SCHEDULE: Great Elm Group: Northern Right Capital Management Amends Schedule 13D

Northern Right Capital Management, along with affiliated entities, has amended its Schedule 13D filing, reporting a combined beneficial ownership of approximately 19.1% of Great Elm Group, Inc. common stock.

Summary

• Northern Right Capital Management, L.P., Northern Right Capital (QP), L.P., Northern Right Long Only Master Fund LP, Northern Right Fund GP LLC, BC Advisors, LLC, and Matthew A. Drapkin (collectively, the "Reporting Persons") have filed an amendment to their Schedule 13D filing regarding Great Elm Group, Inc. (the "Issuer").
• The amendment updates beneficial ownership as of July 13, 2026, with the Reporting Persons collectively holding approximately 19.1% of the Issuer's outstanding common stock.
• This ownership stake amounts to 6,211,072 shares of common stock.
• The filing details the specific holdings and beneficial ownership of each reporting person, including sole and shared voting and dispositive power.
• A key aspect of the filing is the forbearance agreement entered into on July 10, 2026, which extends until July 15, 2027. This agreement prevents Northern Right QP, NRC LO, and Mr. Drapkin from exercising their rights to convert their PIK Notes into common stock.
• The forbearance agreement impacts the calculation of beneficial ownership, as shares issuable upon conversion of PIK Notes are not currently deemed beneficially owned by certain reporting persons.
• The total outstanding shares of common stock used for percentage calculations is based on 32,539,020 shares as of April 30, 2026, plus potential shares from PIK note conversions.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this filing as neutral to slightly negative due to the potential for future dilution from PIK note conversions and the nature of a Schedule 13D filing indicating significant investor influence.

Positives

• The Reporting Persons collectively hold a significant stake of 19.1% in Great Elm Group, Inc., indicating substantial investor interest.
• The forbearance agreement, while restricting conversion, provides a period of stability until July 15, 2027, potentially reducing immediate dilution concerns for the Issuer.
• Matthew A. Drapkin was awarded restricted shares on January 8, 2026, as compensation for his board service, aligning his interests with the company's performance.

Negatives

• The potential conversion of PIK Notes represents a significant number of shares (1,083,511 for Northern Right QP and NRC LO, and 98,502 for Mr. Drapkin) that could be issued, leading to future dilution.
• The forbearance agreement defers the conversion of PIK Notes until July 15, 2027, indicating that the current ownership structure is temporary and subject to change.
• The filing is an amendment to a Schedule 13D, which is a form typically filed by investors who acquire a significant stake (more than 5%) in a public company and may intend to influence or control the issuer.

Risks

• Future dilution from the conversion of PIK Notes held by Northern Right QP, NRC LO, and Mr. Drapkin, which could impact the value of existing shares.
• The potential for the Reporting Persons to exercise their rights to convert PIK Notes after the forbearance period ends on July 15, 2027, which could significantly alter the company's capital structure.
• The possibility of further amendments or changes in strategy by Northern Right Capital Management and its affiliates, given the history of amendments to this Schedule 13D filing.

Future Outlook

The primary forward-looking aspect relates to the forbearance agreement, which extends the period during which certain PIK Notes cannot be converted into common stock until July 15, 2027. After this date, the conversion rights can be exercised, potentially impacting the share count.

Management Comments

• Matthew A. Drapkin, as Managing Member of BC Advisors, LLC, the general partner of Northern Right Capital Management, L.P., signed the amendment.
• Matthew A. Drapkin, as Managing Member of Northern Right Fund GP LLC, the general partner of Northern Right Long Only Master Fund LP, signed the amendment.
• Matthew A. Drapkin, as Managing Member, signed for Northern Right Fund GP LLC.
• Matthew A. Drapkin, as Managing Member, signed for BC Advisors, LLC.
• Matthew A. Drapkin signed as an individual reporting person.

Industry Context

StockSavvy.ai notes that Schedule 13D filings, particularly amendments like this one, often signal increased activist investor interest or a shift in strategic holdings. The forbearance agreement on PIK notes is a common tool used in debt restructuring or to manage potential dilution during sensitive periods.

Related Party Transactions

• The filing details the beneficial ownership of securities by related parties, including Northern Right Capital Management, L.P., Northern Right Capital (QP), L.P., Northern Right Long Only Master Fund LP, Northern Right Fund GP LLC, BC Advisors, LLC, and Matthew A. Drapkin.
• The forbearance agreement is between the Reporting Persons and Great Elm Group, Inc., indicating a contractual relationship concerning the PIK Notes.

Stakeholder Impact

• Shareholders: Potential for future dilution if PIK Notes are converted, which could impact share price and ownership percentages. The forbearance agreement provides a temporary period of stability.
• Creditors: The forbearance agreement may impact the company's debt covenants or financial flexibility, depending on the terms of the PIK Notes and the forbearance agreement.
• Management: The significant stake held by the Reporting Persons may influence management decisions and strategic direction.

Next Steps

• Monitor any further amendments to the Schedule 13D filing.
• Observe the company's actions leading up to the Forbearance End Date of July 15, 2027.
• Evaluate the impact of potential PIK Note conversions on share count and dilution after July 15, 2027.

Key Dates

Recommendation

The filing indicates a significant ownership stake and a forbearance agreement that defers potential dilution. However, the potential for future dilution and the nature of a Schedule 13D filing suggest a cautious approach. Holding the stock allows investors to monitor future developments, including the expiration of the forbearance agreement and any subsequent actions by the reporting persons.

Keywords

Schedule 13D, Great Elm Group, Northern Right Capital Management, Beneficial Ownership, PIK Notes, Forbearance Agreement, Common Stock, SEC Filing