Los Angeles, California – After months of uncertainty and speculation surrounding B. Riley Financial, Inc. (NASDAQ: RILY), the Los Angeles-based investment bank recently filed its 2023 annual report on Form 10-K. This filing marked a significant turning point, debunking the bearish thesis that the company would fail to submit the report and face potential delisting from the SEC. With the 10-K now submitted, the bearish narrative has crumbled, leading to the imminent unwinding of short positions in RILY in the coming weeks and months.
Investors have responded positively to the news, with the short interest in RILY’s 2028 baby bonds like B. Riley Financial, Inc. CAL NT 28 (NASDAQ: RILYZ) experiencing increased demand. This surge in interest comes after the bonds briefly traded at a substantial discount to their $25 per share liquidation value, reflecting renewed confidence in the company’s financial stability. Notably, RILY boasts $232 million in unencumbered cash and faces no significant debt maturities in the near future, further bolstering investor sentiment.
The filing of the 10-K has also positioned RILY for a potential uptick in share price, as it transitions away from being one of the NASDAQ’s most shorted stocks. While bearish investors may attempt to pivot their positions, the eradication of the 10-K delay risk has paved the way for RILYZ to continue its rally towards pre-bearish thesis levels. With over 1 million shares held in short interest prior to the 10-K release, the current days to cover ratio suggests sustained buying pressure as short interest levels normalize.
RILYZ stands out as one of the most discounted bonds in RILY’s portfolio, with impending redemption of other bonds and upcoming catalysts poised to drive further growth. The company’s strategic review for its Great American Group business, set to culminate in a potential sale later this year, could bolster RILY’s financial position. Additionally, RILY’s robust liquidity, boasting over $1 billion in securities and other investments, positions the bank favorably for future growth and stability.
With a $200 million credit facility in place and no outstanding borrowings, RILY’s ability to meet its obligations remains strong. As the company looks towards a recovery driven by market conditions and operational performance, RILYZ is poised to return to its fundamental value, signaling a positive outlook for investors. The demise of bearish arguments has set the stage for a sustained recovery in RILYZ, reflecting a renewed confidence in the company’s long-term prospects.
