Corporate executives and directors tend to have a good read on their firms’ near-term prospects. If these insiders are buying company stock, it’s a sign that they’re confident about the future and that they expect the stock to rise.
In this report, we are going to highlight some interesting insider buying at B. Riley Financial (RILY:US). B. Riley is an American financial services company which, through its subsidiaries, provides financial solutions to public and private companies and high net worth individuals. It is listed on the NASDAQ Global Market and currently has a market capitalization of $1.3 billion.
B. Riley Financial Inc: Insider Buying
Our records show that on 13 January, four insiders at B. Riley purchased stock through the company’s common stock offering, which raised approximately $56.5 million. Those who purchased stock included:
- Founder, Chairman, and Co-CEO Bryant Riley who purchased 100,000 shares
- President Thomas Kelleher, who purchased 10,000 shares
- Director Kenneth Young, who bought 1,600 shares
- Director Randall Paulson, who acquired 1,600 shares
All of these shares were purchased at a price of $46 per share. The total amount spent by these insiders was $5.6 million.
High Insider IQ
This insider activity is significant because recent purchases from B. Riley Financial insiders have been timed very well. In September, for example, we noted that Chairman and Co-CEO Bryant Riley had purchased stock four times. Since then, the stock’s price has nearly doubled. Insiders also bought a large amount of stock in November when it was trading near $30. The fact that four insiders have recently purchased large amounts of stock at a price of $46 suggests that they continue to believe the stock is undervalued at present.
B. Riley Financial posted a strong set of preliminary results 12 January in which performance significantly exceeded prior guidance.
For the fourth quarter, the company now expects net income of $162 - $167 million versus prior guidance of $109 - $112 million. Meanwhile, Q4 EPS are expected to be between $6.18 and $6.38 versus prior guidance of $4.15 to $4.27.
"We are providing preliminary results for the fourth quarter and full year of 2020 that exceed our previously released guidance for net income by over $50 million, operating EBITDA guidance by $20 million and total EBITDA by over $70 million. Our updated estimates reflect better-than-expected operating performance and appreciation in our investment portfolio as of year-end," said Chairman and Co-CEO Bryant Riley.
“The current momentum of our combined operating units has never been stronger, and we are increasingly excited about the opportunities ahead as we look to continue to build upon our growing platform," he added.
As for the capital raise, the company has said that it expects to use the net proceeds of this offering for general corporate purposes, including funding future acquisitions and investments, making capital expenditures and funding working capital.
In light of the strong Q4 performance here, and the confident tone from management, we see the insider buying here as bullish.