Yup, and I'll keep saying sell until the bottom eventually drops out. I'm a long term value investor, not a short-term momentum trader, and from where I'm sitting there is nothing to be excited about with this company. Not only for all of the reasons previously discussed, but also because its management team has shown a historical propensity towards making bad decisions and overpaying for acquisitions.
I don't really care if it has experienced short-term gains. Even dog shit stocks rise and fall in value based upon trading volumes. It is a highly volatile stock with historically low trading volume, so it doesn't take much trading to move the needle on the share price. My bigger concern would be holding it in a portfolio when even one bad iota of bad news is released (which will happen eventually), which will be a body blow to the share price.
Anyway, time will tell. Come back to me this time next year and, if the stock has shown itself to be able to sustain a valuation in excess of $11 over that time horizon, I will even type in "Dougster was right!" as a thread subject headline, along with a description of how you were right. ;)
You are right that the management of these clubs sucks. I went to their El Paso club. Not a total disaster but definitely not good. Their Phoenix club, OTOH, was a disaster. Four people in the club on a weekend night. And a Fuckin' Yoda muppet watching the place.
Has management really changed their ways and turning a new leaf? Doubt it. CEO seems like a meglamanical cock-sucker. Even bought himself a private jet for a company so small.
Maybe worth a trip to Phoenix to see if they still don't have it together. If not take 30% profits and spend it in the Phienix clubs. :-)
Rick's Cabaret, the Texas-Based Strip Club Empire, Is Entering the Breastaurant Business
Since the first Rick's Cabaret opened three decades ago, the company has grown into a publicly traded strip club empire with more than two dozen locations nationwide. It prides itself on classiness, boasting on its corporate website that it was while dancing at Rick's Cabaret that Anna Nicole Smith met J. Howard Marshall, her billionaire husband, and that "many of our performers have become Penthouse Pets and Playboy Playmates."
Now, having fully penetrated the gentleman's club market, so to speak, the company has settled on another outlet for growth: breastaurants.
Rick's Cabaret International opened its first earlier this year on Stemmons Freeway in Dallas. Called "Bombshells," it has a World War II-era military theme, complete with artillery shells out front and servers wearing dog tags and camouflage daisy dukes. Their second, the Ricky Bobby Sports Saloon and Restaurant, opened a couple of months later on NE Loop 820 in Fort Worth. The name is inspired by, but in no way associated with, Talledega Nights. And Rick's announced today that it will be opening a second Bombshells just outside Houston.
It's easy to dismiss breastaurants as wannabe strip clubs catering to those men who are too timid to go to the real thing or else want to rationalize their tit-staring by saying they're going for the food. But they're serious business. In a breastaurant trend story last year, The Associated Press reported a one-year, 30-percent jump in sales among the top three non-Hooters chains.
Meanwhile, Rick's topless dancer business suffered during the recession and, while it has recovered enough to open a second location in New York's Times Square, an exploding breastaurant market is too attractive not to grab hold of.
Even bigger news is that it seems like they might also be getting ready to do an offering now that the stock price is up. Presumably use the proceeds to clean up some of the debt on their balance sheet.
The rate on that offering (10%) is kind of high. But otherwise the terms aren't too bad.
Presumably whomever purchased it thinks $13.33 is cinch, so they would only be paying 10% until that price looked stable. $10.25 isn't too bad to sell that much stock, and only a bit dilutive.
I echo your LOL and add a personal 'YIKES' of my own.
Those are pretty onerous terms to float a $2.5mil debenture at junk rates, especially the 6% 'finder's fee' for whomever brokered this deal for RICK. Pricing warrants under current market quotes for the stock is also the move of a desperate borrower. Shows lots of management confidence in the future price of their own paper, doesn't it?
I read very carefully the 2009 RICK annual at your suggestion and found about as messy an operation as I have ever seen among publicly traded companies. This debenture issue shows me that nothing has changed in the intervening four years.
@Dougster,
Don't take some profits.........take ALL of them, every single last penny!
^ I might have agreed with that statement 5 years ago, but right now yields on treasuries are practically non-existent and AAA corporate bonds are trading at an average yield of about 4.5% right now. Not only did RICK need to give the buyer a whopping 10%, but had to sweeten the deal with conversion rights.
art: "Those are pretty onerous terms to float a $2.5mil debenture at junk rates, especially the 6% 'finder's fee' for whomever brokered this deal for RICK"
Yeah, I noticed that too. $150,000 for a few minutes work. Eric's cousin?
@farmer: 100% agreed. I don't know how or why RICK's share price has run up so much over the past couple of weeks, but it seems like their creditors continue to be clear eyed about the situation. ;)
Rick: "I don't know how or why RICK's share price has run up so much over the past couple of weeks"
It was pretty obvious it was going to happen. The situation with the balance sheet was known, yet the stock had consolidated around $8.50 for so long. Management was authorized to do buybacks if it dipped more. Real estate is improving. They had meme to rally it on. A REIT. Said meme didn't make sense if you think about it too deeply, but those are the best kind to rally. All the skepticism about the stock, yet it was holding in mid $8's. There really wasn't much downside risk, so of course it would go up.
So that was the story around $8.8. Up, here is a whole other game. I really don't think trying to reinvent Hooter's is their ticket. Maybe another ridiculous meme to rally later, but I think one run is all it gets for a while...
This rally was based upon absolutely nothing other than smoke and mirrors as far as I can tell. If any real financial improvement was evident in their situation then they wouldn't have been bent over the table so badly just to borrow another $2.5mm.
Smelling a little pump and dump market manipulation in the works. I suspect that anyone who bought in at $10 or higher is going to be sorry that he did.
I agree with all but the last sentence. I can see I going either way - but I doubt much more upside short term. I think I'll just watch it for a few months now and see what happens. Better risk/reward elsewhere.
Weird. The initial earnings reports did not move the stock much at all, nor did the actual release of quarterly earnings. and then, a day later, some no name pseudo analyst writes a speculative fluff piece in Seeking Alpha and , soon after, the price starts to run up. Over the following days, trading volumes spike and yet another no name analyst at a penny stock pump and dump shop starts recommending a buy. Then today, another speculative fluff piece in Seeking Alpha (with author's name omitted this time, no doubt due to shame), filled of course with lots of pretty but ultimately meaningless graphs, shows up just as the price starts meeting some serious resistance.
I haven't done anything close to thorough in reviewing all of this, but I'll bet that there are emails and other very convincing looking puff pieces floating around out there. I'd say that this is all a result of someone wanting to run up the price. Given the thinly traded nature of the stock, I'm sure that it wasn't that hard to do.
Dougster, you may want to reconsider clarifying the theoretical nature of your trades. All joking aside now, you really don't want to be on record anywhere with being involved in profiting from what is looking more and more like market manipulation. I strongly suspect that, before too long, securities regulators are going to be all over this like flies on shit.
Anyway, that's all the time I can spend on this topic - lol.
I don't know. I always looking as Seeking Alpha as a contrarian indicator. Gives insight into the way mediocre/non-professional "analysts" are thinking. So if they all start agreeing/screaming I get worried.
I actually thought a positive piece on SA was bad news for the stock.
Waited a few days though, and it rallied on good volume though, so I figure - what the heck!
Holy fuck! This ticker is on the move again, already so soon. Even though the news of the crappy terms their last offering are already know.
So here's what I'm thinking now -
This club has crappy management in general and a CEO who is a megalomaniacal cock-sucker in particular.
Nevertheless, they are profit and have some decent real estate holding.
So my suspicion is that their is an activist investor out their who is accumulating stock with the idea of buying the company out, or at least replacing the CEO (who only has a 10% stake. Not really in the position to defend, although I'm sure what he really wants is a private jet, and then to sail around on a Yacht with beautiful babes (think Tom Vu) for the test of his life).
$12's now, and I'm thinking of getting back in. Let's see what happens!
27 comments
I'd lock in those gains now if I were you. Covered calls anyone? ;)
I don't really care if it has experienced short-term gains. Even dog shit stocks rise and fall in value based upon trading volumes. It is a highly volatile stock with historically low trading volume, so it doesn't take much trading to move the needle on the share price. My bigger concern would be holding it in a portfolio when even one bad iota of bad news is released (which will happen eventually), which will be a body blow to the share price.
Anyway, time will tell. Come back to me this time next year and, if the stock has shown itself to be able to sustain a valuation in excess of $11 over that time horizon, I will even type in "Dougster was right!" as a thread subject headline, along with a description of how you were right. ;)
You are right that the management of these clubs sucks. I went to their El Paso club. Not a total disaster but definitely not good. Their Phoenix club, OTOH, was a disaster. Four people in the club on a weekend night. And a Fuckin' Yoda muppet watching the place.
Has management really changed their ways and turning a new leaf? Doubt it. CEO seems like a meglamanical cock-sucker. Even bought himself a private jet for a company so small.
Maybe worth a trip to Phoenix to see if they still don't have it together. If not take 30% profits and spend it in the Phienix clubs. :-)
Since the first Rick's Cabaret opened three decades ago, the company has grown into a publicly traded strip club empire with more than two dozen locations nationwide. It prides itself on classiness, boasting on its corporate website that it was while dancing at Rick's Cabaret that Anna Nicole Smith met J. Howard Marshall, her billionaire husband, and that "many of our performers have become Penthouse Pets and Playboy Playmates."
Now, having fully penetrated the gentleman's club market, so to speak, the company has settled on another outlet for growth: breastaurants.
Rick's Cabaret International opened its first earlier this year on Stemmons Freeway in Dallas. Called "Bombshells," it has a World War II-era military theme, complete with artillery shells out front and servers wearing dog tags and camouflage daisy dukes. Their second, the Ricky Bobby Sports Saloon and Restaurant, opened a couple of months later on NE Loop 820 in Fort Worth. The name is inspired by, but in no way associated with, Talledega Nights. And Rick's announced today that it will be opening a second Bombshells just outside Houston.
It's easy to dismiss breastaurants as wannabe strip clubs catering to those men who are too timid to go to the real thing or else want to rationalize their tit-staring by saying they're going for the food. But they're serious business. In a breastaurant trend story last year, The Associated Press reported a one-year, 30-percent jump in sales among the top three non-Hooters chains.
Meanwhile, Rick's topless dancer business suffered during the recession and, while it has recovered enough to open a second location in New York's Times Square, an exploding breastaurant market is too attractive not to grab hold of.
Go here for photo.
http://blogs.dallasobserver.com/unfairpa…
http://biz.yahoo.com/e/130904/rick8-k.ht…
LOL.
Presumably whomever purchased it thinks $13.33 is cinch, so they would only be paying 10% until that price looked stable. $10.25 isn't too bad to sell that much stock, and only a bit dilutive.
But still... Best not to get too greedy.
I echo your LOL and add a personal 'YIKES' of my own.
Those are pretty onerous terms to float a $2.5mil debenture at junk rates, especially the 6% 'finder's fee' for whomever brokered this deal for RICK. Pricing warrants under current market quotes for the stock is also the move of a desperate borrower. Shows lots of management confidence in the future price of their own paper, doesn't it?
I read very carefully the 2009 RICK annual at your suggestion and found about as messy an operation as I have ever seen among publicly traded companies. This debenture issue shows me that nothing has changed in the intervening four years.
@Dougster,
Don't take some profits.........take ALL of them, every single last penny!
Done!
Yeah, I noticed that too. $150,000 for a few minutes work. Eric's cousin?
Welcome back btw.
It was pretty obvious it was going to happen. The situation with the balance sheet was known, yet the stock had consolidated around $8.50 for so long. Management was authorized to do buybacks if it dipped more. Real estate is improving. They had meme to rally it on. A REIT. Said meme didn't make sense if you think about it too deeply, but those are the best kind to rally. All the skepticism about the stock, yet it was holding in mid $8's. There really wasn't much downside risk, so of course it would go up.
So that was the story around $8.8. Up, here is a whole other game. I really don't think trying to reinvent Hooter's is their ticket. Maybe another ridiculous meme to rally later, but I think one run is all it gets for a while...
Smelling a little pump and dump market manipulation in the works. I suspect that anyone who bought in at $10 or higher is going to be sorry that he did.
I haven't done anything close to thorough in reviewing all of this, but I'll bet that there are emails and other very convincing looking puff pieces floating around out there. I'd say that this is all a result of someone wanting to run up the price. Given the thinly traded nature of the stock, I'm sure that it wasn't that hard to do.
Dougster, you may want to reconsider clarifying the theoretical nature of your trades. All joking aside now, you really don't want to be on record anywhere with being involved in profiting from what is looking more and more like market manipulation. I strongly suspect that, before too long, securities regulators are going to be all over this like flies on shit.
Anyway, that's all the time I can spend on this topic - lol.
I actually thought a positive piece on SA was bad news for the stock.
Waited a few days though, and it rallied on good volume though, so I figure - what the heck!
All pretty standard for the market.
So here's what I'm thinking now -
This club has crappy management in general and a CEO who is a megalomaniacal cock-sucker in particular.
Nevertheless, they are profit and have some decent real estate holding.
So my suspicion is that their is an activist investor out their who is accumulating stock with the idea of buying the company out, or at least replacing the CEO (who only has a 10% stake. Not really in the position to defend, although I'm sure what he really wants is a private jet, and then to sail around on a Yacht with beautiful babes (think Tom Vu) for the test of his life).
$12's now, and I'm thinking of getting back in. Let's see what happens!