I am an enormous fan of insider buying; when insiders buy more shares of the company they run, they are making an emphatic statement that they expect good things to happen in the future, asserts Tim Melvin in Tim Plaehn’s advisory service, The Dividend Hunter Insiders.
Insiders do not buy shares because they expect percentage returns over the next few months. Instead, they open their checkbooks with the expectation that prices will eventually be several multiples of the price they pay for the shares.
Combining insider buying with alternative income opportunities has worked very well for me over the years. It is also a powerful combination when it comes to spotting opportunities in operating businesses as well.
B. Riley Financial (RILY) is a very attractive option that both has a high yield and has recently been bought by insiders. For my money, they are the very best small-cap research brokerage firm in the United States today, and they are also very active in other segments of the financial markets.
B. Riley has a merchant bank division that invests directly in companies and consults with management about how to improve the business. This division of the company has engaged in activist investing strategies, buyouts, spinoffs, and recapitalizations to increase the shareholder value of the target company.
B. Riley also has a wealth management division that manages assets for high-net-worth institutions, including endowments and pension funds, as well as an advisory business that consults with companies on merger and acquisition opportunities. B. Riley Real Estate has been one of the leading providers of real estate restructuring, dispositions, and acquisitions for both public and private companies for decades.
And B. Riley Venture Capital invests in late-stage private growth companies heading towards an eventual IPO. This is not a venture capital fund. These opportunities are syndicated across B. Riley’s institutional and investment banking clients. High net worth retail clients may also get the opportunity to invest.
Forensic accounting litigation has been another important area of operation for B. Riley over the years. This division provides forensic financial and technology analysis. In addition, its team members are often used as expert witnesses in trials involving complex financial matters.
This division also often works with government agencies such as the Securities and Exchange Commission, the Department of Justice, and various state and municipal governments in civil and regulatory investigative matters.
All of its wide range of corporate services are fantastic businesses on a stand-alone basis, but as part of the B. Riley team, each expands the company’s core knowledge base of all things corporate and financial. The knowledge gained by each division makes the other divisions of the company better at what they do.
B. Riley Financial itself has been buying tens of millions of shares of stock on the open market, as have several key executives. For example, both the co-CEOs, Bryant Riley and Thomas Kelleher, have both been buying large amounts of stock in the company they oversee. Andrew Moore, the head of B. Riley Securities, also recently purchased almost half a million dollars worth of shares. Several directors have also been buying the stock lately.
The company is pretty generous about sharing that cash with shareholders. As a result, the stock currently has a dividend yield of more than 7%. This is a fantastic business that has an enormous amount of recent insider buying a very generous yield. Historically that is a combination that usually works out very well for shareholders.