I cannot believe, that even after almost 500 published posts, I haven’t explored this topic. You guys know me. I’m a horndog. Hell, I’m a borderline pervert. Greg from Control Your Cash once called me an “unregistered sex offender.” Most people would get mad if they were called that, but I just gave the comment a knowing smile. Enjoy these jokes folks, since I might actually get a girlfriend one day and then I won’t be so sex deprived. But, for now, masturbation helps, at least until I think about the crippling loneliness.
That paragraph was depressing, huh? Let’s move on.
As the expression goes, sex sells. Ladies everywhere have been selling their bodies since the beginning of modern commerce. Strip clubs are everywhere. Pornography has officially taken over the internet, at least according to my history. Everybody’s making all sorts of money off horny people, and schmucks like us aren’t seeing a dime of it. Well, I’m had enough of it. I should be profiting off sex. There’s gotta be a way you can invest in it. Let’s find out.
First of all, there are some easy ways to do so that we’re not going to cover. You could, for instance, open up a strip club. Or a brothel. You could even become a pimp. Considering that most of those suggestions are, you know, illegal, we’re not going to spend time on them. Plus, most of those things require a lot of time and/or money. And we’re more casual sex investors.
Aside: Curious about the business behind strip clubs? Go read then. But you might get a boner.
Let’s start out somewhere kinda obvious, condom manufacturers. Trojan enjoys over 70% of worldwide market share, so you should just rush out and buy their parent company, Church and Dwight, right?
Oh, you couldn’t be more wrong little one.
Church and Dwight have all sorts of different brands, including baking soda, toothpaste, and household cleaners. Ansell, who owns the second biggest condom brand Lifestyles, (take that, Durex) mostly makes medical and industrial equipment out of their latex. Condoms are just a fun distraction for everyone.
How about the birth control pill, the choice for sluts who aren’t afraid of getting the clap? Nah, it’s too fragmented too. Each of the major drug manufacturers has their own version of the pill. I’ll leave it up to the ladies to determine which of these pills are the best and which pill company is most evil. The comment section awaits.
Okay, I guess I gotta start stretching a little. Playboy has to do with sex, right? Hell, I’m sure half the dudes reading this have pleasured themselves over a playmate or two. And if it wasn’t for Playboy, Jenny McCarthy would just be someone’s trophy wife, instead of a crazy dingbat.
Nope, actually, you can’t do that either. Just last year, founder Hugh Hefner put the stock out of it’s misery and bought out remaining shareholders at a little more than $6 a share, which only represents a 48% loss from its IPO back in 1971. Take that, buy and hold guys.
Okay, this isn’t going so well. How about some better ideas?
New Frontier Media distributes adult movies to hotel rooms and cable providers. They take a cut of each sale when horny guys with nothing better to do at the hotel decide to partake. This is all fine and good, except the internet is really cutting into their business. The stock currently trades at $1.37 per share, and an activist shareholder currently has a $1.75 per share offer on the table for the whole company. As you can tell by the price, New Frontier has no interest in selling.
Up next is Rick’s Cabaret, a chain of strip joints headquartered in Houston. Rick’s is pretty big when it comes to the world of strip clubs, but is a relatively small stock. Yearly revenudes (heh) were just a shade under $80M for 2011, with a net profit of $10M. It does not pay a dividend. If it did, it would give new meaning to the term ‘dividend growth investing.’
Have a few hundred grand kicking around? Then why not invest it with AdultVest, a hedge fund that makes private investments in porn sites that need the money, but aren’t able to get it using traditional means. The fund made an impressive 50% return in 2008 and then was accused of being a ponzi scheme in 2009. According to accusers, the fund was only a way for the founder to raise money to attract the ladies with. You might want to avoid this one.
Want one more? How about Friend Finder Network, which is a very innocent sounding name for a company that sells hardcore pornography. They own several dating sites, as well as Penthouse’s assets. So yes, if you invested in this company, you could totally write a Penthouse forum letter to it.
For some reason, today I bought a stock that hasn’t made money, uh, ever, and currently has a negative book value. Oh, and they have more debt than assets. But I’m turned on for some reason.
Horny Bob from Tulsa
Anyway, here’s the deal with sex stocks. If a major part of the company is in the sex business, chances are investors will shun it. The availability of free porn online has made it tougher for pay sites to compete. Business guys who used to order the $12.99 movie from the hotel’s tv are just firing up their laptops these days. If you combine the taboo factor with challenging business conditions, it’s not such a good time to invest in porn.