Good article. I am a current shareholder. I like you brought up the point under points of concern of lack of focus. I like the company (why I'm a share holder) but the lack of focus is my main gripe with the company. They have something they can do better than others i.e. buying and running Gentlemen's clubs and I think they should focus on that. People say it makes up a smaller share of the company, but I think it also distracts both management and shareholders. At the last earnings call I heard a disproportionate amount of time was spent discussing Bombshells.
Thank you for reading and for the kind words. The lack of focus has me torn. On one hand I like companies that are spawners (are able to create new/adjacent business lines), but it does seem there’s a disproportionate amount of time spent on Bombshells. Worth watching going forward
Jul 15, 2023·edited Jul 15, 2023Liked by Breeley Capital
Agreed definitely worth watching. Since the change in the companies capital alocation policy in 2016 I think Eric has done a good job and deserves some slack.
I have only read a little about spawners and am happy for businesses to invest in other new potential businesses, but I would prefer it that they are much more relevant to their primary business. Such as their admireme investment. I think that strengthens (depending on its success) their existing gentlemen's club business mote, while also creating a new business at a much smaller cost in terms of money and management time. But all these other ideas such as Bombshell's or the energy drink are tangentially related at best, take much more time and resources and don't benefit from the existing business.
Good write up - both the positives & negatives were well explained.
I think that the 2022 earnings might be well above the normalized number (Covid re-opening effect I guess). What earnings (a ballpark number would be fine) do you think the firm can sustainable deliver going forward? I want to the normalized yield the business might deliver.
Thank you for the reading and the kind words. This is not a company you can put a normalized earnings yield on, as it had many levers that can very easily drive or destroy value. Obviously buying more clubs is always a priority, the new casino in Colorado could potentially be a game changer, the Bombshells story could have various outcomes, shares will be bought back when management believes it is accretive, and there is always the possibility of another out of left field capital allocation decision on the table (like the energy drinks). To get comfortable with the company more than anything you’ll have to get comfortable with its management and capital allocation decisions rather than a normalized earnings number or reversion to a mean
Another great read, appreciate it :)
Thank you for reading and the kind words, Milosz!
Good article. I am a current shareholder. I like you brought up the point under points of concern of lack of focus. I like the company (why I'm a share holder) but the lack of focus is my main gripe with the company. They have something they can do better than others i.e. buying and running Gentlemen's clubs and I think they should focus on that. People say it makes up a smaller share of the company, but I think it also distracts both management and shareholders. At the last earnings call I heard a disproportionate amount of time was spent discussing Bombshells.
Thank you for reading and for the kind words. The lack of focus has me torn. On one hand I like companies that are spawners (are able to create new/adjacent business lines), but it does seem there’s a disproportionate amount of time spent on Bombshells. Worth watching going forward
Agreed definitely worth watching. Since the change in the companies capital alocation policy in 2016 I think Eric has done a good job and deserves some slack.
I have only read a little about spawners and am happy for businesses to invest in other new potential businesses, but I would prefer it that they are much more relevant to their primary business. Such as their admireme investment. I think that strengthens (depending on its success) their existing gentlemen's club business mote, while also creating a new business at a much smaller cost in terms of money and management time. But all these other ideas such as Bombshell's or the energy drink are tangentially related at best, take much more time and resources and don't benefit from the existing business.
Good write up - both the positives & negatives were well explained.
I think that the 2022 earnings might be well above the normalized number (Covid re-opening effect I guess). What earnings (a ballpark number would be fine) do you think the firm can sustainable deliver going forward? I want to the normalized yield the business might deliver.
Hey Pranjal,
Thank you for the reading and the kind words. This is not a company you can put a normalized earnings yield on, as it had many levers that can very easily drive or destroy value. Obviously buying more clubs is always a priority, the new casino in Colorado could potentially be a game changer, the Bombshells story could have various outcomes, shares will be bought back when management believes it is accretive, and there is always the possibility of another out of left field capital allocation decision on the table (like the energy drinks). To get comfortable with the company more than anything you’ll have to get comfortable with its management and capital allocation decisions rather than a normalized earnings number or reversion to a mean