I think my average reader has a different risk tolerance than myself. There are secular tailwinds, Goldman Sachs and Morgan Stanley both say that capital market activity is thawing out. With 27 years of relationships, there is a good chance RILY can acquire good transaction volume. Perhaps within the crypto community, for example, successfully rehabilitating Core Scientific is more important than some Twitter FUD. I want to be careful for psychological biases, because the mind tries to find ways to hope. The RILY team are clever, there is always good odds they figure out some solutions.
do you think rily can be turned around in 3-5 years?
your analysis of their current mess was that their relationships were insufficiently strong or numerous enough to overcome the bad press, reputational damage, and doubts sown by the fraud and the losses. the entities on the other ends of those current relationships will in the meantime be dealing with other entities with which they already have or will be establishing new relationships to replace those they have with rily.
i'm not trying to convince you to give up on rily, but i want to question whether you are letting hope and a reluctance to realize your losses lead you to hold on to a very iffy position. are those "good odds" at rily enough to outweigh your conviction that your capital would be well placed with possibly better odds elsewhere?
bottom line, if you were all in cash and newly allocating to all your ideas, would you be buying rily right now? and isn't this the question we should be asking ourselves every day?
Yes, those are the questions. Yes, I would start a small position in RILY at $7 a share. My original position was at a larger portfolio weight, I would not buy to the same weight, but as the price has fallen, it's pretty much a wash. Any asset sale at all at a reasonable valuation and some debt retirement would cause a pretty solid market reaction because almost every asset is held at a book value far below current prices, and the debt can be retired at a discount. There is also a big backlog of consulting work, many of those jobs are already won and provide income over several years. Also liquidations winning the CONN business is not small income for the second half of this year starting in October.
"I think RILY is a fantastic business, built over the course of 27 years by its founder."
"With RILY commenting on the deteriorating consumer, the earnings are likely somewhat less, but we have no way of tracking this inside RILY’s black box."
Can a black box be a fantastic business? Maybe. Can it be analyzed with a high degree of certainty that the deck isn't rigged? Humbly, I think the answer is no.
just listened to an interview of vincent daniel and porter collins -now "seawolf capital"- of big short fame. learned they were among the shorts in rily. i wish i had known- i have a lot of respect for those guys and i think they would have kept me out of rily.
You seem to like the riskiest stocks in a sector. Instead of targeting high risk high returns why not try low risk high returns. Focus on out of favor industries. Writing puts on a company that has known issues is very risky.
why not re-allocate your remaining capital given greater conviction in other positions?
I think my average reader has a different risk tolerance than myself. There are secular tailwinds, Goldman Sachs and Morgan Stanley both say that capital market activity is thawing out. With 27 years of relationships, there is a good chance RILY can acquire good transaction volume. Perhaps within the crypto community, for example, successfully rehabilitating Core Scientific is more important than some Twitter FUD. I want to be careful for psychological biases, because the mind tries to find ways to hope. The RILY team are clever, there is always good odds they figure out some solutions.
do you think rily can be turned around in 3-5 years?
your analysis of their current mess was that their relationships were insufficiently strong or numerous enough to overcome the bad press, reputational damage, and doubts sown by the fraud and the losses. the entities on the other ends of those current relationships will in the meantime be dealing with other entities with which they already have or will be establishing new relationships to replace those they have with rily.
i'm not trying to convince you to give up on rily, but i want to question whether you are letting hope and a reluctance to realize your losses lead you to hold on to a very iffy position. are those "good odds" at rily enough to outweigh your conviction that your capital would be well placed with possibly better odds elsewhere?
bottom line, if you were all in cash and newly allocating to all your ideas, would you be buying rily right now? and isn't this the question we should be asking ourselves every day?
Yes, those are the questions. Yes, I would start a small position in RILY at $7 a share. My original position was at a larger portfolio weight, I would not buy to the same weight, but as the price has fallen, it's pretty much a wash. Any asset sale at all at a reasonable valuation and some debt retirement would cause a pretty solid market reaction because almost every asset is held at a book value far below current prices, and the debt can be retired at a discount. There is also a big backlog of consulting work, many of those jobs are already won and provide income over several years. Also liquidations winning the CONN business is not small income for the second half of this year starting in October.
"I think RILY is a fantastic business, built over the course of 27 years by its founder."
"With RILY commenting on the deteriorating consumer, the earnings are likely somewhat less, but we have no way of tracking this inside RILY’s black box."
Can a black box be a fantastic business? Maybe. Can it be analyzed with a high degree of certainty that the deck isn't rigged? Humbly, I think the answer is no.
Franchise Group is the black box within RILY. Not all parts of RILY are behind the wall
just listened to an interview of vincent daniel and porter collins -now "seawolf capital"- of big short fame. learned they were among the shorts in rily. i wish i had known- i have a lot of respect for those guys and i think they would have kept me out of rily.
You seem to like the riskiest stocks in a sector. Instead of targeting high risk high returns why not try low risk high returns. Focus on out of favor industries. Writing puts on a company that has known issues is very risky.