Greenhaven Road 2Q20 Commentary: RCI Hospitality Holdings

Guest post by Scott Miller

Greenhaven Road Capital commentary for the second quarter ended June 2020, discussing RCI Hospitality Holdings and Collectors Universe.

The second quarter was a healthy period for markets as they began their recovery after bottoming in March. The funds that we are invested in followed a similar trajectory, generating an aggregate return of over 18% for the Greenhaven Road Partners Fund in the second quarter. The fund of funds remained down 9.4% for the year as of the end of June, though we estimate that ground has been made up with encouraging returns in July and month-todate in August. Time will tell, but it has been a productive environment for stock picking.

While it seems like ages ago, Q2 included the meat of the “lockdowns” in the United States. For almost two months, my universe of in-person human interaction narrowed to my immediate family. This was a period of intense volatility in the markets and great uncertainty regarding the trajectory of the virus, the level of government response, and the health of the economy. Together, these factors created an interconnected mess with a very wide range of potential outcomes. In this period of isolation, I really wanted to convene the managers of the Partners Fund to discuss individual companies as well as the overall investing landscape. If I could have waived a wand, I would have brought everyone back to The Harvard Club for another decision-making workshop with Annie Duke, the author of Thinking in Bets. For a number of obvious reasons, that was just not possible, so I borrowed my wife’s Zoom account and hosted an online “happy hour” for all of the managers one Thursday after the market closed.

Convening a bunch of introverted and impassioned “value nerds” can have its moments of awkwardness, but I found our discussion to be a robust and informative comparison of notes on how managers I respect were navigating the markets. This energizing experience led to additional Thursday happy hours during which we continued our freewheeling conversation. While I thoroughly enjoyed the camaraderie and insight, I was also interested in digging deeper and putting more structure around these virtual gatherings, so I decided to modify the format a bit.

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