- RICK is poised to be a massive beneficiary from reopening.
- Continued free cash flow growth driven by accretive acquisitions and Bombshells rollout.
- Significant upside as the market awards the company a reasonable multiple.
Yaron Naymark, founder and Portfolio Manager at 1 Main Capital, discusses his investment in RCI Hospitality (NASDAQ:RICK). RICK is a cash flow machine, and Yaron thinks the company is set to compound free cash flow per share at an accelerated rate for years as they continue to roll up the gentlemen's club industry at very low multiples, execute on their Bombshell's growth plans, and repurchase shares when they trade at attractive prices.
1:55 RICK overview
10:05 Getting comfortable with the management team
18:30 Discussing the roll up opportunity
28:15 Valuation arbitrage on acquired clubs
32:25 Bombshell's growth prospects
38:50 Breaking down the ROIC for new Bombshell's
44:15 RICK valuation and SOTP
49:25 Does ESG and regulation help or hurt RICK?
51:55 Normalized FCF for RICK
57:10 Closing thoughts and adjusting for James Harden leaving Houston
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