Greystone Capital: “RICK Continues to Perform Well”

Greystone Capital Management, an investment management firm, published its  second-quarter 2022 investor letter – a copy of which can be downloaded here. During the second quarter of 2022, returns for separate accounts managed by Greystone Capital ranged from -19.8% to -30.1%. The median account return was -22.8%. Year-to-date, the median account return was -33.1%, net of fees. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Greystone Capital Management mentioned RCI Hospitality Holdings, Inc. (NASDAQ:RICK) and explained its insights for the company. Founded in 1983, RCI Hospitality Holdings, Inc. (NASDAQ:RICK) is a Houston, Texas-based nightclub company with a $569.9 million market capitalization. RCI Hospitality Holdings, Inc. (NASDAQ:RICK) delivered a -21.19% return since the beginning of the year, while its 12-month returns are down by -9.81%. The stock closed at $61.38 per share on August 09, 2022.

Here is what Greystone Capital Management has to say about RCI Hospitality Holdings, Inc. (NASDAQ:RICK) in its Q2 2022 investor letter:

“As I’ve said before, a frustrating element of today’s market environment is having to watch one of our businesses perform brilliantly quarter after quarter while the stock price either declines or barely reacts to positive operating results. RICK continues to perform well in both their nightclub and Bombshells segments, with their recent 11-club acquisition set to contribute nicely to both the top and bottom line during FY22, while Bombshells growth will continue as the company expands both corporate and franchise locations. In January, RICK stock reached an all-time high of $92/share, only to decline nearly 50% to today’s price as macro concerns dominate the mood and capital flows away from retail, consumer discretionary and restaurant stocks. While RICK’s industry/sector is a tough one for many investors to wrap their heads around owning right now, I believe the company is being unfairly lumped into the broader restaurant and consumer discretionary categories while being compared with weaker and less attractive peers. So why would we want to own RICK? In terms of navigating the current or potential economic environment, RICK’s variable cost structure, balance sheet and access to capital provide significant advantages. The business has pricing power on both the service and alcohol sides, has assets to monetize, and is on a mission to acquire another $20mm of EBITDA by 2023 via accretive M&A where they serve as the buyer of choice for mom-and-pop nightclub operators. Should they achieve this goal, shares would be trading at around 5x next year’s EBITDA making RICK one of the cheapest stocks in the entire restaurant universe. This isn’t lost on management, who are repurchasing shares hand over fist at a high free cash flow yield while the stock trades at unreasonable levels…” (Click here to see the full text)

Easiest Liquors to Make at Home with Fruit, Yeast and Sugar


Our calculations show that RCI Hospitality Holdings, Inc. (NASDAQ:RICK) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. RCI Hospitality Holdings, Inc. (NASDAQ:RICK) was in 19 hedge fund portfolios at the end of the second quarter of 2022, compared to 14 funds in the previous quarter. RCI Hospitality Holdings, Inc. (NASDAQ:RICK) delivered a 3.84% return in the past 3 months.

In February 2022, we also shared another hedge fund’s views on RCI Hospitality Holdings, Inc. (NASDAQ:RICK) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.