giofranchi

Well, this only proves what I am saying all along: go for a great entrepreneur + a great business + a fair price! Your second list of Buffett's investments imo perfectly fits the description! ;) Cheers, Gio

https://fundooprofessor.wordpress.com:443/2015/03/20/why-you-shouldnt-invest-in-a-business-that-even-a-fool-can-run/ Gio

Gio

Moreover, I would say that I never use a SotP analysis to value the businesses I own. It is simply too flawed and you’ll never get to an idea of FV. FV is what we as shareholders will own 30 years from now, that is to say BVPS 30 years from now, discounted to the present. Period. Imo BVPS 30 years from now will be orders of magnitude higher if Biglari stays as CEO. Therefore, if on the other hand Groveland wins, my margin of safety holding BH would shrink substantially. Gio

I would probably wait to collect the special dividend and then sell all my shares… This doesn’t mean I would be interested in BH as a business anymore, while waiting for the special dividend… Because I would not. Mine would be just a short term trade. By the way, whenever I try to make short term trade, I usually lose money! ;) Gio

Well, of course the market is misunderstanding or underestimating: 1) S n S operating performance 2) BH’s investments in building the new franchise infrastructure 3) BH’s investment in MAXIM 4) BH’s stock market investments 5) Also BH’s investment in First Guard is imo not fully appreciated 6) During the last few years BH stock price has not increased much… Easy to attack Biglari. And just see what happens. Nothing to lose, right? And possibly a lot to gain, if BH’s shareholders happen to be of the gullible kind! Those investors, who instead understand how business is done, know better. And would prefer not to be bothered by opportunistic guys without a shred of a plan for the company! I hope this kind of investors will ultimately prevail. Or else I am gone! Cheers, Gio

The thing I find truly shameful is that a fantastic businessman and investor like Biglari should have to waste his time protecting BH from a bunch of opportunistic guys, who would do anything to make a name for themselves quickly… But, as I have already said, I am sure the great majority of BH’s shareholders are rational investors! ;) Cheers, Gio

Well, of course I could… But I was asking for something that could be summed up in just a few words… ;) Anyway, don’t worry! It doesn’t matter. What matters imo is the following: during the last 4 years franchising revenues have compounded at 30% annual. If they go on increasing at the same rate for the next 5 years, they will generate $44 million in revenues. If new stores make $3 million, BH will have to open 213 new stores… less than your number! That’s very fine with me, whatever multiple you put on the earnings generated from those franchising contracts. Multiple that clearly depends on how long BH can go on opening new stores and at which rate… Who knows? Surely, if people like S n S, the potential for new stores is huge! :) Gio

Ok… but what’s the point of excluding the 70 legacy franchise units? What do you mean by “allowable”? Agreed openings imo mean there are people who want to open those stores and have agreed to do so… If people want to do something, they generally don’t wait for 5 years… I don’t think this is very significant… The investments made in 2011 and 2012 cannot immediately bear fruit in 2013 and 2014… And new investments are still being made... Therefore, imo we must wait and see if Biglari was right in his decision of investing in franchising initiatives or otherwise he was wrong. (By the way, I think he was right! ;)) Gio

I find page 51 of the presentation OVERVIEW OF COMPENSATION to be very clear. And sincerely I don’t see why I should judge it to be excessive. Furthermore, Biglari now must buy BH stocks on the open market with 50% of the incentive received as CEO, instead of 30% before. Also look at page 54 BIGLARI CAPITAL’S FEES and page 55 and 56. Clearly, BH is no BRK nor FFH, but compares favorably to almost any other publicly traded company. Gio

– Ed Campbell, Founder & CEO of First Guard Insurance Company To me Biglari seems intelligent enough to recognize the best tools in Buffett’s arsenal and the best tools in Icahn’s arsenal, and to make use of the former or the latter as circumstances dictate. Gio

Valeant Pharmaceuticals Prices Offering Of $1.45 Billion Of Common Shares http://ir.valeant.com/investor-relations/news-releases/news-release-details/2015/Valeant-Pharmaceuticals-Prices-Offering-Of-145-Billion-Of-Common-Shares/default.aspx $199 per share. Gio

Pershing Square Responds to The Wall Street Journal Herbalife Article Gio 2015-03-13-Letter-to-Investors-re-WSJ.pdf

Thank you! Great presentation! :) Cheers, Gio

Why 50? The number of franchise units was 124 in 2014. And franchise revenues were $12 million in 2014, not $5 million ($100.000 x 50). I think your number for existing units 5 years from now is conservative: 124 already existing + 239 already signed agreements = 363 units. Even if no new contracts were signed during the next 5 years… Seems conservative enough to me! Gio

Valeant Pharmaceuticals Announces Offering Of $1.45 Billion Of Common Shares http://ir.valeant.com:80/investor-relations/news-releases/news-release-details/2015/Valeant-Pharmaceuticals-Announces-Offering-Of-145-Billion-Of-Common-Shares/default.aspx Gio

Howard Marks on Luck and Skill in Investing Cheers, Gio Howard_Marks_on_Luck_and_Skill_in_Investing.pdf

Endo Withdraws Proposal For Salix http://www.endo.com/news-events/press-releases Gio

I have just put 8% of my firm’s stock market investments portfolio in FIH. Maybe I have paid a bit more than many people on this board are used to and like… But we all know the kind of growth Watsa & Company are purchasing in India and at which prices. Not to act on such an opportunity imo would have been a serious mistake of omission! ;) Furthermore, I have left plenty of room to average down: at the right price I would gladly double the percentage of my firm’s portfolio invested in FIH. Cheers, Gio

It surely could be a great short term trade. But for the long term… I just don’t see how this is ending well… Italy’s debt is unsustainable. And there is no real evidence its load is decreasing… On the contrary, it is still increasing. QE and the following low interests are means to buy some (very welcomed!) time. But then more substance must follow, if we truly are to reverse course, and start decreasing our debt load. Unfortunately, I don’t know what that lucky event (or series of events) could be, and certainly I am not seeing it happen right now! This being said, the Italian stock market has already enjoyed a wonderful run this year: if I am not wrong, it is up almost +30%! If you still can find deeply undervalued situations, they could work very fine… at least for some time! ;) Gio

Valeant And Salix Agree On Amended Terms To Merger Agreement http://ir.valeant.com/investor-relations/news-releases/news-release-details/2015/Valeant-And-Salix-Agree-On-Amended-Terms-To-Merger-Agreement/default.aspx Gio

Thank you NBL0303 for the very exhaustive write up! Now I will print it and read it carefully… It is too long to be read on my i-phone!! ;D ;D Cheers, Gio

Speaking about results, BVPS from September 25, 2013 to December 31, 2014 increased 10.8%. September 25, 2013: Equity + Treasury stocks = $640,505,000 Shares outstanding = 1,778,819 BVPS = $360 December 31, 2014: Equity + Treasury stocks = $823,990,000 Shares outstanding = 2,065,586 BVPS = $399 G&A expenses in 2010, when the efforts to franchise the Stake n Shake concept began were 6.2% of total revenues. In 2014 they have been 8.3% of total revenues. If G&A expenses had been 6.2% of total revenues in 2014, they would have cost BH shareholders $16.5 million less. And BVPS would have grown by 13% instead of 10.8%. In other words, clearly 2014 has not been a stellar year, but not bad either. Long-term notes payable and other borrowings = $312,595,000 Cash and cash equivalents = $129,669,000 Net debt = $312,595,000 - $129,669,000 = $182,926,000, or 22.2% of Equity + Treasury stocks at December 31, 2014. Today the market is pricing BH stock at 1.06 x BVPS (at the end of 2014): with the only exception of FFH, BH already is the company in which I have made the most money so far (of course thanks to the large % of my firm’s capital that I have invested in BH), and yet it is still among the cheapest stocks I know. Cheers, Gio

Not at all! Imo any new acquisition of operating businesses will always be done by BH, not the LF. The LF will only manage stock market investments. Just like NBL0303 has clearly explained. Again: if and when something different happens, I will review and possibly alter my thesis on BH. Gio

Because then I would not be owning the operating businesses, a part of BH which I like and care a lot about. Gio