(1/10) $RICK is the only publicly listed company that specializes in the ownership and management of adult nightclubs. Just like a $REIT, it buys real estate and grows organically by improving the operations of its assets, and it also grows externally by acquiring new properties.

(2/10) But the economics of $RICK are far superior to those of a regular $REIT because it specializes in a sector that's highly inefficient. There are few buyers (ESG...) but there are many sellers because most owners are approaching retirement age.

(3/10) $REITs will commonly buy properties at a 5-7% cap rate with limited value-add potential. In comparison, $RICK buys high-quality strip clubs at a 25-33% EBITDA yield with significant value-add potential, resulting in exceptionally large spreads and rapid external growth.

(4/10) A $REIT will typically grow externally by acquiring assets at a 100-200 basis point spread over its cost of capital (e.g. 6% cap rate and 4% WACC). $RICK does the same thing, but instead of earning 100-200 basis point spreads, it earns 1,000-2,000 basis point spreads!

(5/10) The proof is in the results: $RICK has managed to grow its FCF per share by 20% CAGR by following by this simple strategy since FY16 and best of all, it is still just getting started. Today, it owns 52 clubs and there are about 500 other clubs that it could target.

(6/10) Typically, $REITs that grow at this pace trade at high multiples, but $RICK is currently priced at just 8.5x forward normalized FCF, which is exceptionally low even in today's market. Its multiple could double and it would still be reasonable.

(7/10) Its growth prospects coupled with its multiple expansion potential makes $RICK a great investment opportunity. If you expect its FCF per share to grow by ~20% CAGR over the coming 5 years and its FCF multiple to expand to 12x FCF, it would triple your money.

(8/10) I think that this is quite realistic given the company's growth prospects, its current valuation, and its past track record. Since FY16, $RICK has earned a 745% total return for shareholders. That's 8x more than the returns of the S&P500 $SPY over the same time period.

(9/10) @RicksCEO has over 80% of his net worth invested in $RICK stock and he recently explained to me in an interview that he simply cannot find better returns elsewhere.

(10/10) I just posted an interview with Eric Langan, CEO of $RICK. It is quite long at 6,000+ words but very insightful: https://seekingalpha.com/mp/12... (There is a paywall, but @SeekingAlpha offers a 2-week free trial and won't charge you anything if you cancel in the first 14 days)

@JussiAskola Yessss $RICK to the moon! Acquired a huge block in the summer $50~

@LamboJohnny 🙌🏻🙌🏻

@JussiAskola The only "Reit" I'm interested in ^^ No dilution necessary to grow (in most situations).

@stonkmetal Yes, no need to even raise equity to grow at a rapid pace!

@JussiAskola is this company technically a REIT? i may take a look at it

@DGretta_Author It is not, but it behaves similarly and buys the real estate.

@JussiAskola I see $800M market cap so 8.5x FCF multiple implies 94M FCF. Over the last year they did $84M of EBITDA and 37M FCF. How are you getting to 8.5x forward multiple? Also any idea why results have been so good of late? Is that the effect of having added new clubs or strong comps?

@catapultcap Lots of adjustments are needed to get the forward normalized FCF. Many acquisitions are still impacted by covid, etc. We have an analysis of this at High Yield Landlord.

@JussiAskola Post this at the lows not the highs.

@AverageTrue When you look back 10 years from now, this will seem like a low price. We started buying at around $15.

@JussiAskola Some of their corporate governance seems questionable. Prior Exec went thru a lawsuit mishandling company funds he allocated to a private school? Not sure of exact details. Something to keep in mind…

@Hinge12522012 It is not. Governance and shareholder alignment is very good at $RICK. There is important context that you need as you assess the case that you mention here. We have an analysis of it at High Yield Landlord: https://seekingalpha.com/check...

@JussiAskola Haven’t been to one in years but hasn’t only fans and cam sites devastated their business? Legit question

@retirementhunt They haven't. They may help in the long run as they are synergies between the digital and real world.

@JussiAskola Thanks for the work and research here, I just wouldn't view this in the lens of a REIT. Commercial buildings with long WALEs aren't as impacted by fluctuations in macro, or to that point even be compared with Strip clubs. Yes the CoC returns of clubs are fantastic, but 1/n

@KobeInvests Hotels are commercial buildings and they don't have long WALEs.

@JussiAskola Your growth and cf assumptions seem very reasonable - but in my experience, there's little chance of multiple expansion no matter what the growth profile given the nature of the underlying business. Returns will be driven by cash yield primarily.

@pioneerplaza Note that the multiple has already expanded a lot so it is happening. $RICK is doing a great job attracting retail investors. They don't care so much about the nature of the business.

@JussiAskola Because like many other you got paid to plug this stock?

@ebitdank Why would you think that? Of course not

@JussiAskola Seems expensive now; bold 3x prediction.

@nattyappgas What makes you think that it is expensive?

@askjussi Intriguing . I usually like to do social arbitrage style Internet sleuthing to research stock ideas. This one could get interesting.

@Jayofcar Let me know if you have any questions. Thanks for your interest!