bargainman Posted December 24, 2009 Share Posted December 24, 2009 When Biglari took over SNS I vaguely remember he was buying upwards of $15 per share, which is just a bit off of the current price of spilt adjusted 300. I remember back then people had calculated that the real estate alone was worth $10-12 of the stock price.. Does anyone else have this recollection? But now people are saying that SNS at 15 is over valued or at least highly valued. Can someone explain this? If Biglari saw upside at $15 a share, why are we saying it's overvalued a year or two later with the turnaround firmly in place? Thanks. Link to comment Share on other sites More sharing options...
JAllen Posted December 24, 2009 Share Posted December 24, 2009 Yes, I've thought about this also. He was buying it at 16-17 and now he's issuing it to acquire another company. So, the value wasn't there then or it's not overvalued now? Link to comment Share on other sites More sharing options...
Parsad Posted December 24, 2009 Share Posted December 24, 2009 Yes, I've thought about this also. He was buying it at 16-17 and now he's issuing it to acquire another company. So, the value wasn't there then or it's not overvalued now? When a company issues stock, that isn't necessarily indicative of the stock's valuation. You can issue undervalued stock, as long as you are issuing it for stock that is equally undervalued or even more so. So Steak'n Shake may still be undervalued...it's just that Fremont is probably equally undervalued or even cheaper than Steak'n Shake. Cheers! Link to comment Share on other sites More sharing options...
DCG Posted December 28, 2009 Share Posted December 28, 2009 What does the price Biglari paid for SNS stock have to do with valuation? Nothing. CEO's overpay for their own stock all the time. Just because they're a top insider in no way makes them right. Look at Michael Dell for example. He bought over $100 million of his own company's stock at the end of 08 and early 09 for around $21. Dell's stock then went below $8 before rebounding to around $14. If I had time, I could create a huge list of CEO's that bought large amounts of their own company's stock at terrible times. Why wasn't Biglari buying SNS stock when it was at $5? Link to comment Share on other sites More sharing options...
EdWatchesBoxing Posted December 31, 2009 Share Posted December 31, 2009 What does the price Biglari paid for SNS stock have to do with valuation? Nothing. CEO's overpay for their own stock all the time. Just because they're a top insider in no way makes them right. Look at Michael Dell for example. He bought over $100 million of his own company's stock at the end of 08 and early 09 for around $21. Dell's stock then went below $8 before rebounding to around $14. If I had time, I could create a huge list of CEO's that bought large amounts of their own company's stock at terrible times. Why wasn't Biglari buying SNS stock when it was at $5? Some interesting points regarding Dell, but I wouldn't group Biglari's buying of SNS with Dell's of DELL. As of last 13-F, Fairfax holds about half a billionl of DELL still. I'm pretty sure they bought some of that in the $20 range. We know they only buy if they believe it's cheap. IMO, Biglari believed SNS was cheap ~$15. Biglari saw value at $15, and continued buying on the way down. I don't know if he got anything in the $5 range, but I know he got some under $10. Link to comment Share on other sites More sharing options...
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