B. Riley Financial, Inc. RILY
RILY is a bottom-feeder investment bank whose loans to zombies and imploding equity book will drive ~$700M of 2023 losses, breach a Nomura NAV covenant, and threaten collapse.
Thesis
Wolfpack is short B. Riley Financial (RILY), a second-tier investment bank that overleveraged itself during 2020-2021 to buy speculative assets and lent aggressively to companies that have since degenerated into zombies. RILY's total cash and investments, net of debt, collapsed from $606 million in Q4 2021 to negative $350 million in Q4 2022, a $950 million deterioration in one year. Wolfpack reconstructed RILY's loan book via SEC EDGAR and found four of its seven largest publicly traded borrowers — including bankrupt Core Scientific ($42M), Exela ($75M), and Greenidge ($11M) — at high or already-realized risk of default. Wolfpack projects RILY will record up to $700 million in investment losses in 2023, breach its $1.1 billion Nomura NAV covenant, suspend its dividend, and potentially collapse — leaving retail baby-bond holders with severe haircuts.
SCQA
B. Riley Financial is a mid-market investment bank that aggressively expanded its balance sheet in 2020-2021, using leverage to fund speculative equity stakes, SPAC sponsorships, and loans to distressed operators across crypto mining, dial-up telecom, and cannabis-adjacent names.
RILY's speculative strategy has imploded: the equity portfolio lost 38% ($400M) in 2022, the loan book is dominated by zombie borrowers (CORZQ bankrupt, XELA/GREE near-default), and rather than cutting losses, management extends more capital to pretend better days are coming.
Short RILY: Wolfpack argues investment losses of up to ~$700M in 2023 will drive a breach of the Nomura $1.1B NAV covenant, force a dividend cut, and accelerate failure, with the Primary Guarantor structure deliberately obscuring how close covenants already are.
Equity faces potential collapse from $44 stock price; RILY's $1.227B of baby bonds — 74% held by retail unaware of cov-lite subordination — face severe haircuts in default given $2.5B of debt and inflated, illiquid asset values unlikely to cover liabilities.
The three reasons
- 1
RILY's net cash and investments collapsed $950M to -$350M in 2022 as speculative bets imploded
- 2
Four of RILY's seven largest loan-book borrowers are in default or distressed (CORZQ, XELA, GREE, AREN)
- 3
NAV has crashed below the $1.1B Nomura covenant, threatening dividend and firm-level collapse in 2023
KPIs cited
Pattern membership
Composition what's on the 24 slides
Slide gallery ·
Notes
Wolfpack Research short thesis on RILY. Word-processor style research note (not a slide deck), heavy on Bloomberg screenshots and embedded tables. Core argument is 'extend and pretend' — RILY keeps lending to zombie borrowers rather than cutting losses. Notable rhetorical devices: CEO deflection quote on loan-book composition used against him, circular-transaction framing (RILY underwriting its own borrower GREE's ATM offering), and obfuscation claim about Primary Guarantor NAV. No named human author on cover; credited to Wolfpack Research / WPR, LLC. Disclaimer states WPR has a position in covered securities but does not quantify stake. Document purpose is fraud/over-valuation short, not activist change campaign — but fits corpus as contrarian thesis.