B. Riley Faces Wider Probe on Risk Disclosures, Ties to Kahn
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 12 2024
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Source: Bloomberg
B. Riley's Financial Troubles: B. Riley's shares plummeted over 54% due to significant writedowns and an ongoing SEC investigation into the accuracy of its financial disclosures, particularly concerning its dealings with founder Brian Kahn and his investment firm, Franchise Group (FRG).
Impact of Retail Bankruptcy: The company's financial situation is further complicated by the bankruptcy of Conn’s Inc., which owed B. Riley $93 million, raising concerns about FRG's capital structure and potential violations of loan terms, as well as the overall sustainability of B. Riley's investments.
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Analyst Views on RILY
About RILY
BRC Group Holdings, Inc., formerly B. Riley Financial, Inc., is a diversified holding company, including financial services, telecom, and retail, and investments in equity, debt and venture capital. The Company's core financial services platform provides small cap and middle market companies customized end-to-end solutions at every stage of enterprise life cycle. The Company's banking business offers comprehensive services in capital markets, sales, trading, research, merchant banking, mergers and acquisitions (M&A) and restructuring. The Company's wealth management business offers wealth management and financial planning services including brokerage, investment management, insurance and tax preparation. Its telecom businesses provide consumer and business services including traditional, mobile and cloud phone, Internet and data, security and email. The Company's retail businesses provide mobile computing accessories and home furnishings.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Investigation into B. Riley Financial's Fiduciary Duties to Shareholders
- Shareholder Rights Investigation: Halper Sadeh LLC is investigating whether certain officers and directors of B. Riley Financial, Inc. breached their fiduciary duties, potentially impacting corporate governance and shareholder rights.
- Legal Relief Options: Long-term shareholders of RILY stock may seek corporate governance reforms, fund recovery, or court-approved financial incentives, thereby improving management and transparency within the company.
- Importance of Participation: Shareholder involvement can drive improvements in company policies and oversight mechanisms, enhancing transparency and accountability, which ultimately boosts shareholder value and supports long-term corporate growth.
- Global Investor Representation: Halper Sadeh LLC represents investors worldwide, focusing on combating securities fraud and corporate misconduct, having successfully implemented corporate reforms and recovered millions for defrauded investors.
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BRC Group Projects Significant Q4 Revenue Growth
- Revenue Expectations Rise: BRC Group anticipates Q4 2025 revenue to be approximately $271 million to $282.5 million, significantly up from $178.6 million in Q4 2024, reflecting strong performance amid market recovery.
- Net Income Rebound: Expected net income is projected to range from $60 million to $65.4 million, a substantial increase from $0.9 million in Q4 2024, indicating a notable improvement in the company's profitability and a return to financial health.
- Adjusted EBITDA Turnaround: The company forecasts adjusted EBITDA between $98.9 million and $109.4 million, a significant recovery from a loss of $(113.8) million in Q4 2024, showcasing enhanced operational efficiency and successful cost management.
- Earnings Per Share Surge: Basic and diluted earnings per share are expected to range from $1.96 to $2.14, compared to $0.03 in Q4 2024, reflecting a robust recovery in profitability and increased investor confidence.
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