Recall, almost one month ago to the day, we reported that Barry Ritholtz and Josh Brown's Ritholtz wealth management had taken out an SBA-backed payroll protection loan.
"Thank you, Chase Bank! Thank you, SBA! It’s the news I needed and it came at the right time," Josh Brown blogged at the time. He also told Financial Advisor, who asked about the loan: "It’s nobody’s business how a firm choses to finance itself."
But now, about one month later amidst incessant criticism...
"By May, we looked into replacing the PPP loan with a line of credit. Last week, we did that, and repaid the loan in full (plus interest)," Ritholtz said.
Nice of him to note they paid it back with interest; we can't imagine how difficult servicing what was likely a 1% loan you had drawn on for barely a month was.
Meanwhile, Ritholtz could still be paying (more) interest on its newly established line of credit that it replaced the PPP loan with. And the fact that they paid off one loan to draw on more expensive cash, seems to suggest that the firm had, or has, some kind of funding hole.
This is especially odd since the market has now rebounded significantly from its March lows. Which means, hypothetically, if one was adhering to the same "patience, discipline, long only, buy value on dips" strategy one was selling to its clients, you'd expect to be almost be ahead of where you were in March at this point.
On June 5, the firm's ADV update stated: "We intend to pay back the loan in full as per the terms of the loan." This had replaced language suggesting the loan was forgivable "provided our firm satisfies the terms of the loan program."
Regardless, the optics appear to be less than stellar. Perhaps the firm should just sit on its hands when it comes to doing any more "PR" or "damage control" in the future.