Short-selling data can provide impeccable insights into the risk levels of the company's stock. If you see short sellers in pursuit of shorting a stock, there’s definitely going to be a sound reason behind it.
In this article, we are going to get our sights focused on the short-interest data of B. Riley Financial (RILY:US). Founded in 1997, B. Riley Financial is a U.S based investment management firm having a market cap of around $1.32 billion. On Feb 8, Wolfpack Research published a report predicting heavy losses this year which resulted in a 15% plunge in stock price.
Wolfpack Short Report
Wolfpack Research is identified as a top-tier financial research firm, which recently revealed an analysis report and disclosed that they are taking a short position in B. Riley Financial.
As per the analysis done by Wolfpack researchers, the company made some bad investment calls which led to the company's lower NAV (Net Asset Value). The NAV fell from $400 million to $350 million, in just a time frame of one quarter, due to four main factors:
- B. Riley Financial's equity investments fell $107 million in Q4 primarily because of a $95 million collapse in the value of FAZE (firm financed by B. Riley).
- It also appears to have lost $42 million due to the bankruptcy of CORZQ.
- B. Riley Financial's debt grew by nearly $200 million during Q4, from $2.32 billion to $2.5 billion.
- It paid a $28.5 million dividend during Q4 2022.
The financial status of the investment firm does not seem favorable for itself or its investors and Wolfpack research speculates that the company will lose around $700 Million by the end of 2023, putting its dividends at risk and potentially triggering a collapse.
B. Riley Financial's Short Interest
Looking at the short-selling data on B. Riley Financial, one aspect stands most visible and that is; the short interest has surged since last month.
About a month ago, nearly 2.2 million shares of B. Riley Financial were on loan. In contrast, the figure is around 4.27 million today. This represents a tremendous increase of around 100% in just one month. In our opinion, this is a sign of caution as sharp increases in short interest often have weak share prices on tail.
It’s important to keep in view that around 4.27 million shares equate to approx. 26.68% of the free float. The number in itself is quite high for an investment management company.
With the sudden surge in short interest, it's important to be cautious about the stock in the near future, generally because short sellers don't make unwise decisions.