Disclosures

A-Mark Precious Metals, Inc.

Disclosure

  • B. Riley & Co., LLC, or any of its affiliates, does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • B. Riley & Co., LLC makes a market in the securities of the company covered in this report.
  • This report may be distributed by FBR Capital Markets & Co., an affiliate of B. Riley & Co., LLC and as such constitutes third party research. For additional information, please visit http://www.fbr.com/disclosures.
Disclosure Chart

Initiated Coverage on 06/19/2015 with a Buy Rating and a Price Target of $14.00

Ratings Distribution as of August 21, 2017
Rating Number of Companies Percent of Total
Buy 145 74.4%
Neutral 49 25.1%
Sell 1 0.5%
Total 195 100%
% with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 23 88.5%
Neutral 3 11.5%
Sell 0 0.0%
Total 26 100%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect “Buy” rated stocks to have an above-average risk-adjusted total return over the next 12 months. We recommend that investors buy the securities at the current valuation.
  • Neutral: We generally believe “Neutral” rated stocks will have an average risk-adjusted total return over the next 12 months.
  • Sell: We generally expect “Sell” rated stocks to have a below-average risk-adjusted total return over the next 12 months. We recommend that investors reduce their positions until the valuation or fundamentals become more compelling.

Risks and Considerations

  • Acquisition/Integration - The Company actively evaluates potential acquisitions as part of its growth strategy. Acquisitions pursued by the Company could be dilutive to financial results and result in a difficult, dilutive or expensive integration.
  • Commodity Costs - Should commodity prices for the Company's resources increase, the Company's operating margins could be harmed.
  • Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
  • Currency Exposure - Since the Company purchases its finished goods from foreign manufacturers and sell its products in transactions denominated in U.S dollars, a weakening of the U.S dollar could negatively impact the Company.
  • Cyclical Nature of the Company's Business - Revenue from the Company's businesses have historically correlated positively with both US and world GDP. A cyclical downturn in GDP growth domestically and/or abroad may lead to a material deterioration in the Company's results.
  • Discretionary Spending - The products the Company sells are largely discretionary in nature and any slowdown in consumer spending would have an unfavorable impact on the Company.
  • Distribution/Sales Dependency - The Company relies heavily on its indirect sales channel for much of its sales. A loss of a major distributor or changes in a distributor's payment practices could prove to be detrimental to future sales growth.
  • Dividend - The Company could choose to eliminate its dividend.
  • Economy - Macro-economic issues such as increasing oil and gas prices and a possible drop in consumer spending could have a negative impact on the Company's business.
  • Execution - Management may not execute well on its restructuring efforts as it allocates capital and human resources towards acquisitions and related integration, possibly resulting in lower margins and cash flow.
  • Financial Results - Unpredictable timing of customer orders.
  • Freight costs - Increases in freight costs caused by high gasoline prices or other factors could cause margin erosion or lost market share if the Company raises prices.
  • Government Funding - Historically, the Company has generated significant revenues from various departments of the U.S. Government. Should funding to these departments be reduced, programs in which the Company participates in may be scaled down or cut, thereby hurting the Company's financial results.
  • Growth Plan - There are many factors that may impact the company's ability to achieve its stated growth objectives.
  • Insider Ownership - Directors and executive officers collectively own a significant percentage of the Company. While this may align interest with other shareholders, investors might view a future sale by any director or officer negatively.
  • Interest Rates - The Company's balance sheet is asset sensitive and its NIM is vulnerable to a declining interest rate environment.
  • International Operations - The Company derives a significant portion of its revenues from outside the United States. The Company is subject to foreign exchange risk and the risks inherent in managing a global Company.
  • Inventory risk - Depending on market conditions, the Company's gross margins could come under pressure if market prices quickly fall within a three to five week time frame.
  • Liquidity and Solvency - The Company has a significant debt load and interest expense, which may hamper its ability to invest in the business. Also, the Company may need to raise additional capital in the future and access to such capital is difficult to predict.
  • Loss of Key Personnel - In our opinion, the current management team will be instrumental in executing the Company's growth strategy. The resignation of a key member of management would have a negative impact on the Company.
  • Natural Hazards - The Company's operations are located in an area prone to natural hazards. Damage to the area would impair the Company's ability to fill orders from customers and distributors.
  • Pricing Pressure - The Company's business could be affected by pricing pressure within the market.
  • Sector Rotation - Negative news by large financial services firms regarding CDOs and sub-prime loans and by banks in markets hit hard by real estate malaise could continue to put pressure on valuations for the sector. Accordingly, the trading price of the Company's common stock may be vulnerable to sector rotation despite not having exposure to these issues.
  • Weather - The weather can significantly impact the Company's results.
  • General Industry - The Company could miss our estimates and/or their financial guidance.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

    A-Mark’s predecessor company, Spectrum Group International, was involved with a legal investigation by US and Spanish authorities in 2006 relating to Spectrum’s prior parent company. After investigations by US securities authorities, the company was cleared of any wrongdoing. Spanish authorities have not yet concluded the investigations, per our research. Under Spanish law, if any of the former officers or directors of SGI or its subsidiary were ultimately found guilty, then, under the principle of secondary civil liability, SGI could be held liable for certain associated damages. If that were the case, SGI creditors may allege that SGI was insolvent at the time of the distribution of A-Mark shares, or was rendered insolvent as a result of the distribution, such that the distribution constituted a fraudulent conveyance, and such creditors could seek to recover the A-Mark shares distributed in the spinoff or their value.