Yahoo Finance RCI Hospitality (RICK): Ace River Capital Partners’ Top Position
Ace River Capital, an investment management company, released its first quarter 2024 investor letter. A copy of the same can be downloaded here. In the first quarter, the fund delivered -10.4% compared to a 10.8% and 5.2% return for the S&P 500 (SPX) and the Russell 2000 (RTY) respectively. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Ace River Capital featured stocks like RCI Hospitality Holdings, Inc. (NASDAQ:RICK) in the first quarter 2024 investor letter. Headquartered in Houston, Texas, RCI Hospitality Holdings, Inc. (NASDAQ:RICK) owns and operates clubs and restaurants. On April 19, 2024, RCI Hospitality Holdings, Inc. (NASDAQ:RICK) stock closed at $51.64 per share. One-month return of RCI Hospitality Holdings, Inc. (NASDAQ:RICK) was -7.89%, and its shares lost 31.55% of their value over the last 52 weeks. RCI Hospitality Holdings, Inc. (NASDAQ:RICK) has a market capitalization of $477.39 million.
Ace River Capital stated the following regarding RCI Hospitality Holdings, Inc. (NASDAQ:RICK) in its first quarter 2024 investor letter:
"The fund’s top position is RCI Hospitality Holdings, Inc. (NASDAQ:RICK). RICK is the only publicly traded owner of adult nightclubs in the US. Currently they own 56 clubs across 13 states and an additional 13 sports-bar restaurants with the “Bombshells” concept. With few municipalities issuing new adult entertainment licenses these businesses function as local monopolies with excellent unit economics. With the construction of two Colorado casinos underway, the long runway of adult night club acquisition targets, the growth potential and spin off value of the Bombshells concept and finally the potential upside of the “admireMe” OnlyFans type website, I expect this to remain my top position for the foreseeable future.
The recent quarter has shown same store sales weakness in the bombshells segment. M&A activity looks to be stalled by inflated 2022 revenues result on valuation expectations for club owners vs what RCI is willing to pay on a more normalized revenue valuation. The CEO has initiated a cost reduction effort for bombshells to get it back to profitability and has been in the talks for a club acquisition, stated on the recent conference call. In this high interest rate environment, upcoming elections and war activity abroad, we can expect investor money to remain on the sidelines near term I believe. RCI should make substantial buybacks over this period and any positive momentum with the gaming licenses, bombshells or the admireme.com website should create a nice tailwind at some point in the future. My thesis has not changed fundamentally but the value of bombshells may be insignificant if it continues to perform poorly. I still feel the company is well positioned and can drive shareholder returns without a strong contribution from the bombshells segment."
A bustling nightclub filled with energy, illuminated by mesmerizing lights and the thumping beat of the dance music.
RCI Hospitality Holdings, Inc. (NASDAQ:RICK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, RCI Hospitality Holdings, Inc. (NASDAQ:RICK) was held by 10 hedge fund portfolios, down from 11 in the previous quarter, according to our database.
We previously discussed RCI Hospitality Holdings, Inc. (NASDAQ:RICK) in another article, where we shared Bireme Capital's views on the company. In addition, please check out our hedge fund investor letters Q1 2024 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.
