Northern Right Capital Management, L.P. has reported a series of stock purchases in Great Elm Group, Inc. (NASDAQ:GEG), totaling $88,326. The transactions occurred over three consecutive days in May. The firm acquired 24,984 shares on May 21 at a weighted average price of $1.7717, 20,001 shares on May 22 at $1.7633, and 5,015 shares on May 23 at $1.7536. These purchases were made on behalf of investment advisory clients of Northern Right Capital Management, which acts as the investment manager for the managed accounts. Following these transactions, Northern Right Capital Management holds a total of 4,243,168 shares of Great Elm Group.
In other recent news, Great Elm Group has seen significant changes and growth. The company recently reported a tripling of revenue to $9 million in the fiscal fourth quarter of 2024, along with a 22% increase in fee-paying assets under management (AUM) from the previous year. Despite a net loss of $0.6 million for the quarter, largely attributed to unrealized losses on investments, the adjusted EBITDA rose to $1.2 million, up from $0.4 million in the same period the previous year.
In a significant shift, Great Elm Group's Audit Committee dismissed its previous independent registered public accounting firm, Grant Thornton LLP, and appointed Deloitte & Touche LLP as the new auditor for the fiscal year ending June 30, 2025. This change was not due to any disagreements or issues with Grant Thornton's audit reports.
The company also successfully launched new platform businesses and raised significant capital for its business development company, Great Elm Capital Corp. However, it reported a net loss for the year, primarily due to accounting treatments of investments in Special Purpose Vehicles (SPVs).
Looking ahead, Great Elm Group expects continued growth in its real estate platform, particularly with the build-to-suit (BTS) business. The management remains focused on expanding the platform and growing AUM, aiming to pursue opportunities that offer attractive risk-adjusted returns. These are the recent developments for Great Elm Group.
InvestingPro Insights
Northern Right Capital Management's recent stock purchases in Great Elm Group, Inc. (NASDAQ:GEG) come at a time when the company is experiencing significant growth but facing profitability challenges. According to InvestingPro data, GEG's revenue growth has been impressive, with a 105.86% increase over the last twelve months and a remarkable 194.71% growth in the most recent quarter. This rapid expansion aligns with Northern Right Capital's increased investment in the company.
However, investors should be aware of some key financial metrics. GEG's gross profit margin stands at a low 5.48%, and the company is not profitable over the last twelve months, with an operating income margin of -43.95%. These figures support an InvestingPro Tip that GEG "suffers from weak gross profit margins."
Another InvestingPro Tip notes that GEG is "quickly burning through cash," which could explain why Northern Right Capital is increasing its stake, possibly anticipating a turnaround or seeing value not reflected in the current share price. The stock's price-to-book ratio of 0.89 suggests it may be undervalued relative to its assets.
For investors considering following Northern Right Capital's lead, it's worth noting that InvestingPro has identified 6 additional tips for GEG, which could provide further insights into the company's financial health and prospects. These tips, along with real-time metrics and analysis, are available to InvestingPro subscribers, offering a more comprehensive view of Great Elm Group's investment potential.
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