InsideArbitrage February 2023 Mid-Month Update – Revisiting B. Riley

Our History With B. Riley Instead of focusing on a new idea for our February 2023 mid-month update, I decided to revisit one of our long-term holdings in light of a short seller report that was published about the company last week. We started a position in the mid-tier investment bank B. Riley (RILY) in September 2020 as discussed in this Special Situations Newsletter and the position is up 62% in the model portfolio despite a pull back in the stock in the last year. After the position had appreciated more than 112%, I reduced our exposure by 25% in early 2022 to free up capital for a new position as discussed in the April 2022 mid-month update. B. Riley remains one of the larger positions in my personal portfolio. Short Sellers I have a lot of respect for short sellers. They often swim against the current, tend to do very detailed analysis and expose fraud. I also do not find the fact that they establish a short position, publish the report and hope to make a profit from the ensuing drop in the stock price as particularly worrisome. There is an element of front running in this approach but long-only...

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