B. Riley Call Buyers Target Further Upside as M&A Activity, Issuance Trends Remain Strong
B Riley (RILY) strong small-cap financial that saw unusual activity on 6/15 in the October $69.50 calls with over 500 opening with buyers paying $6.70. RILY doesn’t have any other notable flows in open interest. Shares are up almost 3X since October and pulling back recently to the April gap when it was announced they would join the S&P 600. There was a reversal day on Monday and above $70 gets it back above the 10- and 20-EMA and short-term momentum can shift back to reclaiming the recent highs. RILY has a measured move to $90. The $1.88B company trades 1.25X sales and 2.5X book with a nice cash position and 2% yield. RILY is a leading mid-market investment bank and benefitted recently from a pickup in banking activity, especially M&A, restructuring, and bankruptcy consulting. They are also one of the leaders in market issuance and saw ATMs nearly double in Q1 thanks to large offerings from AMC Theaters (AMC) and Novavax (NVAX). RILY recently launched an Advisory Services business that specializes in “helping clients strategically prepare for and respond to cyber risks, public health risks and operational risks.” They expect to see continual growth in the business throughout 2021. RILY has little-to-no analyst coverage recently. Short interest is 4.5% and rising since January. Hedge fund ownership rose 5.5%. Elliott Associates and Nokomis Capital two notable holders of stock. RILY has been popular with insiders since early 2020 with Chairman and co-CEO Bryant Riley buying over 800,000 shares and most recently a $2.2M buy at $66.90. Others have been buying too around $67.70 including the CEO of B Riley Securities.