Parsad

Thanks TRF! Ever since seeing the new SNS website, I've got a bigger craving to try one of their burgers. Unfortunately, I would have to fly to a city that has one...maybe my next vacation! Cheers!

The Governator made it happen. Cheers! http://www.cnn.com/2009/POLITICS/07/20/california.budget.crisis/index.html

Article at Forbes on Hoisington. Cheers! http://www.forbes.com/2009/07/20/economy-bonds-deflation-business-recovery.html

I think this goes back to what Sam Mitchell said at our dinner this year..."Sometimes macro does matter." Cheers!

Steak'n Shake can enact a shareholder rights plan (poison pill) where they could make a takeover unattractive. In the worst case scenario, if anyone wanted to take over the company, they would end up driving the price up considerably and shareholders could sell at a premium...including Sardar's controlling group. The big question you should ask is why would anyone would want to acquire SNS and replace Sardar? Other than someone with a grudge aiming to get back at him (Gilman), why would anyone spend so much capital and pay a fair price, only to get rid of a manager who turned the business around and probably knows more than the acquirer. So, that answer leads to the question, but what if Sardar screws up? Well, that's actually a bigger reason why shareholders should be happy, because Sardar is going to want to get as many shareholders on his side as he can to build a loyal following. In other words, he doesn't want to make too many mistakes, as he knows that the sword cuts both ways and he could end up on the same pointed edge of that sword as Gilman. If you are worried about a takeover, or Sardar ever leaving Steak'n Shake, then you should probably invest in WEST rather than SNS. Sardar, Jonathan Dash and Shawn Sedaghat effectively have full control of WEST, with Sardar controlling about 34% of WEST alone, and about 80% of WEST is really SNS. Cheers!

Also here: http://www.sec.gov/Archives/edgar/data/1106838/000114420409028984/v150530_8k.htm it looks like their plan to buy all of Texas Wings Hooters 45 stores was terminated. On the other hand it looks like they are acquiring Hooters? http://www.sec.gov/Archives/edgar/data/1106838/000114420409024044/v147997_10q.htm To clarify on your question: Hooters Inc (HI) and Texas Wings (TW) are different than Hooters of America (HOA). Hooter's was founded by the group at "HI", which in turn sold the rights outside of Tampa, Chicago and Manhattan to "HOA". "TW" is one of the largest, if not the largest franchisee, which purchased their rights for Texas from "HOA". Chanticleer's acquisitions were with "HI" and "TW", but not "HOA" which the bulk of the Hooter's restaurants fall under. The restaurants under "TW" and "HI" account for 12 of the top 20 highest-grossing Hooter's restaurants, and the average profitability of "TW" and "HI" restaurants are far above the median Hooter's restaurant. Now the note that Chanticleer issued to "HOA" when former "HOA" CEO Robert Brooks was in charge, which was renewed for another year (below), gives Chanticleer the right of first refusal on any offer for "HOA". Thus if anyone ever wants to buy "HOA", they have to go through Chanticleer first. http://www.sec.gov/Archives/edgar/data/1106838/000114420409030516/v151386_8k.htm Since the note was renewed for another year at a higher rate, you can come to some conclusion on whether they have the funds to remain a going concern. Cheers!

Hi Mhdousa, My situation is kind of different than the general public. It's probably the same for many of the managers I've mentioned, including Mohnish. Generally, we don't invest with other managers for a few reasons: 1) We trust our own instincts and investment philosophy 2) We generally know that there is no way we'll screw ourselves over, whereas there is always the possibility someone else may 3) We want our partners to know that we have our own capital invested with them 4) It is more cost efficient for us to manage our own capital, as we can control trading costs, position sizes and other administrative costs 5) We get a cut of our own profits when we've invested in our own fund, whereas that incentive allocation would go to another manager 6) Depending on where we live, we may not be able to invest with managers in certain jurisdictions, unless we invest through one of our subsidiary companies There are many good managers out there, and many are my friends. I don't like to tout any one single individual, but I will make one exception, as it will be pointless to invest in his fund since he probably won't take any new money. Due to his age (31), abilities as an investment manager(beaten the S&P500 by 17% annually for the last nine years), entrepreneurship (a couple of businesses), operational and leadership skills (TLF, WEST, SNS), and track record to date, Sardar Biglari ranks right on top! He's simply as impressive as they come and he's executing his playbook flawlessly. To put it plainly, I don't believe I know anyone who has bigger balls! ;D I didn't really think much of him the very first time I met him, but over the years I've watched him very closely, spoken to him on many occasions and studied every little detail of his investments...the guy is the real deal. I'm sure there will be people who will stay stuff, and he will make mistakes where people will jump on it, but they did the same thing to Buffett, Prem and anyone else who aspires to great things. In 10 years, we'll be talking about him like Prem Watsa or Eddie Lampert. Cheers!

Hi Folks, If you've recently upgraded your Microsoft Internet Explorer to Version 8, you may have a little difficulty when posting messages. To remedy this, on your open internet explorer page showing the message board, click the little "cracked page symbol" right next to the explorer URL bar. This "cracked page" will allow Explorer 8 to work properly with websites created for use under Explorer 7. Once you've clicked that symbol, you will find that the page view and posting all work like normal going forward. Cheers!

On the weekends, I like reading all sorts of things. Often, I'll go back and look at old partnership letters, annual reports, etc, of the people I admire. I read the original Buffett Partnership letters AGAIN! ;D And then re-read the first few years of Fairfax's business. In particular, I carefully scrutinized the 1st Annual Report, which was still under the Markel Financial Holdings name. http://www.fairfax.ca/Assets/Downloads/AR1985.pdf In the letter, Prem has the breakdown of the capital that was injected into Markel when they acquired it: $5M - The Sixty-Two Investment Company $2.6M - Markel Corp $1.5M - Private Investors I was thinking about that $5M. I remember Prem telling me the whole story over lunch, and for him at the time, it was very, very difficult to raise the capital. He had every cent invested in this deal...for him and his family, it meant all or nothing! Robbert Hartog of course was one of the private investors. Francis was in there as well. It's amazing the confluence of events that lead to Prem meeting the Gardiners, then Tony Hamblin, Francis, Robbert, the Markels, etc. In the letter he goes on to tell the shareholders: Our investment philsophy is based on the value approach as laid out by Ben Graham and practiced by his famous disciple, Warren Buffett. Remember this was only 1985 and Buffett’s net worth was a little more than Prem’s today in dollars. Granted in 1985, $600M was probably like $2B today. Prem talked about his 20% return on equity objective. Milton Markel remained the Honorary Chairman, Steve and Tony Markel remained as directors, and Prem became Chairman. They had about $42M in total assets and a little over $10M in equity…primarily from the $9M injection of capital when they took over. Equity per share was about $2 and they had 5,000,000 shares outstanding. Twenty-Four years later and look at what has happened. That little business, not entirely different than when Sardar put half of the Lion Fund into Western Sizzlin, is now a behemoth with over $4.5B in equity and the shares outstanding have only tripled. Today, the Markels run their own very successful company, Tony Hamblin and Francis have done pretty good to say the least, not to mention all the other principals at Hamblin-Watsa, and little old Prem Watsa…well his dividends alone now annually generate more than 3-4 times all the money he had to scrape together to buy Markel in the first place. Wow, what a story! Cheers!

CIT managed to restructure its debt with its bondholders over the weekend, and bought itself some time. I'm just wondering exactly why and how the government is deciding on what businesses to save by bailing them out, and which ones they are telling that we can't help you so you're on your own? Let the conspiracy theories propagate! Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=a27vvkQWJqg8

After some bad blowups (DFC) and a supposed change in his investment style towards less concentration, what are people's thoughts towards Pabrai and his funds now? He has reduced his minimum to 1m. Would you invest your money with him? Obviously I'm a bit biased, but I have no problem recommending Mohnish as an investment manager. You should be prepared with volatility with any investment manager that focuses on equities, and Mohnish's partners who joined in the last couple of years probably wish they had waited, but long-term he will do very well...he's a bright and humble guy. He's also my friend, but I don't think he needed to change to a less concentrated fund. He rebounded 50% in the last quarter, and I would suspect if he had stayed the course on his old philosphy of a concentrated portfolio, the rebound would have been even higher. But an investment manager has to do what he is comfortable with, and a more diverse portfolio gives his partners more comfort. The volatility in his fund would have probably scared off the more recent investors (last 2-3 years), but the ones that have been with him since the early days understand the fund and they've enjoyed better returns over the long-term. The problem is, that a more diverse portfolio doesn't necessarily reduce volatility, if you continue to have correlated risk or you have a broad market decline like we saw in 2008. Ask Bill Miller or a host of other managers who had greater than 20+ positions. The problem was correlated risk and not enough cash holdings, not the concentration of the portfolio. I'm very impressed with his fee structure (as far as I know, the only fund still using the old Buffett structure). No, there are a number of funds that use the same fee structure these days. The Lion Fund, Dardashti Capital, Braewick Capital, Lindmark Capital, Chanticleeer Advisors, Pacific Vista, us at the MPIC Funds...the list goes on and on! Cheers!

Terrific article by Michael Lewis on AIG! Excellent stuff! Cheers! http://www.vanityfair.com/politics/features/2009/08/aig200908?currentPage=1

In February I had put up a PDF with listings for 15 SNS restaurants for sale or leasebacks. I thought I would update some of those listings to see which have sold, or if there are any new listings. These listings are gone: 104 Magnolia Drive, Georgetown, KY 1015 James Avenue, Bedford, IN 1410 Flamming Drive, Waterloo, IA 1741 North Bechtle Avenue, Springfield, OH 2001 Colby Taylor Drive, Richmond, KY 2999 Watson Boulevard, Warner Robins, GA 9530 Diamond Centre Drive, Mentor, OH Existing Listings From February: 718 N. Westover Boulevard, Albany, GA 980 N. St. Augustine Road, Valdosta, GA 1601 Bradley Park Drive, Columbus, GA 1627 N. Dixie, Elizabethtown, KY 3250 Cassopolis, Elkhart, IN 4429 Old Union Road, Tifton, GA 7700 S. Orange Blossom Trail, Orlando, FL 9521 N. Owasso, Expressway, Owasso, OK New Listings: 1874 Decatur Pike, Athens, TN 4500 South Highway 17-92, Casselberry, FL 11040 Pendleton Pike, Indianpolis, IN All in all, it looks like the listing of restaurants to be sold is decreasing, and they've sold some existing restaurants. I'm guessing they were able to pay down the $12M in long-term debt, without much of a hit to the $35M cash hoard they had at the end of the last quarter. Cheers!

Get used to it, as they'll be doing it every year for the next 20 years. Cheers!

I see quite a bit of optimism everywhere, but I'm finding it difficult to believe that consumers in general will be eager to spend over the next few years. In particular, those that fall into the category of 8.3M homes where their mortgages are worth more than their property! I remember MPIC did a presentation in Bakersfield, California in October of 2006, where we provided a slide of the negative savings rates for Americans in 2005...something that had not happened in over 70 years. I think Americans have already begun their unprecedented swing to the positive side of the income statement and they will remain frugal for some time. These homeowners will be telling their story of how they lived through the Great Recession and nearly lost their home, just like I used to hear tales from people who lived through the Great Depression! Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=aGKKaIPgvnDk

Article discussing Berkshire's failed cash bid for IPC Holdings. Cheers! http://www.bloomberg.com/apps/news?pid=20601109&sid=aUEV5ZIEFL3s

Thanks to Josh for the article! The Tampa Bay Examiner has a very nice article on Steak'n Shake and how the restaurants have become very kid friendly. I'm guessing that the "Kids Eat Free" on weekends deal will probably continue to accelerate customer traffic while the economy remains in tough shape. Good stuff! Cheers! http://www.examiner.com/x-14579-Tampa-Family-Entertainment-Examiner~y2009m7d15-Kids-eat-free-at-Steak-n-Shake

More details: http://www.cnbc.com/id/31927126 Cheers!

Some more chapters released from Mark Mitchell's Dendreon story: Chapter 9: http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon-chapter-9-of-15/ Chapter 10: http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon-chapter-10-of-15/ Chapter 11: http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon-chapter-11-of-15/ Cheers!

CIT is talking to advisors on what they could do without U.S. govenment intervention. I thought the interesting part of this article was exactly what impact a CIT failure would have on the manufacturing and retail industry. Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=a_7Sejneng2Y

The U.S. Treasury has proposed legislation that will require hedge funds with $30M or more in assets to register and confidentially disclose holdings, investors, and off-balance sheet investments. Cheers! http://www.bloomberg.com/apps/news?pid=20601110&sid=aB4mwPcRiP1w

Here is CNBC's interview with Buffett in Sun Valley for those that missed it. Cheers! http://www.cnbc.com/id/31836625/

For those in Canada, you will have to watch the clip of the Daily Show at the Comedy Network: http://watch.thecomedynetwork.ca/the-daily-show-with-jon-stewart/full-episodes/july-14-2009/#clip192870 Cheers!

... suprised California isn't in there somewhere. I don't think they can afford to buy as much as before! ;D I believe what you really mean is that the highest consumption is in the most rural states. Well, I can understand Alaska, but wouldn't Montana, Idaho or Iowa be in that list then? I think you may be onto the massage parlour thing. I would suspect that Republican States are more strict on allowing businesses like massage parlours, escort services, etc, thus you have higher porn consumption through DVD's, magazines, internet, etc. Or it could just be Republicans like to get freaky more than Democrats! ;D Cheers!

I thought this was kind of interesting. Take a look at this CNBC slideshow. The top porn consumption states per capita just happen to be virtually all Republican states. Cheers! http://www.cnbc.com/id/31905302?slide=1 http://www-personal.umich.edu/~mejn/election/2008/