Should You Consider Adding RCI Hospitality Holdings (RICK) to Your Portfolio?

Investment management company Bireme Capital recently released its fourth-quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the fund returned 34.7% net of fees compared to a 7.6% return for the S&P 500. The strategy has compounded at 27.4% annualized, besting the market by 16% a year. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

Bireme Capital highlighted stocks like RCI Hospitality Holdings, Inc. (NASDAQ:RICK) in the Q4 2022 investor letter. Based in Houston, Texas, RCI Hospitality Holdings, Inc. (NASDAQ:RICK) operates hospitality and related businesses. On February 17, 2023, RCI Hospitality Holdings, Inc. (NASDAQ:RICK) stock closed at $83.07 per share. One-month return of RCI Hospitality Holdings, Inc. (NASDAQ:RICK) was -11.03%, and its shares gained 29.53% of their value over the last 52 weeks. RCI Hospitality Holdings, Inc. (NASDAQ:RICK) has a market capitalization of $766.754 million.

Bireme Capital made the following comment about RCI Hospitality Holdings, Inc. (NASDAQ:RICK) in its Q4 2022 investor letter:

“RCI Hospitality Holdings, Inc. (NASDAQ:RICK) appreciated more than 40% in Q4, rising from $65 to $93. The company reported robust results on December 14th, with fiscal year EBITDA up 44% to $87m and EPS of almost $5 per share. The company also announced the acquisition of six nightclubs and a few one-off bar / restaurant locations. The nightclubs were acquired at about 5x EBITDA, a price made even cheaper by a seller-financed 7% loan. This is an extremely attractive cost of debt given that AAA bonds were yielding over 5% in November. The acquisition appears likely to increase RICK’s FCF by 15-20% and only required the issuance of 200k shares (around 2% of the fully diluted total).”

Photo by Marcela Laskoski on Unsplash

RCI Hospitality Holdings, Inc. (NASDAQ:RICK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 13 hedge fund portfolios held RCI Hospitality Holdings, Inc. (NASDAQ:RICK) at the end of the third quarter, which was 15 in the previous quarter.

We discussed RCI Hospitality Holdings, Inc. (NASDAQ:RICK) in another article and shared Greystone Capital Management’s views on the company. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.

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