured Subordinated Convertible Debentures, and the 12.0% Senior Secured Note.

    4. On October 18, 2018, the Company entered into a purchase agreement with two accredited investors, B. Riley and an affiliated entity of B. Riley, pursuant to which the Company issued to the investors 10% Original Issue Discount Senior Secured Debentures in the aggregate principal amount of $3,500,000, . . . The debentures are due and payable on October 31, 2019 (the “Maturity Date”). Interest accrued on the debentures at the rate of 10% per annum,. . .The debentures are convertible into shares of the Company’s common stock at the option of the investor at any time prior to the Maturity Date, at a conversion price of $1.00 per share

    5. On December 12, 2018, the Company entered into a securities purchase agreement with three accredited investors, pursuant to which the Company issued to the investors 12% Senior Secured Subordinated Convertible Debentures in the aggregate principal amount of $13,091,528, which includes (i) the roll-over of an aggregate of $3,551,528 in principal and interest of the 10% Original Issue Discount Senior Secured Debentures issued to two of the investors on October 18, 2018, and (ii) a placement fee, payable in cash, of $540,000 to the Company’s placement agent, B. Riley FBR, in the offering. After taking into account legal fees and expenses of the investors, the Company received net proceeds of $8,950,000. The 12% Debentures are due and payable on December 31, 2020 (the “Maturity Date”). Interest accrues on the 12% Debentures at the rate of 12% per annum, payable on the earlier of conversion or the Maturity Date. . . .Debentures are convertible into shares of common stock, at the option of the investor at any time prior to the Maturity Date, at a conversion price of $0.33 per share

    6. On June 10, 2019, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with one accredited investor, BRF Finance Co., LLC (the “Investor”), an affiliated entity of B. Riley FBR, pursuant to which the Company issued to the Investor a 12.0% senior secured note (the “Note”), due July 31, 2019, in the aggregate principal amount of $20,000,000, which after taking into account B. Riley’s placement fee of $1,000,000 and legal fees and expenses of the Investor, resulted in the Company receiving net proceeds of $18,865,000, of which $16,500,000 was deposited into escrow the fund the (purchase of The Street) and the balance of $2,365,000 will be used by the Company for working capital and general corporate purposes.

    7. On June 14, 2019, the Company entered into an Amended and Restated Note Purchase Agreement (the “Amended Note Purchase Agreement”) with one accredited investor, BRF Finance Co., LLC (the “Investor”), an affiliated entity of B. Riley FBR, Inc. (“B. Riley”), which amended and restated that previously disclosed Note Purchase Agreement, dated June 10, 2019, by and among the Company and the Investor. Pursuant to the Amended Note Purchase Agreement, the Company issued an amended and restated 12.0% senior secured note (the “Amended Note”), due June 14, 2022, in the aggregate principal amount of $68,000,000, which Amended Note amends, restates and supersedes that $20,000,000 12.0% senior secured note issued by the Company on June 10, 2019 to the Investor. The Company received additional gross proceeds of $48,000,000, which after taking into account B. Riley’s placement fee of $2,400,000 and legal fees and expenses of the Investor, the Company received net proceeds of $45,550,000, of which $45,000,000 was paid to ABG-SI LLC against future royalties in connection with the Company’s previously announced Licensing Agreement, dated June 14, 2019, with ABG-SI LLC, and the balance of $550,000 will be used by the Company for working capital and general corporate purposes

    8. On June 27, 2019, 25,800 authorized shares of the Company’s preferred stock were designated as “Series I Convertible Preferred Stock”. On June 28, 2019, the Company closed on a securities purchase agreement with certain accredited investors, pursuant to which the Company issued an aggregate of 23,100 shares of Series I Convertible Preferred Stock (the “Series I Preferred Stock”) at a stated value of $1,000, initially convertible into 46,000,000 shares of the Company’s common stock at a conversion rate equal to the stated value divided by the conversion price of $0.50 per share (the “Conversion Price”), for aggregate gross proceeds of $23,100,000.

    In consideration for its services as placement agent, the Company paid B. Riley FBR a cash fee of $1,386,000 plus $52,500 in reimbursement of legal fees and other transaction costs. The Company has used a portion of the net proceeds from the financing to partially re-pay that previously announced Amended and Restated 12.0% Senior Secured Note, due June 14, 2022, in the aggregate principal amount of $68,000,000, issued on June 14, 2019 to an affiliated entity of B. Riley, and to pay deferred fees of approximately $3,400,000 related to that borrowing facility.

    Summary:

    So, while this is convoluted and working off of not current data in some cases, the couple things we can conclude here are:

    1. BRiley is in bed with the Maven in that 1 BRiley exec and 1 BRiley board member are on the board of the Maven

    2. The debt has been rolled over and increased in several steps – up to $68M

    3. There was a partial paydown on the $68M from the Maven issuing their Series I preferred stock. The amount is unknown but could be up to about $18.5M

    1. Are these going to be converted or paid in cash in 2 weeks?
      On October 18, 2018, the Company entered into a purchase agreement with two accredited investors, B. Riley and an affiliated entity of B. Riley, pursuant to which the Company issued to the investors 10% Original Issue Discount Senior Secured Debentures in the aggregate principal amount of $3,500,000, . . . The debentures are due and payable on October 31, 2019 (the “Maturity Date”). Interest accrued on the debentures at the rate of 10% per annum,. . .The debentures are convertible into shares of the Company’s common stock at the option of the investor at any time prior to the Maturity Date, at a conversion price of $1.00 per share

      1. Justin

        The $3.5M you reference has been rolled over up and into the $13M transaction on 12/12/18 – which is due to be repaid 12/31/2020.

        But that got me rereading this and while all these transactions are a but convoluted and only disclosed in subsequent event notes to June 30, 2018 financials – it appear there may be two tranches outstanding:

        1. the $13M due on 12/31/20
        2. the $68M (less what was repaid from the $18M in proceeds from the preferred stock offering) due 6/14/22

  11. B.Riley is a “slick” operator (take that as good or bad). How bad of an investment bank do yo have to be to screw up the Rent-a-Center buyout they advised (buyer side) on last winter (the buyer lost out on almost 100% of value increase $1 billion) plus paid a $100 mill break up fee. Not reinvesting my Rily bond proceeds at the end of the month with them…. feel fortunate for past 2 plus years with problems.

    1. SDMarc – Out of curiosity, what Rily bond it is that is providing you with “proceeds” at the end of the month or are you just talking about the interest payments to be paid on 10/31? To me, proceeds would imply a principal payment. And on RILY in general, my knowledge is not as in depth as many posting here, but to me what makes them relatively unique is their continuing investment in what I think it was Landlord I described as “cigar butt” companies, i.e, companies most investors wouldn’t even consider investing in because of their history or likelihood of being future buggy whip companies….I like that. I like companies that look to profit where most companies won’t even take the time to consider… There’s great profit potential looking at what others ignore. They’ve found a niche, and though I know nothing about theMaven, they sound like they’re doing similar things, so it seems like a logical association. Also, it’s important to differentiate RILY’s investments vs the guilt by association of their liquidation business profiting from helping dicey or failed businesses liquidate such as Barney’s, Gymboree, etc… These are revenue generators where RILY is uniquely situated to take advantage of the death knell that’s apparently surrounding retail Not knowing more about the possible downside of their involvement with The Maven, what bothers me most about RILY right now is two fold. 1. They are an investment banking firm advising others on how to run and/or finance their companies and yet in my experience RILY operates with the least responsive, most non-existent Investor Relationship Dept of any company I’ve ever attempted to follow… That implies to me that that’s how RILY wants it – to be non-responsive to investors…That’s not a good example as an investment advisor/banker to other companies. 2. Though as an investor in RILYL benefiting more eacah day they remain outstanding, it bothers me that RILY specifically said in the RILYN issuance that,”Following this offering, we expect to exercise our redemption rights under the indenture governing the 7.50% 2021 Notes to redeem all such notes prior to their stated maturity,” and they have yet to even start the 30 day period before they can call now one month later. This would be WONDERFUL were I completely trusting of management, but given their serial issuance of notes and now a preferred issue as well (note RILYP was issued a mere 10 days after issuing RILYN), it makes me scratch my head as to what degree what they say can be trusted…. Were they a rated issue, the rating agencies would have considered RILYN to be a neutral event to the degree proceeds equaled the amount of RILYL outstanding because of RILYN retiring RILYL. They would most likely be pressured to do so by the agencies because they would have taken whaht they said into consideration when confirming the rating. With it not yet happening, RILY’s just continuing to pile on baby bonds without doing what they said they would by refunding… Despite improving my anticipated return every day RILYL remains outstanding, I know I’ll feel a lot better once they announce an actual call date..

      1. 2whiteroses…you are right…I was meaning to say when the RILYL get called… which I expected to happen…but you are right to wait and see what they actually do. Sorry for not being clear.

  12. I will be watching the short interest presently at 1.50 % of float on the stock.
    Options are not showing concerns yet.
    The CEO has bought over a million dollars of stock these last 6 months.
    Tim , you may be too early.
    “The market can stay irrational longer than you can stay solvent.”

    1. Newman–these things can take years to play out so I have no current concerns, but down the road—I will watch over it.

      1. Tim, thanks for the alert. When RILY issued its first note, lots of people at Doug Le Du’s subscribers were angry with Doug for failure of alerting the then “hidden jewel”. I see RILY’s analyst quite frequently at Earnings Call, just like LTS (another shaky small brokerage: now we all know the colonel or the long time heir of some civil war general). These guys always sit at the last, after letting the big analysts go first. I did not like the magic lite biz. And sold some of the notes with cap loss offset by the dividends. Their notes seem to be performing better these days, probably from the Fed’s restrained from rate increase. I took a peak on Rich Hill’s website, just like many have noted, RILY actually have been doing well, in comparison to LTS. Then, LTS would be doing fine, if not for the founder’s misdeed getting caught. I actually bought 400 shares of the new preferreds, RILYP at a sloppy trade @$24.80 at Schwab. As soon as it becomes no net loss, I will probably unload them all when the commons start to fall. With Schwab not charging commission, it does make it easy to trade. All the financial data are certainly based on published info. If there is fraud, it could become Enron.

        1. BTW, I sold my wife’s WFC-V, callable Dec 2020. IF WFC-T already callable, gets called, I believe that WFC-V valuation could see severe decline. With its new CEO, who knows. I have loaded up the new PYMFP, PRIF-E. This time, I was careful trying not to pay too much with tiny volumes traded for the last few sessions. The order at FIDO failed to be filled just 10 minutes before the market closed. I quickly added one penny, got filled at $24.85. Compared to the PRIF-A, the new one is not a great buy. However, earlier in the day, PRIF-A was trading higher, now closed at $24.976. PYMFP closed at $24.84. Oh well, on the grand scale. This is alright. Someone recommened APTS, an eREITS, then I read that it is or plans to make a secondary offering. With so much uncertainty, I thought, I should stay with the preferreds.

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