Article on Zeke Ashton at the VIC

[Parsad]

Zeke Ashton, who runs the Tilson Dividend Fund, spoke at the VIC.  One of his picks was Fairfax and he discussed BH as well.  Cheers!

 

http://blogs.barrons.com/stockstowatchtoday/2010/10/12/value-investing-congress-ffh-mvc-among-centaurs-top-picks/?mod=yahoobarrons

[stahleyp]

"In his hedge fund past, the CEO showed he could generate “high teens” returns for his hedge fund customers. The CEO is required to use 30% of his pre-tax income to buy stock."

 

Did he return about 13% over the past decade? I believe another poster on here said that.

 

Furthermore, I hear a lot of talk about Biglari, but if we look how BH has performed over the past 3 years (about the time he took over, from my understanding), they've underperformed the restaurant category. 3.94% vs 4.17%.

 

http://performance.morningstar.com/stock/performance-return.action?t=BH&region=USA&culture=en-US

[Myth465]

I have liked Aspen for a while. Slightly annoyed I didnt buy at 24 when we were talking about it. The March options are cheap though.  :P, and the season is over.

[Parsad]

Did he return about 13% over the past decade? I believe another poster on here said that.

 

He did about 18% annualized till 2008.  I don't know what he did in 2009 and 2010 so far in the Lion Fund.  Even if he did 13%, that is a good 12% better annually than the S&P500 since when he started in 1999.

 

Furthermore, I hear a lot of talk about Biglari, but if we look how BH has performed over the past 3 years (about the time he took over, from my understanding), they've underperformed the restaurant category. 3.94% vs 4.17%.

 

To be fair, Sardar didn't get control until late 2008...roughly the bottom of the chart that you linked.  Since then he's killed the restaurant industry in terms of stock price and quarterly sales.  Steak'n Shake's restaurant sales are probably close to the very top of the industry.  

 

I absolutely don't like the way he enacts certain changes, but in terms of execution of the business, there are few who have done better in the last couple of years.  

 

And no, I'm not and don't plan on ever being a shareholder of BH again...unless the stock plummets to well below book!  ;D  Cheers!

 

[stahleyp]

Sanjeev,

 

Thanks for the insight. You have much more knowledge than I do of the fellow and company, so I appreciate you sharing this.

 

As for the return of 18%, that is a pretty great return, especially starting at 22 or so. With that being said, that return is great against the s&p 500, but isn't all that spectacular compared to a lot of great value investors. If we assume that his 10 year return was 13% (also assuming that is after expenses), that's not much better, if any than some good value funds like Yacktman and Fairholme. Now, I realize hindsight is 20/20, but those funds also have stricter parameters to deal with. I can see why the stock doesn't interest you right now. If he has good performance but not great and an outsize pay package, that could not work out so well for fellow shareholders.

[Parsad]

There aren't too many value managers who have made that return over the last ten years.  If you include Fairholme, Yacktman, Lion Fund etc., they all would probably be in the top 1% of all investment managers over that span...that's pretty darn good.  I think anyone would be happy with that. 

 

Now the question is out of all those investment managers in the top 1%, what type of parameters did they operate with...leverage, maximum 10% allocated to any investment, extreme concentration at any point (100% in one investment), lockups, no lockups, MER's or incentive fees, countries they concentrated their investments in (domestic or international investments), etc.  Cheers!

[stahleyp]

Sanj,

 

I agree that the vast majority of investors would love to have 13% annual returns over the past decade.

 

"Value" overall has had above average returns vs the S&P 500 over the past decade.

 

He started off with a lower asset base than other star managers, which also helps with returns.

 

He has more flexibility than a lot of other managers (but not all) which, should allow him to produce outstanding returns.

 

At least in the current structure with BH, he seems to be much too "fairly" concentrated.

 

With all that being said, I think it's a situation to follow, but I don't know if it's a great place to invest.