2016: A Year of Outperformance and Some Avoidable Mistakes

Another year has gone by and I can announce that for the first time in this blog´s short two-year history I have squarely beaten the S&P500 by 4.9%. The value of funds invested is up 18%  from the beginning of the year and the S&P500 closed 13.1% higher (in EUR). I am especially happy about the results since they were achieved by employing a very rational approach that I am confident to be able to replicate in the years ahead.

For each company that I bought shares in I could determine with high certainty its intrinsic value and document most of the analysis here on this blog. As a consequence I achieved healthy returns with Clydesdale Bank, Baidu, IBM, RCI Hospitality and Davita. Many of these fine companies are still far away from my target prices and will hopefully serve as foundation for next year´s outperformance. Continue reading

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Selling RICK at a 36% Profit on R/E Concerns

There was recently a major change in my portfolio that was left unexplained until today. I quietly sold off my entire RCI-Hospitality-Holdings (RICK) holdings after having beat the drum for the company for quite some time. Therefore, I feel that I owe an explanation of why I have done so.

As you might have noticed I was quite fond of RICK´s insanely cheap valuation. The position was bought at levels of USD 8 and USD 10 per share respectively. In my Seeking-Alpha analysis of RICK I determined the company to be worth anywhere between USD 12.50 on the low- and USD 16 per share on the high side. Continue reading

More Color on RCI Hospitality

I felt I had to shed a little more light on a conviction buy of mine, RCI Hospitality (RICK). While I have briefly outlined the thesis for investing in RICK, I feel to better comprehend the rational behind taking a position in the company requires a little more detail.

I have decided against publishing the article on my own page in favor of SeekingAlpha. Due to the large audience on this platform authors are usually confronted with critical feedback on their argumentation, which I consider essential for the investment process. This is not a click and bait action of any kind. Compensation on this article will be minor since even on Seeking Alpha this stock is underfollowed and the write-up will generate only few views upon which compensation is based on.

Going forward I hope I can evoke similar feedback for my ideas on Investing0711.com and am able refrain from publishing my ideas on 3rd party websites.

Finally, here´s the link to the article: http://seekingalpha.com/article/3985498-rci-hospitality-holdings-sin-stock-50-percent-upside-assuming-zero-growth

Here´s a brief update on recent released Q3 sales figures of RICK: http://seekingalpha.com/article/3987995-rci-hospitality-holdings-reports-solid-sales-disappoints-capital-allocation.

Strip-Club Dollars Coming at RICK

RICK (long): 154 shares, 8.42€/Share

Much has happened to RCI Hospitality (RICK) after having pitched why I bought into the firm. Since last week the price dropped below 8 USD, which translates into a FCF-yield just short of 20%,  I decided to up my position by 70 shares. Due to a shortage of cash I sold my CB&I holdings to finance the purchase. This shifting out of CB&I into RICK has two reasons. First, I believe RICK is valued much more attractively and its real-estate portfolio, takes a lot of risk out of the equation. Second the recent developments at CB&I (impairment and selling of their nuclear segment) haven´t exactly bolstered confidence in the current management to create shareholder value. Continue reading

RCI Hospitality Stripped Down

RICK (long): 94 shares, 9.58€/Share

I recently purchased 94 shares of RCI Hospitality (RICK) and briefly want to update you why I did so. After having talked about the Greenwald Valuation for companies in my last article (before my creative time-out) I have been busy finding companies that are undervalued according to exactly these standards. At the end of this search was RCI Hospitality, a value investment gem. The company, as the title of this blogpost might hint, is active in the adult entertainment business and runs several what they call “cabarets” aka. strip clubs across America. Their business model results in the holding of a large real estate portfolio. The firm is a small cap with a market capitalization of about 80 million as of last week. Due to its size it is largely ignored by analysts. The combination of a lack of analyst-attention and what some people would call dubious industry might have created this very attractive opportunity. Currently RICK trades at a P/B of just 0.7 and a P/E of 9.0 and a free-cash-flow yield north of 15%. Continue reading