BH - Biglari Holdings

[giofranchi]

the story is to gain control, yes! As it should be. My idea simply is, once he owns a large enough percentage of the company, he will behave rationally. Your idea might be different. Very well! Like I have always said, I will take the evidence as it comes. Right now the sole evidence is BH is a wonderful business led by a man whose entrepreneurial ideas and achievements I admire a lot. ;)

 

Shouldn't he behave rationally at all times regardless of his ownership stake?

 

Nice comeback!

 

Sorry, evidently I have not expressed myself correctly… I was answering to the idea Biglari’s final goal is to make BH a private company, probably buying out all other shareholders at a depressed price… Therefore, when he finally gets a large enough percentage of the company, that is how he will act…

 

First, to me this idea is nothing but speculation. Second, as I have said, I think he will behave rationally and understand his chances to get on the Forbes 400 list are much higher maximizing the per share value of a public company than doing anything else in this world! ;)

 

Gio

 

[giofranchi]

Gio, this investment may prove profitable -I don't know- but I'm confident that in that case you'll certainly end-up being more lucky than correct

 

This is how I see it:

 

If the return on my investment is positive but unsatisfactory, I agree with you: it will only be good luck!

 

On the other hand, if I make many times my money in the next two decades, it will probably be part good luck part good reasonings (as it is always! ;)).

 

Cheers,

 

Gio

 

[Txvestor]

"Ignore the compensation agreement changes; ignore the two classes of shares; ignore selling the hedge fund to BH and then buying it back to reap the incentive fees; ignore the licensing agreement; ignore the complaints by franchisees; ignore the comments by those that consulted and worked at SNS; ignore long-time shareholders that were there from Western Sizzlin or Lion Fund; ignore Biglari Design and SNS by Biglari crap; ignore the deteriorating performance at SNS; ignore the increasing amount of leverage at BH and its subsidiaries; ignore the stock price which is lower than when I sold it four and a half years ago; ignore all of that which has been oft-repeated to you...doesn't the retaliatory purchase of AIRT and ISIG share prices well above where they were trading concern you in the slightest?

 

Sardar was concerned with saving $600K a year by removing the red coloring on the styrofoam cups after taking over Steak'n Shake, but now you and other shareholders are perfectly fine excusing several million dollars spent needlessly on two companies where BH activists are sitting? 

 

These activists would have had zero chance of replacing him several years ago.  Now they have a moderate chance because of the way he's alienated people.  Whose fault is this?  A complacent board and those shareholders who get sucked into this vortex!"

 

When one has convinced oneself and has gone into the mode of rationalizing any concerns, they certainly can pass off with much gusto a lot of stuff that generally does not pass the smell test.

This is what I am sensing here. Up to this point I too rationalised a lot of stuff, but each step he takes sticks it to his shareholders to either benefit him or worse yet embellish his ego.

I originally entered due to the undervalued nature of these shares(which if you are disregarding Mr Biglari's character they still are).

I also admired the doubtless entrepreneural skill of Mr Biglari. Now having observed his actions for 3years, I am coming to a conclusion that his shareholders are not right up there in his priority list.

Consider yourself a small passive investor who puts away 10k with him and as Munger/Buffett say, delegate almost to the point of abdication. That would be a terrible mistake with Mr. Big, you'd be diluted heavily, and Mr. Biglari would add salt to your wound by calling you asinine for not having followed his communiques. That's no way to treat a minority shareholder in a public company. I say this having participated in each of his two previous offerings and got extra shares on behalf of people that did not subscribe. My conscience was a bit heavy for getting those shares at $250, i am sure Mr. Big had none of those misgivings, and instead celebrated his ingenuity and their asininity.

Perhaps this attitude also explains why he feels so insecure. ie That he anticipates a shareholder revolt at any time because he knows deep inside his actions repeatedly do not redound to their benefit, near or long term. Unfortunately the results shareholders get over time are going to reflect this reality.

I wish it was not so, but hard earned capital is too valuable to risk on an individual of questionable character even if extraordinarilly skilled. Again quoting loosely from Buffetts teachings, someone of extraordinary skill and intelligence without integrity will kill your investment.

[bookie71]

Txvestor,

Well said!

[innerscorecard]

I have communicated/interacted with Buffett/Watsa/Biglari (and know several people who have communicated and interacted) - haven't worked with any of them  ;D ;D. Parsad knows all three much better and more intimately.

 

Biglari is cut from a different cloth. If you really love the dude, you should invest via The Lion Fund  ;D ;D

 

 

Shalab, would you be able to give some examples of your personal interactions with Sardar Biglari?

[giofranchi]

When one has convinced oneself and has gone into the mode of rationalizing any concerns, they certainly can pass off with much gusto a lot of stuff that generally does not pass the smell test.

 

Look, all I am saying is I think I can judge business results better than I can foresee them! Especially if the foreseeing is based upon some vague and supposedly flawed character traits…

 

Therefore, this is what I am monitoring during the next 2 to 3 years:

1) Number of franchisee units opened (I would like to see at least half of the 239 promised in the latest AL to be actually opened in the next 3 years);

2) The licensing business: though very recently started, I think it has the opportunity to contribute to earnings in the next 2 to 3 years, in other words I want to see that business becoming profitable 2 years from now;

3) Same Store Sales at SNS: I don’t expect them to continue growing each quarter, and it would be enough to see them steady, not deteriorating from today’s level; if they keep growing, better still!;

4) Investments: I want to see Biglari finally sitting on CBRL's board of directors, or otherwise gradually selling BH’s investment in CBRL; I would also like to see at least one other major investment in the same industry (this, of course, also depends on how the markets behave: if they stay at today’s high levels for the next 2 to 3 years, I understand it might not be easy to find a truly enticing opportunity for a major investment…);

5) Insurance: I want to see at least another acquisition in this area, one which truly starts to generate meaningful float;

6) Maxim: I want to see a satisfactory solution to this investment (either if it works out fine, or if it doesn’t);

7) I would like to see more rights offerings, in order to keep adding to my investment in BH at very attractive prices.

 

I strongly believe that, if 3 years from now points 1) to 7) are satisfactorily met, BH will have increased its value a lot (even after paying a generous incentive to Biglari)! Therefore, I will keep my investment. Otherwise, I will revisit my thesis on BH, and probably sell it, or at least part of it.

 

Now tell me: what am I rationalizing? ???

 

Gio

 

[muscleman]

I sold out all my BH shares for a small profit. Gio, did you take my shares?  :P

When I initially build the positions a couple weeks ago, it was large and tentative. I felt the shares are so undervalued even if a Biglari discount is applied, so I built the position before doing much research. Yes, Biglari is arrogant and has some ego issues. That's all fine. But the recent actions with AirT is something that I would absolutely not do if I were him.

 

In terms of consistency and clarity, it may be a small thing, but in the past 2 annual letters, SB disclosed the percentage of SG&A going into franchisee training. This year's letter did not. Not sure how much this matters though.

 

 

[giofranchi]

But the recent actions with AirT is something that I would absolutely not do if I were him.

 

Probably, it is just me that don’t get this straight… Therefore, I would really like to understand what Biglari did with AirT that is so much condemnable… If you could help me understand the situation better, I would really appreciate it!

 

Well… It seems everyone is abandoning the boat… I am inclined to believe you all are right about Biglari… So why am I willing to give him the benefit of the doubt? Because I like the business and its future prospects very much! And I think only an idiot would spoil such great opportunities for building wealth… And Biglari might be arrogant, with some serious ego issues… But I still don’t think he is an idiot!

 

I don’t see the clear potential for growth expressed in my points from 1) to 7) in any other business that I know of… And I think that, if truly I am dead wrong and Biglari proves to be a terrible owner/manager, 3 years from now points 1) to 7) simply won’t have occurred, and BVPS won’t have grown much… This is truly my worst case scenario for BH…

 

Maybe I always see BH through too rosy a pair of glasses… I don’t know! We will see! ;)

 

Cheers,

 

Gio

 

[muscleman]

But the recent actions with AirT is something that I would absolutely not do if I were him.

 

Probably, it is just me that don’t get this straight… Therefore, I would really like to understand what Biglari did with AirT that is so much condemnable… If you could help me understand the situation better, I would really appreciate it!

 

Well… It seems everyone is abandoning the boat… I am inclined to believe you all are right about Biglari… So why am I willing to give him the benefit of the doubt? Because I like the business and its future prospects very much! And I think only an idiot would spoil such great opportunities for building wealth… And Biglari might be arrogant, with some serious ego issues… But I still don’t think he is an idiot!

 

I don’t see the clear potential for growth expressed in my points from 1) to 7) in any other business that I know of… And I think that, if truly I am dead wrong and Biglari proves to be a terrible owner/manager, 3 years from now points 1) to 7) simply won’t have occurred, and BVPS won’t have grown much… This is truly my worst case scenario for BH…

 

Maybe I always see BH through too rosy a pair of glasses… I don’t know! We will see! ;)

 

Cheers,

 

Gio

 

I totally agree with points 1 to 7. If Mr. Biglari stay normal for the next couple of years, there is good chance that you can make a lot of money. Good luck Gio!

[muscleman]

http://alphavulture.com/2014/12/20/betting-against-biglari/

 

Someone posted this link a few pages before.

[augustabound]

http://alphavulture.com/2014/12/20/betting-against-biglari/

 

Someone posted this link a few pages before.

 

I read that the other day and actually laughed out loud at the embedded tweet in his post.  ;D

[DanielGMask]

http://alphavulture.com/2014/12/20/betting-against-biglari/

 

Someone posted this link a few pages before.

 

Indeed. That someone was me. The tweet was hilarious!

[augustabound]

Alpha just tweeted

 

Doubt that my newest visitor is a fan of my blog. Google Analytics is telling me I'm getting visitors from Steak 'n Shake. #hello #biglari?

 

So to the earlier question, oh yeah, he's reading this thread. It's almost guarateed. ;D

[Txvestor]

"Therefore, this is what I am monitoring during the next 2 to 3 years:

1) Number of franchisee units opened (I would like to see at least half of the 239 promised in the latest AL to be actually opened in the next 3 years);

2) The licensing business: though very recently started, I think it has the opportunity to contribute to earnings in the next 2 to 3 years, in other words I want to see that business becoming profitable 2 years from now;

3) Same Store Sales at SNS: I don’t expect them to continue growing each quarter, and it would be enough to see them steady, not deteriorating from today’s level; if they keep growing, better still!;

4) Investments: I want to see Biglari finally sitting on CBRL's board of directors, or otherwise gradually selling BH’s investment in CBRL; I would also like to see at least one other major investment in the same industry (this, of course, also depends on how the markets behave: if they stay at today’s high levels for the next 2 to 3 years, I understand it might not be easy to find a truly enticing opportunity for a major investment…);

5) Insurance: I want to see at least another acquisition in this area, one which truly starts to generate meaningful float;

6) Maxim: I want to see a satisfactory solution to this investment (either if it works out fine, or if it doesn’t);

7) I would like to see more rights offerings, in order to keep adding to my investment in BH at very attractive prices.

 

I strongly believe that, if 3 years from now points 1) to 7) are satisfactorily met, BH will have increased its value a lot (even after paying a generous incentive to Biglari)! Therefore, I will keep my investment. Otherwise, I will revisit my thesis on BH, and probably sell it, or at least part of it"

 

Ok Gio, I will take a stab at it.

 

1) If you wait for a cheery consensus that he is a con artist, or atleast someone just using the public markets to get a leg up and enrich himself, well the share price then will fully reflect that consensus. Already there is a Biglari discount in the shares suggesting that the market consensus is moving against you. Always remember that the market is a formidable competitor.

 

2) Has the number of franchisees to date been ahead or behind expectations? I think the latter. Surely you can see franchisee litigation does not enhance the likelihood of hitting 239. And why do you set the bar so low at half what is promised? Is that a bias?

 

3) The licensing business is nothing but words in an annual letter. Pie in the sky prognostications are not part of the lexicon of a value investor. That belongs in the realm of the momentum crowd.

 

4) CBRL Board! Really should I go on? Do you know any other activist that has amassed a 20% stake in any company and can't get on the board. He has practically alienated all other shareholders and painted himself into a corner. That is not a strategy borne out of any skill, it is one borne out of an oversized ego. If he sells, the CBRL share price collapses and wipes out his paper profits, and he can't go above where he is now. He has effectively sterilized 20% of the shares and been left to sulk in a corner. And shareholders are in the corner with him, their capital having been sterilized into a company run by so called "asinine" management. Thank god for all of us they were not as asinine as he projected for their restaurants and shares have actually far outperformed his own.

 

5) SNS sales are growing because margins are falling. in other words, top line for the sake of growing top line is not one that makes sense. If that is what you want, then Amazon perhaps would be where you should be. They accomplish that even more wondrously over there.

 

6) Insurance. It would not surprise me one bit if he used rights issued funds from BH shareholders to gain control of another small insurance operation. How exactly is that proof of value building? If he did that with existing cash flows that would be one thing, but all he is doing by regularly issung shares is dragging in more public money into his dragnet so he can get more of it into his hedge fund. Float is a double edged sword. When it spirals downward, it can be lethal.

 

7) If a man of Mr Bigs. self confidence and ego, say what he did about Maxim in his last letter, rest assured things are not at all rosy there. I suspect that it will be a $30 million dollar mistake when all is said and done. But of course time will tell the tale.

 

8) If you don't want to be diluted you better be ready with ever increasing gobs of cash lying around to feed Mr Big's ravenous appetite. With the above back drop i'm not sure why you are so desperate to go in deeper and deeper. But to each his own.

 

I'll end by parsing your last line to demonstrate your bias. You imply that even if points 1-7 are not met, ie your plus side view was all wrong, "you will sell it, or atleast part of it".

Gio if your thesis is 100% wrong why wouldn't you sell every last share? The very fact that you would even then consider selling just a part of it, says volumes.

 

Again, I wish you well my friend. Perhaps you will make money and if you do great for you. But your rationalizations and justifications do show bias.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[merkhet]

It is interesting that people are so interested in a company they clearly hate or do not think is undervalued.  I think that once most good investors make a decision to move on from an investment, they do not really spend a lot of time (hardly any) thinking about it or writing about it.  For someone who does not believe in it, it is probably not an effective time allocation (which is an investment) to write voluminously about it.

 

Surely, there are other companies on the board that people do not believe in, I wouldn't expect people to continually post about those companies if they did not believe in them - like someone who does not think Liberty Global or Sears Holdings or something is a great investment or once did but then sold it, it would be weird if they kept writing about it.  That said, I have a feeling there is a lot more to come from the same people who clearly do no believe in this company.  Which is, of course, fine - but just a very strange investment of time.

 

Clearly, you have not yet read the Sears thread.

[ScottHall]

For what it's worth, I think it's worthwhile to follow along with companies you have thoughts on because you can occasionally find nuggets of information you didn't consider before. If you have a passing interest in business, it can be worthwhile for future reference.

 

My investing style is pretty relaxed. I have a handful of core positions that I'll hold for a long, long time and that don't require much maintenance. So, it's not much of a hassle to track other companies I have interest in.

 

Sears, for example, is very interesting to me because Eddie Lampert is a talented capital allocator and I'd like to partner with him if I didn't have to buy a lousy retailer to do it. So it's worth following from that perspective, as well as to correct statements that are just factually wrong (guarantor/non-guarantor stuff).

 

To keep this on topic: Biggles is an interesting character. I think this AIRT stuff is ridiculous, and I think his ego gets the best of him, but the stock looks pretty cheap. No position at this point.

[Txvestor]

For the record, I think any shareholder of BH who has a long-term investing orientation and has bought shares in the last, say, year or so would think that the BH share buybacks or whatever they are, is a very good use of capital.  People who have purchased shares clearly thought the company was undervalued, which is why they bought shares - thus the company buying undervalued shares is generally a very good thing from their vantage point.  Though Buffett hasn't employed this strategy over the years with Berkshire (with the obvious recent minor exception) he loves investing in companies that buy back their shares aggressively when those shares are undervalued.  Though this next point is a longer conversation, but it doesn't actually matter how the capital was acquired (rights offering/operating earnings/etc.) it matters what the best use of that capital is once the company has it - and buying back significantly undervalued shares is a good thing.

 

Of course, for people who do not think BH's shares are undervalued or believe they are egregiously overvalued, including the many on this board who have shared their belief on this side of the ledger, then they would definitely not think this is a good use of capital.  Then again, they are not shareholders of BH so it doesn't really matter to them.

 

All this said, the timing of the buybacks is still a separate issue.  Presumably, long-term shareholders would have been thrilled with the re-purchase of BH shares by the company at anytime over the last six months during which time the shares were wildly undervalued (from the perspective of buyers during that time), but since the company didn't go this route until the recent events, that adds a sour note to these corporate actions.  Just on capital allocation terms though, the shareholders should probably cheer this and, of course, the non-shareholders would probably think it is a mistake.

 

Pls explain to me how issuing shares at $250 and funneling those dollars into a hedge fund then buying back those same shares at $360 is a good thing for shareholders.

 

[abitofvalue]

For the record, I think any shareholder of BH who has a long-term investing orientation and has bought shares in the last, say, year or so would think that the BH share buybacks or whatever they are, is a very good use of capital.  People who have purchased shares clearly thought the company was undervalued, which is why they bought shares - thus the company buying undervalued shares is generally a very good thing from their vantage point.  Though Buffett hasn't employed this strategy over the years with Berkshire (with the obvious recent minor exception) he loves investing in companies that buy back their shares aggressively when those shares are undervalued.  Though this next point is a longer conversation, but it doesn't actually matter how the capital was acquired (rights offering/operating earnings/etc.) it matters what the best use of that capital is once the company has it - and buying back significantly undervalued shares is a good thing.

 

Of course, for people who do not think BH's shares are undervalued or believe they are egregiously overvalued, including the many on this board who have shared their belief on this side of the ledger, then they would definitely not think this is a good use of capital.  Then again, they are not shareholders of BH so it doesn't really matter to them.

 

All this said, the timing of the buybacks is still a separate issue.  Presumably, long-term shareholders would have been thrilled with the re-purchase of BH shares by the company at anytime over the last six months during which time the shares were wildly undervalued (from the perspective of buyers during that time), but since the company didn't go this route until the recent events, that adds a sour note to these corporate actions.  Just on capital allocation terms though, the shareholders should probably cheer this and, of course, the non-shareholders would probably think it is a mistake.

 

Pls explain to me how issuing shares at $250 and funneling those dollars into a hedge fund then buying back those same shares at $360 is a good thing for shareholders.

 

Well it could help Mr. Big's get into the Fortune 400 faster. Once he is in the Fortune 400 surely he will act rationally which will benefit shareholders so there is that.

[giofranchi]

Ok Gio, I will take a stab at it.

 

1) If you wait for a cheery consensus that he is a con artist, or atleast someone just using the public markets to get a leg up and enrich himself, well the share price then will fully reflect that consensus. Already there is a Biglari discount in the shares suggesting that the market consensus is moving against you. Always remember that the market is a formidable competitor.

 

2) Has the number of franchisees to date been ahead or behind expectations? I think the latter. Surely you can see franchisee litigation does not enhance the likelihood of hitting 239. And why do you set the bar so low at half what is promised? Is that a bias?

 

3) The licensing business is nothing but words in an annual letter. Pie in the sky prognostications are not part of the lexicon of a value investor. That belongs in the realm of the momentum crowd.

 

4) CBRL Board! Really should I go on? Do you know any other activist that has amassed a 20% stake in any company and can't get on the board. He has practically alienated all other shareholders and painted himself into a corner. That is not a strategy borne out of any skill, it is one borne out of an oversized ego. If he sells, the CBRL share price collapses and wipes out his paper profits, and he can't go above where he is now. He has effectively sterilized 20% of the shares and been left to sulk in a corner. And shareholders are in the corner with him, their capital having been sterilized into a company run by so called "asinine" management. Thank god for all of us they were not as asinine as he projected for their restaurants and shares have actually far outperformed his own.

 

5) SNS sales are growing because margins are falling. in other words, top line for the sake of growing top line is not one that makes sense. If that is what you want, then Amazon perhaps would be where you should be. They accomplish that even more wondrously over there.

 

6) Insurance. It would not surprise me one bit if he used rights issued funds from BH shareholders to gain control of another small insurance operation. How exactly is that proof of value building? If he did that with existing cash flows that would be one thing, but all he is doing by regularly issung shares is dragging in more public money into his dragnet so he can get more of it into his hedge fund. Float is a double edged sword. When it spirals downward, it can be lethal.

 

7) If a man of Mr Bigs. self confidence and ego, say what he did about Maxim in his last letter, rest assured things are not at all rosy there. I suspect that it will be a $30 million dollar mistake when all is said and done. But of course time will tell the tale.

 

8) If you don't want to be diluted you better be ready with ever increasing gobs of cash lying around to feed Mr Big's ravenous appetite. With the above back drop i'm not sure why you are so desperate to go in deeper and deeper. But to each his own.

 

I'll end by parsing your last line to demonstrate your bias. You imply that even if points 1-7 are not met, ie your plus side view was all wrong, "you will sell it, or atleast part of it".

Gio if your thesis is 100% wrong why wouldn't you sell every last share? The very fact that you would even then consider selling just a part of it, says volumes.

 

Again, I wish you well my friend. Perhaps you will make money and if you do great for you. But your rationalizations and justifications do show bias.

 

1) Sincerely, I don’t see BH losing money. Nothing that makes a profit is worth less than BV: today BH is selling for BVPS and it will surely make a profit… therefore, the downside imo is very limited. Of course, if you are right, BH won’t grow as much as I expect… As I have said Biglari might indeed have some serious character flaws, but if you truly believe Biglari is a con artist... well, then we know business, we think about business, and we do business in completely different ways! I have nothing else to add.

 

2) Not at all. Imo the job done until now opening franchisee units has been very satisfactory.

 

3) Well, I surely don’t know what you mean by “the lexicon of a value investor”… In my businesses I take into consideration new initiatives each year, it is necessary to do so in order to stay competitive, I value the investment required and what future rewards might be, and then decide to proceed or look somewhere else. Biglari is doing the same, and thinks the licensing business might yield good results. Thinking about that business, again I agree with him. And again, you probably think about business differently…

 

4) Far from being the exception, the situation Biglari is facing with CBRL is much more common than you seem to believe. And he has faced similar situations before. What Valeant recently faced with Allergan comes to mind: the management of Allergan accused and tried to alienate to other shareholders Valeant’s management, just like the management of CBRL has done to Biglari. CBRL’s stock price has outperformed simply because its management, while trying to alienate Biglari, has followed his advices!!

 

5) Prices have not declined, costs have not gone up… how have you come to the conclusion that margins are falling?!

 

6) I think I have already commented on rights offerings. Regarding insurance, again we think about business differently: I like the business model, evidently you don’t.

 

7) You might be right… We will see!

 

So, now you think I am biased because I wrote “I will sell it, or at least part of it”, instead of “I will sell it. Period!”… ahahah!!!! This cannot be truly serious… Is it a joke??… I guess you know exactly what will happen in the next 3 years, and how things will look like 3 years from now… well, I don’t!… And that’s the only reason why I have left open the possibility to still own some BH, even if my points from 1) to 7) might not come true as I expect today…

 

Cheers,

 

Gio

 

[augustabound]

It is interesting that people are so interested in a company they clearly hate or do not think is undervalued. 

 

I think that once most good investors make a decision to move on from an investment, they do not really spend a lot of time (hardly any) thinking about it or writing about it.

 

I've followed the Biglari thread mostly our of curiosity but ScottHall made a couple of good points also.

 

It's one of those situations where both sides is absolutely sure they're right, bulls love him and are going to get rich with him and bears don't trust him and he's bound to crash and burn under the weight of his own ego.

Sure there may be some of that with Sears Holdings but from what I can see, nobody or very few people, doubted that Eddie Lampert has his and shareholders best interests in mind.

 

I've never held BH and lost interest with those others who did 3-4 years ago with the name change, comp agreement etc.

 

To your second point, I casually keep up with what I've passed on or sold. I keep firmly in mind why I passed/sold and have it written down on a page in MS OneNote so it's easy to see.

It could have been a mistake or circumstances could change and I may still like the company.

 

[giofranchi]

It's one of those situations where both sides is absolutely sure they're right

 

Not true.

 

Sure there may be some of that with Sears Holdings but from what I can see, nobody or very few people, doubted that Eddie Lampert has his and shareholders best interests in mind.

 

I have never invested in bad businesses. I hope I never will. Sears imo is a bad business. And Lampert cannot defend his shareholders form this simple yet inevitable fact. Nor could Dell.

 

BH imo is a good business.

 

I only hope everyone sees the difference between struggling in a dying business and idiotically spoiling a good wealth building machine like BH is.

 

Gio

[augustabound]

Sure there may be some of that with Sears Holdings but from what I can see, nobody or very few people, doubted that Eddie Lampert has his and shareholders best interests in mind.

 

I have never invested in bad businesses. I hope I never will. Sears imo is a bad business. And Lampert cannot defend his shareholders form this simple yet inevitable fact. Nor could Dell.

 

BH imo is a good business.

 

I only hope everyone sees the difference between struggling in a dying business and idiotically spoiling a good wealth building machine like BH is.

Gio

 

It has nothing to do with Sears retailing being a bad business it has to do with his intentions. Few people doubt Lampert is doing what he thinks is best.

 

You're a BH shareholder and just wrote he may be spoiling a good wealth building machine. That's his ego and from what I've seen nobody has blamed Lampert's actions on ego. I think he's running on a hope now, just get through this Christmas.................just get through the spring...........a few more dollars will get us to next Christmas...

 

My point was there doesn't seem to be this disdain for Eddie Lampert like there seems to be for Sardar Biglari and it's because of his ego.

Personally, I hate an ego and arrogance more than anything.

[giofranchi]

You're a BH shareholder and just wrote he may be spoiling a good wealth building machine.

 

Yes!… Meaning the probabilities someone is so idiot to spoil a great machine for building wealth are imo very low… Just like the probabilities the most honest and capable of the operators, who finds himself struggling with a dying business, finally achieves good results for his shareholders are also very low…

 

Personally, I hate an ego and arrogance more than anything.

 

I understand what you mean… But in my experience ego in very successful individuals is a fact of life… I personally know a lot of CEOs whose companies have been doing very well for a long time… And knowing them personally, I have come to realize they all are self conscious… Some of them are able to disguise it much better than others… That is basically all the difference I could find… Most of all, I don’t see how ego could affect business results, if it doesn’t get reflected in poor business decisions! That’s why I have always said I’ll keep watching Biglari’s business decisions very closely, and try to understand if they make sense or they don’t.

 

Actually, the only reason I have an investment in BH is because I like Biglari’s business and investment choices! To the point that, if I could I would copy what he has done so far! I am definitely not in love with him! Believe me! As soon as I disagree on some meaningful choices of his, I am gone! ;)

 

But I won’t say goodbye to something I like very much so far, simply because I fear that in the future Biglari’s ego might lead him to make poor business and investment choices… I’ll be satisfied to take the evidence as it comes.

 

Cheers,

 

Gio

 

[giofranchi]

All this said, the timing of the buybacks is still a separate issue.  Presumably, long-term shareholders would have been thrilled with the re-purchase of BH shares by the company at anytime over the last six months during which time the shares were wildly undervalued (from the perspective of buyers during that time), but since the company didn't go this route until the recent events, that adds a sour note to these corporate actions.  Just on capital allocation terms though, the shareholders should probably cheer this and, of course, the non-shareholders would probably think it is a mistake.

 

As I have already explained, BH stocks before the rights offerings were trading at 1.3 x BVPS… Now they are trading at BVPS… There is a difference, isn’t there?!

 

At 1.3 x BVPS maybe Biglari can find superior investments than the repurchasing of BH stocks. At BVPS, instead, BH stocks become a much more compelling choice, and one very difficult to beat!

 

This, of course, doesn’t mean BH stocks at 1.3 x BVPS weren’t a good investment before the rights offering!!

 

Gio

 

[giofranchi]

I think this AIRT stuff is ridiculous

 

Sorry, sometimes I am really very slow to understand… but can someone please explain to me in plain English, in a very easy way to grasp the concept, why do you all think that what Biglari has done with AIRT is so condemnable?

 

Thank you very much in advance! ;)

 

Gio