Detroit Bear
Deep value, special situations, long-term horizon, value

Rick's Cabaret: Two Steps Forward, One Step Backwards

Rick's Cabaret (NASDAQ:RICK) has been one of my favorite companies to follow for several years. Rarely do you find a company with such a rock solid business in the microcap space. However, Rick's management team has been extremely inconsistent. One minute the team is frequently buying wonderful businesses for 2-4x EBITDA. The next minute, management names one of its restaurant's after an established movie character; an action that was bound to end in legal action.

After surprising me with two solid capital allocation decisions in March, there have been some more positive events. In typical Rick's fashion, additional poor corporate governance and poor incentives offset these positive events.

The Positive: Q2 Earnings

One of the most evident improvements...

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