Less than a year ago, B. Riley Financial’s share price was hanging by a thread, trading below $3. On Nov. 11, 2025, it announced that it would change its name to BRC Group Holdings (RILY) effective Jan. 1.
Since hitting a 52-week low of $2.67 last April, its shares have gained 251%. The most recent surge over the past five days saw the share price rise 17% and average daily volume exceed 6 million, considerably higher than its 30-day average of 2.38 million.
It’s been a little more than two months since the announcement and less than three weeks since the official name change. While it seems as though a name change was all the company needed to become relevant with investors again, there’s a lot more at play to explain the gains over the past 12 months.
Looking ahead, with the easy gains already achieved, investors are pondering whether to bet on the once-down-and-out investment banker.
There’s a case to be made for jumping on the bandwagon. Here are three reasons risk-tolerant investors might want to consider RILY stock.
The “BRC” in BRC Group Holdings stands for B. Riley & Co., the company’s original name when it was founded in 1997. The “Group Holdings” part recognizes that the firm has transitioned from a financial services platform to a range of businesses, each with distinct qualities and separate management.
While that may be true, that’s not something that generally moves the needle so drastically. However, sometimes a name change is therapeutic for a business that’s been through the wringer — and it most certainly has.
Four short years ago, its stock traded at an all-time high of $91.24. It’s now one-tenth the value and is working through a turnaround to put the stock and business on a better footing.
It is not out of the woods despite reporting Q4 2025 results that were much better than a year ago.
Investors who follow small-cap stocks are most likely very familiar with the $216.5 million investment gone bad that B. Riley made in the Franchise Group Inc. (FRG) in August 2023 as part of the franchise owner’s management take-private deal for $2.8 billion.
Almost immediately, the buyout turned ugly, with FRG CEO Brian Kahn resigning his position two months later on Jan. 22, 2024, after the SEC began an investigation into Kahn’s business dealings while involved in the management of Prophecy Asset Management, a now-defunct New York-based hedge fund.
FRG entered bankruptcy proceedings in November 2024. It emerged much smaller in June 2025. In December 2025, Kahn pleaded guilty to defrauding the hedge fund’s investors of $300 million. He faces up to five years in prison.
As for B. Riley, its bad investment and loan to FRG resulted in hundreds of millions in losses. On Jan. 20, BRC and affiliated businesses filed a lawsuit against Willkie Farr & Gallagher LLP, the law firm advising B. Riley, Brian Kahn and his wife, Lauren Kahn. It is seeking $735 million in damages for the defendants’ malfeasance.
That pretty much explains B. Riley’s share price cratering to penny-stock status.
In January 2025, I asked if B. Riley was uninvestable. It had just entered Barchart’s Bottom 100 Stocks to Buy in 81st position.
At the time, Kahn hadn’t been charged with a crime related to Prophecy. We now know that he pleaded guilty to defrauding its investors.
“B. Riley’s operating loss was $220.3 million in the second quarter, most of which was due to the write-down of the fair value of its $200 million loan to Kahn, which was based on FRG shares he provided as collateral. Those shares are now worth $2 million,” I wrote in January 2025.
Despite the heavy losses, I suggested that the ongoing operations were reasonably sound, stating, “If you remove the FRG debacle, which is admittedly tough considering B. Riley is supposed to be a financial expert and able to sniff out bad investments, the core businesses will remain strong, as Riley maintains.”
I concluded that B. Riley was investable but only for aggressive, risk-tolerant investors. I feel that the same applies to the successor, BRC Group Holdings.
BRC reported its Q3 2025 results on Jan. 14.
They were much better than a year ago, generating a net profit of $89.1 million, up from a $286.4 million loss in Q3 2024. On the top line, its revenue was $277.9 million, up from $175.4 million a year earlier.
However, the Capital Markets segment’s improvement really stands out. Its revenues from advisory fees and trading were $110.3 million, nearly three times the $28.5 million it generated a year earlier.
That’s a sign its most significant revenue driver is on the mend. With small caps on the rise, a big part of its investment banking client base, it should be able to keep delivering positive growth on both the top and bottom line.
In addition, its wealth management and communications businesses generated healthy profits of $7.2 million and $13.0 million, respectively, in the third quarter, despite declining revenues.
As I said in January 2025, if you’re a risk-taker, use options to bet on this down, but not out, financial turnaround.
It’s still early, but who doesn’t love a redemption story?
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
