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Name Change Approved

accutronman

By accutronman
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accutronman Newbie

accutronman

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From Indianapolis Business Journal:

 

NEW YORK—Steak n Shake Co. shareholders on Thursday approved changing the parent company’s name to Biglari Holdings Inc.

 

As IBJ reported in February, the company proposed the name change to avoid confusion between the parent company, now a diversified holding company managed by CEO Sardar Biglari, and its subsidiaries, including Indianapolis-based restaurant chain Steak n Shake Operations Inc.

 

The parent company moved its corporate headquarters from Indianapolis to San Antonio last year.

 

Shareholders OK’d the name change at Steak n Shake’s annual meeting in New York City. Shares will begin trading under the new name—ticker symbol BH—

on Friday.

 

 

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Guest Bronco

Guest Bronco

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I am not a fan of the name change, but life moves on.  I am much more interested in the future capital allocation decisions.

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OracleofCarolina Newbie

OracleofCarolina

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I think Biglari said 95% voted for the change and that he only received

one letter against the change..i am not a good note taker but

i saw numerous folks taking copious notes..the meeting was about

fours and ended once all questions were answered..saw Gabelli showed up

for some of the meeting

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Guest ValueCarl

Guest ValueCarl

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It seems that Mr. Biglari maintains a core group of devout owners who want to bow down to his name. Stock cheered the news!

 

Time will tell how such narcissistic behavior will work out for such a core group of devout owners.

 

By that time, another narcissist, Gabelli, will be long gone, I'm sure. I keep getting mortgage broker advertisements with a guy's face who looks just like Mario. Is his IMAGE being used to dupe the general public into incurring toxic mortgage debt again? I'd love to post the picture, but ads do not seem to enable such a luxury.

 

I realize that this is a partial slam; so be it. imo   

 

Mario, Che dice?  ;D

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Guest Bronco

Guest Bronco

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Reading the Yahoo Link, it seems Biglari is still pursuing FMMH.  I am curious how this will proceed.

 

I would assume it would require a hostile takeover, which in turn would require a higher bid.  Was Biglari tipping his hand?

 

Any thoughts on this?

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Partner24 Newbie

Partner24

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"It seems that Mr. Biglari maintains a core group of devout owners who want to bow down to his name. Stock cheered the news!"

 

So, Steak and Shakes shareholders collectively want to put the name of the actual CEO, who is not the funder of the business and do not have the majority of the stocks in his hands on the name of the business, to the name of the business itself. It's their vote and if they are happy with that ego thing, I have no personal problem with that since I'm not a shareholder of that business.

 

There is a book called "From good to great" and there is a section that talk about the different kind of managers. I strongly prefer "level 5" managers. A level 5 manager is someone who search excellence by combining personal humility with very strong will. These managers tend to let their egoistical needs aside to build a great business. They are fanaticaly devoted to produce results, even it they have to take difficult decisions to do that. They tend to credit others for success, and look themselves in the mirror for failures. In 90% of the cases studied by the team of searchers, these "level 5" CEO's were already employed by the business when they were promoted to that prestigious task.

 

 

 

 

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Myth465 Newbie

Myth465

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I would argue that SNS was not that great example of successful capital allocation. He could have stuck the cash in any number of securities and had the same returns for sitting on his butt. He bailed himself out of SNS, so I give him props for the turnaround but there were probably better investments. Freemont seems like a good deal, but with it being hostile who knows what will happen.

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cooger72 Newbie

cooger72

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One thing i found interesting about what they had to say re: FMMH was that Sardar has already hired a CEO for the job. 

 

He also said at one point that while he'd prefer to be friendly, he thinks of "friendly" as synonymous with "expensive".  There are also several examples of Buffett going hostile in the days of the partnership to get changes that were positive for all shareholders.  Sardar did make the point that while takeovers might be hostile, they'll be hostile to management only, and not to shareholders. FWIW.

 

I have to say that while I voted against the name change, I think I was wrong in opposing it.  It seems that Biglari Holdings, while it is primarily a vehicle for owning SNS Opco at the moment, will not be that way for very long, and so it seems right that Sardar (who said he wants to be there for a "very long time" should be able to name the holding company after himself.  The name of the restaurants and restaurant company isn't changing, just the vehicle for owning them... and going forward that vehicle will very much represent his ideas and work.  I was a little skeptical originally, but I'm a fan of the holding company structure, and I see no reason to oppose naming it after him once the reinvested cash flows begin to strongly alter the nature of the company.  After all, BRK now in no way resembles the company that was once a new england textile company.  The Leucadia guys renamed their company immediately after taking it over.  Is there really a difference except that Sardar's giving his own name?  BH is going to be a completely different company going forward, and I don't have any problem with changing the name to reflect that.

 

Anyway, a couple of other things that I found interesting are:

 

In the model of Berkshire, Sardar spent a good portion of his 15 minute opening presentation on the benefits of owning an insurance company.  Said we're in the "first inning" with FMMH.

 

Thinks the country could support 1500 stores (most expansion will be franchises).  Opening franchised locations in Rome, GA and Richmond, VA this year.  Working with a franchisee for potentially 5 stores in Denver, another one should be opened in SouthPoint casino in Vegas.

 

New prototype store has a 25% smaller footprint but 97% as many seats.  excess space in the back end of the store was eliminated (offices and break area for staff).  Capital costs reduced from 2.2mm to 1.5mm, which is less than the average per store annual revenue line.  Also looking at developing an in-line (stripmall as opposed to free standing) concept.  Are going to open a company owned store in San Antonio on some valuable real estate we've already purchased.

 

Will not undergo a massive re-franchising campaign to reduce company owned stores.  thinks intrinsic value can be better maximized by running them.

 

Noted increased Advertising expense from 28mm to 33mm, said trend/elevated levels should continue. 

 

Spent significant time emphasizing increased training of staff, working towards uniformity of food, service and price across the chain.

 

I'm sure there was more, but I should probably get back to work.  :)

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link01 Newbie

link01

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So, Steak and Shakes shareholders collectively want to put the name of the actual CEO, who is not the funder of the business and do not have the majority of the stocks in his hands on the name of the business, to the name of the business itself.

 

he's not the founder of steak n shake but he is the founder of the new holding co. this co for better or for worse is being re-made according to his own principles, tastes, & philosophy. it bears his unique stamp already. in a few years that stamp will only sharpen into clearer focus.

 

no, he doesnt have majority personal ownership in sns. but thats probably happenstance because he happened to gain control of a co at a time in his young business life that was much bigger than his wallet, not necessarily because he lacked the desire or belief is sns or his abilities.

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Parsad Newbie

Parsad

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I had no problem with the name change, but I didn't think he should have named it Biglari Holdings.  Now that the vote is done and shareholders approved it, I'm looking forward to what else he does, since this is only the beginning.  That being said, as a loyal shareholder, I will always voice my opinion against certain decisions he makes, and praise him for the many he gets right.  I thought I would share a funny email exchange I had with him this morning:

 

Sardar,

 

Someone on the message board said that you received only one letter regarding the name change…I’m guessing it was mine? 

 

You do realize that even the Israelites doubted Moses?  Lead the way Moses, lead the way!  ;D

 

All the best,

 

Sanjeev Parsad

 

 

 

You're forgiven. Regards, Sardar

 

Cheers!

 

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cooger72 Newbie

cooger72

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From what I understand, Starbucks does a great job training their store managers. The basically have a binder that tells the managers how to run their stores.

 

- This would be great in theory, but in practice I guess there's a lot that needs reinforcement.  One of the things I think Chick Fil A (which I think most would agree is best in class at running restaurants in a customer friendly manner) does is they require all new franchisees to have worked at a store for a considerable time, or at least many of their franchisees get their franchises this way.  You can't just develop a culture of high quality, cheerful, friendly service by writing it down in a book.  I'd also say that running a full service/sit down restaurant is a little more difficult than one which offers only premade food and counter service coffee.  Just watching the burger guy make the burgers just right reminds you that it's not as simple as at mcdonalds, wendys or BK where it's much more automated.  I agree with Sardar that it makes for a much better product.  This is only one of many many things that a business that does most of it's business just in beverages doesn't have to worry about.

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Packer16 Newbie

Packer16

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Did Sadar provide any details on how he plans on avoiding buying an insurance company which may have problems for which an outsider has no insight?  If Buffet and Prem have not been very successful at buying bargain insurance cos (GenRe & C&F) and have been successful primarily by growing organically how is Sadar going to do this?  In addition, he has grown in size to the point that many bargains are too big to move the needle.  At a 10s of million firm one or a few modestly sized deals could make a huge difference but now with a market cap at $500m + the competition is much keener.  Turning a branded restaurant is a different animal than an insurance company.  Just my 2  cents.

 

Packer

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ExpectedValue Newbie

ExpectedValue

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Did Sadar provide any details on how he plans on avoiding buying an insurance company which may have problems for which an outsider has no insight?  If Buffet and Prem have not been very successful at buying bargain insurance cos (GenRe & C&F) and have been successful primarily by growing organically how is Sadar going to do this?  In addition, he has grown in size to the point that many bargains are too big to move the needle.  At a 10s of million firm one or a few modestly sized deals could make a huge difference but now with a market cap at $500m + the competition is much keener.  Turning a branded restaurant is a different animal than an insurance company.  Just my 2  cents.

 

Packer

 

I think one of the reasons Biglari mentioned he is looking at acquiring short-tail insurers is to reduce the amount of hidden risks in underwriting (like GenRe).

 

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