RILYK - B. Riley: High Risk With High Stakes That May Take A While To Play Out

2024-03-12 02:33:04 ET

Summary

• B. Riley Financial made moves to start repurchasing its debt at currently attractive discounts by cutting its quarterly dividend by 50%.
• RILYZ currently offers a near-10% yield on cost at a 45% discount to their $25 per note liquidation value.
• The investment bank held cash and equivalents at the end of its recent fourth quarter of $232 million and has launched a strategic review for its Great American Group business.

I've been buying B. Riley Financial 2028 5.25% Senior Notes due 08/31/2028 ( RILYZ ). The bonds pay a $1.3125 annual coupon and are trading at $13.67 per note, $11.33 below a $25 per note liquidation price. This means a 9.6% yield on cost for what's an absurdly undervalued 55 cents on the dollar. RILYZ's yield has never been higher, with the current conundrum driven by an abnormal short interest in bonds that has ramped up volatility and made B. Riley Financial (RILY) the battleground stock of early 2024. The risks are not immaterial with RILY delaying its Form 10-K annual report filing after its board faced considerable resource constraints during the period following an internal review led by outside counsel at Sullivan & Cromwell LLP that determined the company acted properly with its take-private acquisition of Franchise Group....

For further details see: