Insiders of B. Riley Financial, Inc. (NASDAQ:RILY) Must Be Frustrated After Market Cap Dropped US$66m Since Recent Purchases

Simply Wall St · Sep 19, 2023 18:40

Key Insights

Insiders appear to have a vested interest in B. Riley Financial's growth, as seen by their sizeable ownership
50% of the business is held by the top 6 shareholders
Insiders have been buying lately

A look at the shareholders of B. Riley Financial, Inc. (NASDAQ:RILY) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And looking at our data, we can see that insiders have bought shares recently. Their expectations, however, were not satisfied, as the market cap dropped to US$1.4b over the past week.

In the chart below, we zoom in on the different ownership groups of B. Riley Financial.

Check out our latest analysis for B. Riley Financial

ownership-breakdown — NasdaqGM:RILY Ownership Breakdown September 19th 2023

What Does The Institutional Ownership Tell Us About B. Riley Financial?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that B. Riley Financial does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at B. Riley Financial's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth — NasdaqGM:RILY Earnings and Revenue Growth September 19th 2023

We note that hedge funds don't have a meaningful investment in B. Riley Financial. With a 23% stake, CEO Bryant Riley is the largest shareholder. In comparison, the second and third largest shareholders hold about 8.6% and 6.0% of the stock.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of B. Riley Financial

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

It seems insiders own a significant proportion of B. Riley Financial, Inc.. It has a market capitalization of just US$1.4b, and insiders have US$606m worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in B. Riley Financial. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand B. Riley Financial better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for B. Riley Financial (of which 2 are a bit concerning!) you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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