Less than a year ago, B. Riley Financial’s stock price was hanging by a thread, trading below $3. On November 11, 2025, it announced that it would change its name to BRC Group Holdings (RILY). starting January 1st.
Since hitting a 52-week low of $2.67 last April, its shares have gained 251%. In the most recent rise over the past five days, the stock price rose 17% and the average daily volume was over 6 million, considerably higher than its 30-day average of 2.38 million.
It’s been just over two months since the announcement and less than three weeks since the official name change. While it seems that a name change was all the company needed to become relevant again among investors, there is much more at stake to explain the profits of the last 12 months.
Looking ahead, with easy gains already made, investors are considering whether to bet on the once-bankrupt investment banker.
There are reasons to jump on the bandwagon. Here are three reasons why risk-tolerant investors might want to consider RILY stock.
“BRC” in BRC Group Holdings means B. Riley & Co., the company’s original name when it was founded in 1997. The “Group Holdings” portion recognizes that the company has grown from a financial services platform into a variety of businesses, each with distinct qualities and separate management.
While that may be true, it’s not something that generally moves the needle that drastically. However, sometimes a name change is therapeutic for a company that has fallen on hard times, and it certainly has.
Four short years ago, its shares were trading at an all-time high of $91.24. It is now a tenth of the value and is working on a recovery process to put the stock and the business in a better position.
It’s not out of the woods despite reporting fourth-quarter 2025 results that were much better than a year ago.
Investors who follow small-cap stocks are probably very familiar with the $216.5 million investment gone bad that B. Riley made in Franchise Group Inc. (FRG) in August 2023 as part of the franchise owner’s $2.8 billion management privatization deal.
Almost immediately, the buyout turned ugly: FRG CEO Brian Kahn resigned from his position two months later, on January 22, 2024, after the SEC began an investigation into Kahn’s dealings while he was involved in managing Prophecy Asset Management, a now-defunct New York-based hedge fund.
FRG declared bankruptcy in November 2024. In June 2025 it turned out to be much smaller. In December 2025, Kahn pleaded guilty to defrauding hedge fund investors of $300 million. He faces up to five years in prison.
As for B. Riley, his bad investment and loan to FRG caused losses of hundreds of millions. On January 20, BRC and affiliated companies filed a lawsuit against Willkie Farr & Gallagher LLP, the law firm advising B. Riley, Brian Kahn and his wife, Lauren Kahn. It seeks $735 million in damages for the defendants’ misconduct.
That largely explains the drop in B. Riley’s stock price to penny stock levels.
In January 2025, I asked if it was not possible to invest in B. Riley. It had just entered Barchart’s 100 lowest stocks to buy at #81.
At that time, Kahn had not been charged with any crimes related to the Prophecy. We now know that he pleaded guilty to defrauding his 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 it 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 strong, saying: “If you eliminate the West German debacle, which is certainly difficult considering that B. Riley is supposed to be a financial expert and capable of detecting bad investments, the core businesses will remain strong, as Riley maintains.”
I came to the conclusion that B. Riley could be invested in, but only for aggressive, risk-tolerant investors. I think the same applies to the successor, BRC Group Holdings.
BRC reported its third quarter 2025 results on January 14.
They were much better than a year ago, generating a net profit of $89.1 million, compared to a loss of $286.4 million in the third quarter of 2024. Overall, its revenue was $277.9 million, up from $175.4 million a year earlier.
However, the improvement in the Capital Markets segment stands out. Its income from advisory fees and trading operations was $110.3 million, almost three times the $28.5 million it generated a year earlier.
That’s a sign that your main income generator is improving. With small caps on the rise, a large portion of its investment banking client base, it should be able to continue to generate positive growth in both top and bottom lines.
Additionally, its wealth management and communications businesses generated healthy profits of $7.2 million and $13.0 million, respectively, in the third quarter, despite declining revenue.
As I said in January 2025, if you are a risk taker, use options to bet on this negative, but not negative, financial change.
It’s still early, but who doesn’t love a redemption story?
On the date of publication, Will Ashworth had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
