When multiple insiders at a firm are buying company stock, it can pay to take a closer look. This buying pattern is generally very bullish.
In this report, we are going to look at the insider transaction activity at B. Riley Financial (RILY:US), which has seen large buys from several insiders recently. 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 $1.7 billion.
B. Riley Financial Inc: Insider Buying
Our insider transaction data shows that there has been a substantial level of insider buying at B. Riley Financial since early August.
In August, B. Riley’s Co-Founder, Chairman, and Co-CEO Bryant Riley purchased stock on six occasions. In total, the insider picked up 176,167 shares, spending about $11 million on the stock. Investment Banking CEO Andy Moore also picked up 5,000 shares in August, spending about $320,000 on the stock.
On 10 September, Moore followed up his August purchase with another purchase of 5,000 shares. This trade cost him $301,000.
Finally, on 13 September, board member Randall Paulson – who was previously Managing Principal at Odyssey Investment Partners – bought 15,000 shares, spending around $908,000 on the stock.
This insider trading activity is worth highlighting for several reasons. Firstly, the level of buying here is quite substantial. The fact that the three insiders have spent around $12.5 million on the stock in the space of around six weeks suggests that they are very confident RILY stock is set to rise.
Secondly, over the last 18 months or so, insiders at B. Riley Financial including Bryant Riley and Randall Paulson have made a number of well-timed transactions. For example, this time last year, Riley and Paulson were loading up on stock when it was trading below $27. Since then, it has risen as high as $76. Clearly, insiders here have a good read on the stock.
B. Riley’s results for the second quarter of 2021 were strong.
For the period, total revenues increased to $336.8 million, up 26% from Q2 2020. Meanwhile, operating EBITDA increased to $92.1 million, up 97% from Q2 2020. On the back of these results, the group declared a total dividend of $2.00 per share, of which $1.50 was a special dividend.
"Our operating EBITDA doubled on a year-over-year basis demonstrating continued strength across our businesses during the second quarter. Our results were driven by our investment banking division which continues to establish its leadership in small and mid-cap equity capital markets, supplemented by steady contributions from Advisory Services and Principal Investments,” commented Mr. Riley.
In terms of the outlook, management was confident about the future. “As we look ahead, we see multiple pathways with which to grow shareholder value. We will continue to take advantage of market opportunities in our core segments while building on additional recurring revenue streams that are both non-correlated and counter cyclical," said Mr. Riley.
In light of these strong results and the confident tone from management, we see the insider buying here as a bullish indicator.