Insider Weekends: Bryant Riley’s Largest Purchase Of B. Riley

Welcome to edition 581 of Insider Weekends. Insider buying decreased last week with insiders purchasing $84.25 million of stock purchased compared to $190.52 million in the week prior. Selling also decreased to $2.78 billion compared to $5.37 billion in the week prior.

Sell/Buy Ratio: The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider purchases that week. The adjusted ratio for last week went up to 32.99 In other words, insiders sold almost 33 times as much stock as they purchased. The Sell/Buy ratio this week was unfavorable compared to the prior week when the ratio stood at 28.21.

Note: As mentioned in the first post in this series, certain industries have their preferred metrics such as same store sales for retailers, funds from operations (FFO) for REITs, and revenue per available room (RevPAR) for hotels that provide a better basis for comparison than simple valuation metrics. However, metrics like Price/Earnings, Price/Sales and Enterprise Value/EBITDA included below should provide a good starting point for analyzing the majority of stocks.

Notable Insider Buys:

1. B. Riley Financial, Inc. (RILY): $62.8

Shares of B. Riley Financial were acquired by 3 insiders:

  • Chairman and Co-CEO Bryant R. Riley acquired 150,000 shares, paying $60.90 per share for a total amount of $9.14 million. Mr. Riley increased his stake by 2.97% to 5,198,633 shares with this purchase.
  • Director Randall E. Paulson acquired 10,000 shares, paying $60.82 per share for a total amount of $608,220. Mr. Paulson increased his stake by 11.18% to 99,417 shares with this purchase.
  • CEO B. Riley Securities, Inc. Andrew Moore acquired 5,000 shares, paying $63.70 per share for a total amount of $318,500. Mr. Moore increased his stake by 2.22% to 229,758 shares with this purchase.

We have seen Bryant Riley purchase shares of B. Riley several times over the last few years but this is his largest purchase since we started tracking insider purchases over a decade ago. He has purchased more than 150,000 shares in a single week before but those purchases were at much lower prices and hence he spent significantly less than $9 million on those purchases. Looking through his history of large insider purchases, he purchased,

  • 152,372 shares for $9.50 per share in a secondary offering in May 2016
  • 221,181 shares for $18.25 share in March 2018 in a privately negotiated transaction and
  • 201,728 shares at an average price of $26.66 in November 2020 through BRC Partners Opportunity Fund.

I got interested in B. Riley after a series of insider purchases by him and other insiders in 2020. We featured the company as a spotlight idea in our September 2020 special situations newsletter and wrote the following about the company when it was trading for a bargain basement price of $26.78 (unadjusted for special or regular dividends),

B. Riley is a financial services firm that kept showing up on my radar multiple times over the years either because it was acquiring public companies, was buying back its own stock or because multiple insiders were buying the stock. I started digging into the company and its myriad lines of businesses and the more I looked into it, the more I liked what I saw.

The company was founded in 1997 as a boutique research firm focused on small-cap stocks. The company went public in 2014 by merging with the publicly traded financial advisory firm Great American Group. The stock has appreciated 232% since that merger was consummated on June 18, 2014. This compares with a gain of 32% in the Russell 2000 index over the same period.

The company provides investment banking services, wealth management services (over $10 billion in assets under management), appraisals, specialty financial advisory services and retail liquidation services in addition to owning certain companies outright.

Their advisory services businesses combined with their recent penchant to acquire brands or companies outright makes me think of B. Riley as a baby Berkshire Hathaway. The siren call of discovering the next Berkshire Hathaway or the next Warren Buffett has lead many investors astray and the investment landscape is littered with the ghosts of Eddie Lampert, Sardar Biglari, Prem Watsa, etc. That said, the more I looked into B. Riley, the more intrigued I was by the company. While the stock has appreciated handsomely from its March lows, the enterprise value of the company is just $752.27 million (market cap of $684.17 million, plus $55.6 million of preferred shares and $12.5 million of net debt) and I expect years of growth from the company as it navigates a potentially challenging macroeconomic landscape.

B. Riley History

B. Riley History (source: company August 2021 investor presentation)

The stock has more than doubled since then and paid out $7 per share in special dividends in addition to $1.50 in regular dividends this year. The stock went ex-dividend on 8/12/2021 for its latest $1.50 special dividend and the stock has dropped more than 10% through last Thursday, potentially triggering this latest round of insider purchases. I hold a long position in B. Riley and averaged up on the position a few months ago.

B. Riley Key Highlights and Insider Ownership

B. Riley Key Highlights and Insider Ownership (source: company August 2021 investor presentation)

You can view the list of recent insider transactions for B. Riley Financial, Inc. here.

P/E: 3.22 Forward P/E: N/A Industry P/E: 15.15
P/S: 1.2 Price/Book: 2.39 EV/EBITDA: N/A
Market Cap: $1.73B Avg. Daily Volume: 291,664 52 Week Range: $24.27 – $78.95

2. Morphic Holding, Inc. (MORF): $57.24

Director Timothy A. Springer acquired 74,927 shares of this biotech company, paying $56.23 per share for a total amount of $4.21 million. These shares were purchased indirectly by TAS Partners LLC.

You can view the list of recent insider transactions for Morphic Holding, Inc. here.

P/E: N/A Forward P/E: -18.23 Industry P/E: N/A
P/S: 53.81 Price/Book: 5.97 EV/EBITDA: -27.07
Market Cap: $2.09B Avg. Daily Volume: 225,189 52 Week Range: $24.52 – $93

3. Ball Corporation (BLL): $94.63

Shares of this aluminum packaging products supplier were acquired by 7 insiders:

  • Vice President & Treasurer Jeff A. Knobel acquired 4,000 shares, paying $88.69 per share for a total amount of $354,759. Mr. Knobel increased his stake by 7.39% to 58,117 shares with this purchase.
  • Vice President & Controller Nate C. Carey acquired 4,000 shares, paying $88.48 per share for a total amount of $353,924. Mr. Carey increased his stake by 31.98% to 16,506 shares with this purchase.
  • Director Todd Allan Penegor acquired 3,000 shares, paying $89.62 per share for a total amount of $268,860.
  • Director Georgia R. Nelson acquired 3,000 shares, paying $89.70 per share for a total amount of $269,098. Mr. Nelson increased his stake by 50.00% to 9,000 shares with this purchase.
  • Director Cynthia A. Niekamp acquired 3,000 shares, paying $89.27 per share for a total amount of $267,810. Ms. Niekamp increased her stake by 50.00% to 9,000 shares with this purchase.
  • Director John A. Bryant acquired 3,000 shares, paying $89.08 per share for a total amount of $267,246.
  • Director Michael J. Cave acquired 2,200 shares, paying $90.71 per share for a total amount of $199,562. Mr. Cave increased his stake by 36.67% to 8,200 shares with this purchase.

You can view the list of recent insider transactions for Ball Corporation here.

P/E: 36.3 Forward P/E: 22.64 Industry P/E: 27.73
P/S: 2.42 Price/Book: 8.5 EV/EBITDA: 18.87
Market Cap: $30.91B Avg. Daily Volume: 2,181,803 52 Week Range: $76.83 – $102.76

4. Biodesix, Inc. (BDSX): $7.96

Shares of this data-driven diagnostic solutions company were acquired by 2 insiders:

  • Director Jack W. Schuler acquired 261,440 shares, paying $7.46 per share for a total amount of $1.95 million. These shares were purchased indirectly through a trust.
  • Director John Patience acquired 1,604 shares, paying $7.12 per share for a total amount of $11,416. These shares were purchased indirectly by Patience Enterprises LP.

You can view the list of recent insider transactions for Biodesix, Inc. here.

P/E: N/A Forward P/E: -9.26 Industry P/E: 27.62
P/S: 2.79 Price/Book: 8.33 EV/EBITDA: -9.77
Market Cap: $214.69M Avg. Daily Volume: 168,015 52 Week Range: $6.52 – $31.99

5. Finance Of America Companies Inc. (FOA): $5.31

Director Brian L. Libman acquired 168,271 shares of this consumer lending platform, paying $5.19 per share for a total amount of $873,984. 241,730 of these shares were purchased indirectly through a trust.

You can view the list of recent insider transactions for Finance Of America Companies Inc. here.

P/E: 3.44 Forward P/E: 2.16 Industry P/E: N/A
P/S: 0.16 Price/Book: 1.81 EV/EBITDA: N/A
Market Cap: $317.97M Avg. Daily Volume: 723,281 52 Week Range: $4.965 – $11.665

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Walmart Inc. (WMT): $151.45

Shares of Walmart were sold by 2 insiders:

  • Director Robson S. Walton sold 1,216,000 shares for $150.26, generating $182.71 million from the sale. These shares were sold indirectly through a trust.
  • Executive Vice President M. Brett Biggs sold 32,377 shares for $149.53, generating $4.84 million from the sale.

You can view the list of recent insider transactions for Walmart Inc. here.

P/E: 42.63 Forward P/E: 24.12 Industry P/E: 33.22
P/S: 0.75 Price/Book: 5.26 EV/EBITDA: 11.48
Market Cap: $424.39B Avg. Daily Volume: 7,617,628 52 Week Range: $126.28 – $153.66

2. Coinbase Global, Inc. (COIN): $257.32

Shares of this financial infrastructure and technology provider for the cryptoeconomy were sold by 4 insiders:

  • Director Marc L. Andreessen sold 726,487 shares for $259.60, generating $188.59 million from the sale. These shares were sold indirectly through a trust.
  • Director Kathryn Haun sold 19,000 shares for $259.43, generating $4.93 million from the sale. These shares were sold indirectly through a trust.
  • Director Frederick Ernest Ehrsam III sold 10,312 shares for $257.93, generating $2.66 million from the sale. These shares were sold indirectly through a trust.
  • Chief Accounting Officer Jennifer N. Jones sold 4,918 shares for $259.38, generating $1.28 million from the sale. 2,859 of these shares were sold as a result of exercising options immediately prior to the sale.

You can view the list of recent insider transactions for Coinbase Global, Inc. here.

P/E: 18.95 Forward P/E: 46.53 Industry P/E: 15.15
P/S: 13.67 Price/Book: 11.68 EV/EBITDA: 16.9
Market Cap: $67.39B Avg. Daily Volume: 4,565,231 52 Week Range: $208 – $429.54

3. Regeneron Pharmaceuticals, Inc. (REGN): $663.27

Shares of this biotech company were sold by 6 insiders:

  • President & CEO Leonard S. Schleifer sold 220,000 shares for $649.32, generating $142.85 million from the sale. 20,000 of these shares were sold indirectly through a trust.
  • President and Chief Scientific George Yancopoulos sold 50,000 shares for $625.29, generating $31.26 million from the sale.
  • Director Roy P. Vagelos sold 10,039 shares for $650.04, generating $6.53 million from the sale. These shares were sold indirectly through a trust.
  • Director Anthony N. Coles sold 8,000 shares for $643.75, generating $5.15 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Director George L. Sing sold 1,705 shares for $628.53, generating $1.07 million from the sale. 1,000 of these shares were sold indirectly through a trust.
  • Director Bonnie L. Bassler sold 1,219 shares for $630.00, generating $767,970 from the sale.

You can view the list of recent insider transactions for Regeneron Pharmaceuticals, Inc. here.

P/E: 18.88 Forward P/E: 15.64 Industry P/E: N/A
P/S: 7.87 Price/Book: 5.74 EV/EBITDA: 17.16
Market Cap: $70.94B Avg. Daily Volume: 780,439 52 Week Range: $441 – $674.07

4. Facebook, Inc. (FB): $359.37

Shares of Facebook were sold by 4 insiders:

  • COB and CEO Mark Zuckerberg sold 386,500 shares for $360.87, generating $139.48 million from the sale. These shares were sold indirectly by various entities.
  • Chief Financial Officer David M. Wehner sold 11,152 shares for $357.08, generating $3.98 million from the sale. 1,431 of these shares were sold indirectly by Mr. Wehner’s spouse.
  • Chief Accounting Officer Susan J. S. Taylor sold 1,378 shares for $356.10, generating $490,706 from the sale.
  • VP and General Counsel Jennifer Newstead sold 250 shares for $362.60, generating $90,650 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

You can view the list of recent insider transactions for Facebook, Inc. here.

P/E: 26.69 Forward P/E: 22.5 Industry P/E: 29.89
P/S: 9.67 Price/Book: 7.35 EV/EBITDA: 18.47
Market Cap: $1.01T Avg. Daily Volume: 14,377,537 52 Week Range: $244.13 – $377.55

5. Airbnb, Inc. (ABNB): $143.7

Shares of Airbnb were sold by 2 insiders:

  • Chief Strategy Officer Nathan Blecharczyk sold 874,900 shares for $147.89, generating $129.39 million from the sale.
  • Director Jeffrey D. Jordan sold 20,000 shares for $145.04, generating $2.9 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for Airbnb, Inc. here.

P/E: N/A Forward P/E: -2874 Industry P/E: N/A
P/S: 20.42 Price/Book: 26.21 EV/EBITDA: -29.64
Market Cap: $90.34B Avg. Daily Volume: 7,510,596 52 Week Range: $121.5 – $219.94

You can view the full list of sales from this Insider Sales page.

The list of all insider purchases and sales by management people is only available to InsideArbitrage Premium members.

Disclaimer: I hold a long position in B. Riley (RILY). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

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