Parsad

MPIC Fund I, LP was worth over $1.1 billion! I plan on running a proxy against Biglari Holdings with our new found capital. ;D I actually sent Mike Pruitt a screen shot. Something to aspire to...$25K a share! Cheers!

You know what is quite amusing? That in the 2nd paragraph of the letter, Sardar finally admits to what I pointed out to him and Phil right in the beginning: That the new incentive-based compensation structure was not appropriate, as Biglari Holdings would have an advantage that the Lion Fund did not have...captive capital! We had sold half of our holdings after the name change, and we sold the rest after the compensation change. We were not against the incentive structure, just that the hurdle should have been 10% and the incentive-fee should have been 15% above the hurdle. You cannot treat your shareholders ethically, when you have a board that may bend to whatever desires the CEO initiates. This is a perfect example of why Buffett wants his son as non-executive Chairman. Someone who personally owns less than 4% of stock renames the company after himself, and initiates a compensation structure that will reward him incredibly handsomely over time, but where the incentives don't have the appropriate hurdles built in. Incidentally, was this a Freudian slip on the first page: Phil Cooley, Vice Chairman of BH, and I believe we have designed an ideal concept that maximizes our potential for aggrandized returns. The 113% increase in investments due to a special dividend from the sub is not an accurate representation. Really, he should exclude the special dividend from the actual performance number. While the increase in debt is not a direct responsibility of the holding company, it is an indication of the health of the entire enterprise. If my left toe has gangrene, should I talk about how healthy my heart is? Anyway you look at it, recourse or non-recourse to the parent, BH is operating with significantly more leverage. Steak'n Shake continues to be the core driver of the business. It's fantastic, and probably one of the best restaurant chains in America! I agree with Sardar and think this can definitely become a global brand. Cheers!

I thought it was actually a positive view of Howard for any Berkshire shareholder. He's not afraid to speak his mind, yet very well knows exactly what his father would want for Berkshire. He'll be non-executive Chairman, and I don't think this should really concern any shareholder. Cheers!

Hi Hawk, These are good questions, and possibly a reason why more of us should attend Chanticleer's AGM! ;D Let me take a stab at what I think of the questions though: 1) I agree...big difference. Problem was that was right around the time of very tight credit and things were moving very fast. You don't get liquidity quick, you're done. I think money was probably hard to raise at the time, and Mike did what he could to get liquidity quickly. Also, I believe that was done to get Karp Reilly or the other funds on board to help acquire HOA in the future, since the right of first refusal was attached to it. 2) Yup, I agree. But as mentioned previously, I think Haley has a longstanding relationship with Chanticleer as an investor/associate. Some details I found on Haley: He was the largest domestic franchisor of McDonalds restaurants until he sold them to McDonalds in 1993, so he has plenty of restaurant experience and expertise: http://findarticles.com/p/articles/mi_m3190/is_n35_v27/ai_14365733/ Was a graduate of University of North Carolina at Chapel Hill and does alot of community work: http://www.rmhofcharlotte.org/news-and-events/press-room/archives/press-release-mike-haley Was a founder and large shareholder of Cree Inc. In 2000, his shares alone were worth over $2B...not sure if he sold any or what, but he has deep pockets and sometimes you need strategic partners like that. http://www.sec.gov/Archives/edgar/data/895419/000089541900000018/0000895419-00-000018-0001.txt http://www.bizjournals.com/triangle/stories/2003/06/23/story2.html?page=all 3) We did too, but I think it was more to benefit long-term shareholders rather than raise significant capital for the company. 4) It's 5M authorized, but it doesn't mean they will issue all of that stock anytime soon. Simply so that if they do need the capital they can raise it. In terms of dilution...it's kind of moot at this point. There is very little equity and the company is still running up losses, so you are completely betting on them being able to execute on their strategy to expand the Hooters brand and develop cash flow to compensate for the current stock price. Will be hard in the near term, but may work out well over the long-term. The main thing is that they've finally got their hands on HOA and the ability to develop the brand. They've also got strategic partners with very deep pockets who believe in what they are doing. It's not a value investment...it's a bet on Mike Pruitt, plain and simple! Cheers!

Completely agree with that. Often criminal charges are not enforced, but civil liability is completely intact. Cheers!

Don't know who Michael Haley is, but I'm guessing he's a private investor and associate/friend of Mike Pruitts. He bought a really nice home in Palm Beach, so that's all I can find: http://southflorida.blockshopper.com/property/00434133070002850/12121_west_end Our investment in Chanticleer has always been a bet on Mike and a bet that the HOA right of first refusal was worth something. We continue to believe that. They've had their struggles since the credit crunch, primarily due to the deal not closing at the time, and then having to burn through cash to stay afloat until it finally did. But the one thing I can say is that this sucker would have gone down already if somebody else was at the helm. Mike works his ass off trying to create value, but just the sheer expense of running a public company, staff, legal, etc is a hell of a lot every quarter. Then when you think things are finally really improving with the listing of the South African restaurants on the Frankfurt Exchange, and that they would be able to finance their operations from small sales of stock in DineOut SA, the European Crisis hits and investors suddenly sell off European small caps in search of liquidity and safety. I suspect the Paragon financing, along with the convertible warrants (incidentally the dilution would be far greater than 1%...closer to 20% if completely exercised), is simply to finance Chanticleer and the buildout of the Chanticleer Hooter's restaurants. They plan on building another 26-27 restaurants over the next five years, and almost all of them will be 100% owned by Chanticleer. I'm guessing that once they get about half of those restaurants completed, the cash flows from them will be enough to allow Chanticleer to be completely break even or better. The investment business is still part of their main business, but it is hard to raise money for a fund. Matt and Joe are two very smart small-cap analysts...great guys! Over time they will grow this business as capital comes in, along with all the other side projects Mike always has going. But the core will be Hooters and you can see by the focus and updated website, that the HOA right of first refusal really acted as a springboard for Chanticleer to become the primary franchisor to expand into emerging markets. That is huge! They could very well become the largest single franchisee of Hooter's Restaurants outside of North America over the next 20 years. And if you are one of those proponents, that see significant growth and earnings for relatively mature restaurants will come from overseas, then that puts Chanticleer in a very good position. They just have to survive till then! And we think Mike's innate wheeling and dealing ability puts him at a Darwinian advantage! ;D Cheers!

Yes, I hope Reuters and Bloomberg get to see all of the documents. Cheers!

Article that reflects an improving mood for the U.S. consumer, while a stagnant economy is starting to affect Europe. Cheers! http://www.bloomberg.com/news/2011-12-09/consumer-confidence-in-u-s-climbs-more-than-forecast-to-a-six-month-high.html

Lowest point this year. I suspect it widened during late in this quarter. Cheers! http://www.bloomberg.com/news/2011-12-09/u-s-trade-deficit-shrinks-to-lowest-this-year.html

Not good. Tsk, tsk! Cheers! http://www.cnbc.com/id/45615304

Yeah, I wasn't happy with the idea when I first heard about it about three years ago. Now though, it seems as Howard has sort of grown into the idea as far as many shareholders are concerned. I'm also less concerned with Bill Gates being on the board, and virtually all of Buffett's shares will be controlled by the Gates Foundation, so really Gates is the Chairman. As a father, your relationship with someone who is not your son, is far more enjoyable and interactive than the relationship you have with your actual son, so how do you compensate for this a bit? I suspect the non-executive chairman role is specifically for that purpose and to maintain some tangible relationship to the Buffett family. For all intents and purposes, it will have no effect. The real Chair is Gates. Cheers!

Europe is in recession; the US looks to be slipping into recession and China looks to be slowing. Interesting times... Europe is definitely in recession, and will probably experience significant neo-stagflation. China is slowing, but that may actually be a good thing, as it may allow a soft landing. The U.S. is not slipping into recession...in fact, things are accelerating if anything...although I expect it to remain around 2-2.5% GDP growth for the next couple of years as the housing market will take about that amount of time to start turning around. Cheers!

What if who they put in place behaves like Sokol? With Buffett Jr. on board, along with Bill Gates, it's likely that the board would be more likely to act in the same manner as Buffett & Munger. If you have a board over time composed of members who behave in a collegial fashion, and have no history with his father, then it's likely they may overlook such behavior as many would have. Cheers!

In any case I'd love to see the reaction if a short seller, say Jim chanos, did the inverse of this. Say he shorted the stock of a company that had public bonds and wasn't filing financial statements for that period. Then he sued them, forcing default and profited from the equity short. Or something like that. I seriously doubt anyone would be saying "he's just enforcing contracts, guys." That would be completely different than what Klarman is doing. He's not playing both sides. He bought the bonds, expected some sort of settlement at some point, and is not happy with the amount. He's simply trying to get the most he can out of the investment, and any benefit he derives, all other bondholders would also get. The analogy you give of Chanos would be at the expense of the other bondholders and risking their settlement. Not the same thing as Klarman. If Chanos did the same thing as Klarman, I would have no problem with that. At least it's not the same as talking down a stock through the media, or piling onto a company with your hedge fund friends. Cheers!

He's mentioned that before. He would be non-executive chairman...basically maintaining the same corporate culture and values, not day to day duties. Cheers!

I don't like it, but he's not doing anything illegal. That's within his right as a claimant to agree or disagree with the settlement. Cheers!

Barring a setback from Europe, recovery continues to plod along. http://www.cnbc.com/id/45596286 Also, another article on the good and the bad. Cheers! http://www.bloomberg.com/news/2011-12-08/first-time-jobless-claims-in-u-s-decrease-to-lowest-level-in-nine-months.html

Article discussing the difference between the consumer and corporate balance sheets. Cheers! http://money.msn.com/business-news/article.aspx?feed=AP&data-ipsquote-timestamp=20111208&id=14602228

According to Thomson Reuters, the SEC has closed the investigation against SAC and Kynikos. Cheers! http://money.msn.com/business-news/article.aspx?feed=OBR&data-ipsquote-timestamp=20111208&id=14602570

No go for Sardar as far as ISS is concerned. Cheers! http://www.marketwatch.com/story/iss-endorses-all-cracker-barrel-nominees-to-board-rejects-biglari-bid-for-board-seat-2011-12-08

Still looking good! Cheers! http://www.bloomberg.com/news/2011-12-08/north-american-rail-freight-carloads-for-dec-3-table-.html?cmpid=yhoo

Which features in particular do you think are good? All of them! It's a huge step up from their previous phone. The zero lag camera shutter is a good idea. It's now fully interactive with Microsoft Exchange. Alot of their services are now integrated, not unlike Apple. The phone looks a hell of alot better too. Cheers!

Looks very good, and some neat features. Much better progress than their earlier phones. Cheers! http://www.google.ca/nexus/#/index

If he cheated on his wife, I would find that immoral. I didn't get the feeling that he did that though. Perhaps I'm biased, but it sounds like he was so consumed with his business that his wife went searching for other people. According to "The Snowball", this is accurate. In terms of the people he associates with, you have to remember he is as big a celebrity as people like A-Rod or LeBron James. Alot of times, these people seek him out, and not the other way around. I would also suggest that Buffett is a person who would prefer to add value to someones life and conduct, rather than avoid them altogether. Cheers!

Unemployment goes down, but then we get to deal with a population that will likely be declining... That doesn't seem like a good swap to me. It really makes me worry about the Social Security Administration and Medicare/Medicade. Only solution, and one that Japan would not entertain under the same demographic shift over the last 20 years, is to increase and maintain a strong immigration policy that increases the taxpayer base. Hardline on illegals, but increase the legal immigration levels...especially business and entrepreneurial class. That's your only solution, as growth in GDP and taxes alone will not be able to keep up with rising costs. It has worked very well in Canada. Cheers!