Parsad

Jeffrey Immelt, CEO of GE, disagrees with Henry Paulson's recollections of certain conversations he had and are included in his new book. Interesting what Paulson's response to this is...hmmm, my memory may be fuzzy! Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=aZzcAxzDhlPo&pos=7

Story on Willmill & Company's Tom Winmill and his Midas Fund. I know there were some folks talking about Bexil recently. Cheers! http://www.bloomberg.com/apps/news?pid=20601109&sid=abSHodgpVd9I&pos=10

I know that people are on both sides of the fence when it comes to Patrick Byrne, Judd Bagley and Deepcapture.com, but I thought this podcast was quite amazing! Not long ago, Judd Bagley who runs antisocialmedia.net "friended" a bunch of journalists on Facebook under an alias, and found that many of these journalists were friends with various analysts, hedge fund managers, etc. This is nothing new. I had seen that John Hempton and Joe Nocera were Facebook Friends in the past, and I've seen other relationships between analysts and fund managers. We've all already seen the emails John Gwynn had forwarded to Kynikos regarding Fairfax. Judd subsequently released a video discussing these relationships, and all hell broke loose! Suddenly, all the people Judd was trying to tie together went public with various attacks, including that Judd had put their children at risk, that he was a pedophile, etc. Some of these guys were Gary Weiss, Sam Antar and Barry Ritholtz. Ritholtz was invited to a radio talk show to talk about his book, but planned on talking about Bagley during the interview. The radio interviewer decided it would only be fair to have Judd on there as well to respond to anything Ritholtz accused him of. Ritholtz tears into Bagley and pretty much calls him a pedophile on the air. When the interviewer brings Bagley in to respond, Ritholtz bails after vehemently crucifying Bagley on the air. Not just slowly dissipates from the air, but this guy runs! This is the type of excrement that Byrne is dealing with. I know that there are plenty of people who disagree with the way he's pursued this, and at times I've wondered the same, but this is the low-life scum that exists out there and is helping to manipulate stock prices. A must hear...Bagley does a very nice job setting up the whole scenario. Cheers! http://www.deepcapture.com/podcast-barry-ritholtz-tale-of-two-media/

Hi Partner, I agree with your sentiment, but unfortunately just like with Fairfax, it does matter. Berkshire's cost to finance their debt, including debt issued by MAE or Berkshire Hathaway Finance will go up marginally. If more credit rating agencies follow suit, those costs could increase a bit further. Over time, it does make a small impact in intrinsic value. Hopefully, various aspects of Berkshire will start firing on all cylinders and cash will start flowing back like before, and at that point the credit rating agencies will come back to their senses. In the meantime...Cheers!

This should get interesting! Chanticleer, as part of their first fund where they bought a $5M note from Hooters of America, has first right of refusal on any offer which was granted by Robert Brooks himself. Thus, if anyone wants Hooters of America, they have to go through Mike Pruitt and Chanticleer first. Cheers!

Nice article about two Galesberg, Illinois Steak'n Shake employees occupying themselves on a slow night after the huge snowstorm. Cheers! http://www.galesburg.com/columnists/x1328932353/Tom-Loewy-Fighting-ennui-on-a-slow-night

That's actually not a bad idea. Not necessarily for the AGM, but they could use one of those things at the Superbowl, etc. I know Hooters is setting up one around the World Cup venue in South Africa. That thing is the size of a semi-trailer and has a full restaurant-bar for about 200-300 people, plus a big-screen tv and dance stage. Cheers!

Janet Tavakoli responds to Taleb's comments: http://www.cnbc.com/id/35331360 Cheers!

Finally got my Steak'n Shake 2009 Annual Report. I get three copies, since we hold SNS in both our funds and our corporate account...12 free coupons for shakes! ;D Look at that pristine balance sheet at year-end 2009...$51M in cash and virtually no debt relative to equity. Interestingly enough, Steak'n Shake in the first 12 weeks of 2010 or the last fiscal quarter, earned almost the same amount in net income that it earned in all of 2009...$5,998M in 2009 and $5,447M in 1st Q 2010...on pace for about $24M in net earnings for 2010! It is humming along, a terrific cash cow now, with I would think about $70M in cash and another $9M in investments. Imagine if Sardar gets 15% annually on that pile...about another $8M after tax income...$32M total net income or around $22/share! And the cash keeps rolling in quarter after quarter. I don't like the name change, but I love everything else about this business and where he's going! Cheers!

Interesting article about how Burlington Northern, Buffett and Calpers are working on reducing congestion for freight and commuter cars in Chicago. Cheers! http://www.bloomberg.com/apps/news?pid=20601109&sid=aOLsZCyllcdo&pos=11

Fitch downgrades Berkshire to AA-. A couple of things we've seen lately with Berkshire...derivatives bets, splitting the shares and now the loss of Berkshire's pristine AAA rating. Things that are very un-Buffett-like based on what we've heard over the last decade. Cheers! http://www.reuters.com/article/idCNN1017630620100210?rpc=44

I've watched it religiously since the beginning. One of the best shows on television, although at times they've really overcomplicated the story. I still think the two-hour pilot episode was one of the most exciting television shows ever made. And the music score and production value...they really make the show! Ok, back on topic! Cheers!

Lenny Dykstra is in the investment biz again. Now he's got a subscriber newsletter. Soon I'm sure he'll open a private valuation firm like Herb Greenberg, or perhaps a fund of funds like Ron Insana. Maybe a church like Peter Eavis, or more likely a guest columnist for Fortune or the WSJ! Cheers! http://www.cnbc.com/id/35301124/

The fact that Taleb's comments about Soros and Buffett discuss statistical evidence should let you know exactly what you are dealing with. Buffett doesn't make many bets. In fact, how many bets do you think Buffett has made in the Buffett Partnerships and Berkshire since starting? Say ten a year for 50 years...maybe 500 material bets with capital. And what has his batting percentage been on those 500 bets? I would guess 90% or better, since Munger has said Buffett has never lost more than 2% of capital on any investment. How could Taleb or anyone else believe that batting 0.900 is not luck. It's beyond the realm of understanding for economists, no matter how smart they think they are. Cheers!

I dont recall Buffet having any massive failures since running berkshire. Most of them just happened to work out after Buffett got his hand's dirty or had to admit that certain aspects of the business had to be shut down...Solomon's, Dexter Shoes, Gen Re. He learned from all of those close calls. Cheers!

I think it will be a non-issue as well, but unfortunately it sets a precedent in behavior that isn't what I expected. Something that opens the company to criticism, rather than the praise it deserved for all the work in turning around the company. It's also indicative of a board that is perhaps becoming a bit too collegial...if that is so, over time accountability by the board decreases. Cheers!

Parsad, What was in the letter that you sent them? I have looked back in the past posts and didn't find anything. Hi Smallcap, I didn't post the letter here. It basically discussed why I didn't agree with the name change. Cheers!

Flights to NYC are pretty good, but hotels, food, etc. are steep! Wouldn't Chicago have been a better fit...with plenty of Steak'n Shakes around, cheaper hotels and food, and flights would be a little more central to the East Coast and West Coast? Cheers!

I hate to disagree with some members of this board because i have the utmost respect for their opinions, but the "split shares and I'm gone" concept seems to be a bit of an elitist position. Not everyone is a fund manager or can afford to own thousands of shares. When I first started buying Berkshire B's 12 years ago, I was not a fund manager, but someone scrimping and saving to buy each share. There were multiple options for me to put that capital elsewhere, where I could buy more shares for my money. But after reading Buffett's letters, I realized it was nonsensical to do that. Fairfax's shares today aren't out of the realm of even the smallest investor. Twenty years from now, they may be at $2000/share or $3000/share, which is pretty much where the B's are today. To buy stocks like Berkshire or Fairfax, you have to grasp what their CEO's espouse and the culture they've developed. You bring in a very specific group of investors...more knowledgeable about the right things and loyal to that culture. Unfortunately, by splitting their shares, Berkshire is now going to bring in a less desireable group of shareholders...something they had already done once by bringing in the B's and splitting the A's. More liquidity means a more diverse group of owners. Some may prefer that because it reduces the gap between intrinsic value and market price, but I'm of another group that believes you sacrifice the quality of your shareholder base...and not by a little bit, but by alot! Cheers!

Txlaw - at what point do you walk around the chocolate factory before you recognize Mr. Wonka is a strange bird? SB is a little off. I don't agree with that statement at all. I believe it has more to do with immaturity and a young guy who has had enormous success to this point. It's easy to become a bit complacent when things have worked out very nicely for some time. Cheers!

No, not yet. They've received it, as has Sardar. I don't expect any direct response. More likely they will address this at the AGM after the vote...whether they win or not. In this respect, I believe Sardar should really take a page out of Prem and Fairfax's book. Grow the company as you see fit, but when it comes to what the shareholders think...pay close attention. You ever wonder how Fairfax addressed a specific disclosure issue or question that a shareholder may have...they listen! They really, really listen! And that's why they've got some of the most loyal shareholders around. It's why Prem and company are finally garnering the respect and reputation they deserve. Cheers!

Another Indianapolis Star article on Steak'n Shake. This one a little more positive than the one yesterday, but continues to point out some disconcerting decisions that the board has made that affect reputation. http://www.indystar.com/article/20100207/BUSINESS09/2070359/1109/BUSINESS09/In-quick-order-Steak-n-Shake-has-put-a-lot-on-its-plate I too did not like the move of the AGM to New York. I would have much preferred if Sardar moved the meeting to San Antonio, where the new head office will be. If Berkshire can get 30,000 people to Omaha, Nebraska, then Sardar should be able to get a hundred people out to San Antonio. Cheers!

I am not considering to sell yet, but I am watching much more carefully now as I feel less comfortable. Are you still optimistic and engaged or are you getting cold feet? No, not at all...we have no plans on selling our shares. We don't invest in companies solely on management. We do like it when there is quality management in place, with a similar vision for a business, but we don't give any economic value to the manager themselves. They are the icing on the cake! Steak'n Shake is in better shape today, than in anytime in its history. It is an absolutely superb business that will do very well for years to come, as long as management and the board are willing to question each other's decisions...to feel free to critique, advise and consult with one another. If the board becomes too collegial, and they forgo their obligation to advise the CEO and he their guidance, then you may have issues in decisions that they make. That is where the owners of the business, the shareholders, need to make their voices heard. So far, the concerns have been minor...elevated salary, reverse split, name change...but they indicate the CEO's thought process. On the actual operations side, the decisions have been near perfect. So our job as shareholders, is to help steer the board and CEO when their interaction seems to have failed or produced less than an ideal outcome. Cheers!

So while this detail is a mistake, doesn't the whole thing really make sense overall ? No, not at all. He is the Chairman & CEO of the company...what more authority is required to guide the direction of the company. Even if you rename the company Biglari Holdings, that doesn't give him any more authority or control then shareholders have already granted him. Someone can swoop in, buy a large stake of 15%+ and challenge Sardar for control. Having his name on the company isn't going to change that at all, nor the perception by anyone who tries to. The only thing that can give Sardar full control of the company is to have at least 51% of shareholders on his side. Sardar and the board have done a remarkable job in turning around Steak'n Shake. Shareholders were indebted to him for saving the company. At that point, no one could come in and win enough votes to steal control from him, since most shareholders felt he was doing a fabulous job. But stuff like the increased salary, reverse stock split, and name change are slowly going to turn some shareholders away...that means votes that he had locked up, may decide to vote against him if the time ever came when somebody wanted to challenge him for control. Cheers!

The financial post did a video interview with Vito Maida, who runs Patient Capital and used to work for Hamblin-Watsa and Trimark. Part I: http://www.financialpost.com/video/index.html?category=Financial+Post&video=_NGQPaFjVR4EyolDreA4BP30dBlAvZ9i Part II: http://www.financialpost.com/video/index.html?category=Financial+Post&video=_NGQPaFjVR4EyolDreA4BP30dBlAvZ9i Cheers!