Yes, I specifically chose this picture to attract your attention. Now that you are with me, let's do some finance. The topic of our analysis today is RCI Hospitality (RICK), a country-wide operator of night clubs and themed bars: (Source: Corporate Website) The Rick's Cabaret brand was founded in 1983 and "pioneered the creation of elegant gentlemen's clubs featuring beautiful topless dancers and high quality restaurant service" (Source: website). It went public in 1995 and changed its name to RCI Hospitality in 2014. The company is the only gentlemen's club operator in the US that has its stock publicly-traded under the symbol RICK. I am not going to give you a lecture on the company's history and its operations. There are plenty of research articles on this one (including from myself and other contributors on WhoTrades): - RCI Hospitality: Another Reason Why You Should Reconsider Your Approach Towards Sin Stocks - RCI Hospitality Looks Good To Go - Second Quarter's Results Prompt A Significant Upward Revision For RCI Hospitality's Equity - Making Promiscuous Profits With RCI Hospitality - RCI Hospitality Holdings - A Good Deep Value Opportunity RICK is a classical sin stock - very profitable and trades at a discount to other companies. Unfortunately, unlike other sin stocks (e.g. BTI, RAY, DEO, etc.), RICK is not very shareholder-friendly: the company does not pay dividends and does not buy its stock back: (Source: Capital IQ. Prepared by the author) Accordingly, the market is not treating the stock well, either: (Source: Google Finance) Personally, I am sitting on the sidelines. Yes, the stock is ridiculously undervalued and the underlying business is strong. The value of the company's real estate is worth more than the business itself. In fact, the company is currently worth less than its book value: the market value is ~$104M, while the book value is around $123M. But, the company's CEO, Eric Langan, just cannot seem to help the stock lift off! RICK just does not have the escape velocity to rise above $12, and I have no idea why! There have been a lot of positive developments over the last: a decent same-stores' sales growth, new clubs, a cheaper refinancing of debt, even some share buybacks (although, the stock-based compensation just erased the effect). The CEO does a lot to help the business grow but he does not seem to care about investors, probably thinking he is the one in charge. This can be partially explained by the fact that the company does not have a substantial institutional ownership: (Source: Yahoo Finance) Because RCI Hospitality does not have a sufficient institutional ownership and none of the existing owners has a significant stake in the company, nobody can really influence the management on its decisions. Although I gave RCI Hospitality a BUY rating back in May 2015 (after Q2 results came out) with a target price of $19.5 - $20.5 per share, I am starting to think that RICK is really a value trap: "A stock that appears to be cheap because the stock has been trading at low multiples of earnings, cash flow or book value for an extended time period. Stock traps attract investors who are looking for a bargain because these stocks are inexpensive. The trap springs when investors buy into the company at low prices and the stock never improves. Trading that occurs at low multiples of earnings, cash flow or book value for long periods of time might indicate that the company or the entire sector is in trouble, and that stock prices may not move higher." (Source: Investopedia) I think that the industry, in which RICK operates, is not in trouble. I also do no think that the company is trouble - its assets are fine, its cash flows are stable. I think that the problem is with the management: it seems to me that Mr. Langan is a control freak. I listened to a couple of earnings calls and read the transcripts. And he seems to be the only guy who answers the questions from analysts, including those regarding financials. When I think about RICK's management I do not think about a team but about a person - the CEO. If you go to the company's website, his photo is on the front page. There are no photos or bios of other team members. Mr. Langan clearly wants to drive the ship by himself. A while ago, I believe during the Q2 call, Mr. Langan mentioned a "road show" he and the "team" (we know there really is no team - just himself and his employees) would conduct in the summer. I do not think they did any road shows during the summer. On the website, I only found a presentation prepared for a December LD Micro Investor Conference. Besides that, I also learned that the CEO is hosting a so-called "Meet Management" event INSIDE A CLUB! See it for yourself: I mean, this may work okay in the business development environment but not in investor relations. Are strippers coming to the event, as well? RCI Hospitality absolutely needs a separate IR department. In RICK's case, the problem is not with the company, it is with the management, namely, the CEO. Mr. Langan is trying to be a "jack of all trades" (master of none).