B. Riley: Asset Write-Downs Confirm Balance Sheet Weakness? (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Since my 'Strong Sell' view on B Riley and all its related securities, the common stock has fallen 64% and other security classes too have fallen more than 20%.
• The hierarchy of returns across B Riley's security classes has also played out as per my expectations, with shorter maturity duration, lower yield securities doing better.
• B Riley's balance sheet has gotten far worse due to large asset writedowns that according to my calculations have eradicated 7% of asset value.
• With dwindling liquidity, a negative net asset value as per my estimates and unprofitable normalized earnings, B Riley is bleeding cash and eroding its assets.
• Upon release of full financial results for Q2 FY24, I will be tracking core operating earnings to assess debt and interest coverage. Currently, the shorts are a crowded play, but I believe it is wise to stay away from longs.

Read the full article here.