Cevian Posted March 28, 2015 Share Posted March 28, 2015 NBL0303, I agree with your last post. One option that I would expect is that the existing management would put in place a dual share class structure at some stage in the not distant future once this proxy contest is behind them. Link to comment Share on other sites More sharing options...
frugalchief Posted March 29, 2015 Share Posted March 29, 2015 Maxim April issue is out. March issue: Full page ads - 8 Half page ads - 30 Revenue - $2.2 million April issue: Full page ads - 5 Half page ads - 17 Revenue - ?? I would expect revenues to be less of course for April from the comparable month-to-month ads. Maybe we will see another press release about Maxim revenues as long as higher than April 2014. Link to comment Share on other sites More sharing options...
frugalchief Posted March 29, 2015 Share Posted March 29, 2015 Would help to include April 2014 info: Full page ads - 1 Half page ads - 17 (includes 3 pages of "Maxim Market" ads...not sure if those count) Revenue - ?? I don't have March 2013 magazine to compare to figure out how many ads = approx. $600,000 revenue. Maxim April issue is out. March issue: Full page ads - 8 Half page ads - 30 Revenue - $2.2 million April issue: Full page ads - 5 Half page ads - 17 Revenue - ?? I would expect revenues to be less of course for April from the comparable month-to-month ads. Maybe we will see another press release about Maxim revenues as long as higher than April 2014. Link to comment Share on other sites More sharing options...
giofranchi Posted March 29, 2015 Share Posted March 29, 2015 NBL, A "more credible" activist should be an "effective" activist... An effective activist is an investor who finds and pushes for a way to get better business results... 25 straight quarters of same store sales growth... Investment returns that beat 99% of hedge fund managers (just because I could never be sure of saying 100%!!)... Who on earth would ever promise to achieve better results for BH shareholders?!?! Cheers, Gio Link to comment Share on other sites More sharing options...
racemize Posted March 29, 2015 Share Posted March 29, 2015 Who on earth would ever promise to achieve better results for BH shareholders?!?! Someone who would return the capital to shareholders instead of himself? Link to comment Share on other sites More sharing options...
giofranchi Posted March 29, 2015 Share Posted March 29, 2015 Who on earth would ever promise to achieve better results for BH shareholders?!?! Someone who would return the capital to shareholders instead of himself? Joel, Generally when I find someone who asks to be paid less than average for business results that are much better than average, I don't complain... I just say thank you and hope the overperformance goes on for the longest time possible... But... Of course there is Buffett who doesn't ask to be paid... In my experience the great majority of people, who work and don't ask to be paid, are charlatans (with few exception like Buffett, of course!) ;) Cheers, Gio Link to comment Share on other sites More sharing options...
philly value Posted March 29, 2015 Share Posted March 29, 2015 Who on earth would ever promise to achieve better results for BH shareholders?!?! Someone who would return the capital to shareholders instead of himself? Joel, Generally when I find someone who asks to be paid less than average for business results that are much better than average, I don't complain... I just say thank you and hope the overperformance goes on for the longest time possible... But... Of course there is Buffett who doesn't ask to be paid... In my experience the great majority of people, who work and don't ask to be paid, are charlatans (with few exception like Buffett, of course!) ;) Cheers, Gio The thing is, to me, Biglari's track record with Biglari Holdings does not seem nearly enough to warrant the reputation he is being given. You can point out the track record of Biglari's investment portfolio vs the S&P - but his investment portfolio the last few years is basically one stock - Cracker Barrel. Does he deserve being called a genius and earning 25% of profits over 6% based on buying and holding one stock? It seems very, very different to me than paying a hedge fund manager 25% over 6%. Nobody would pay a hedge fund manager 25/6 to invest in one stock, and it seems crazy to pay Biglari to do the same. Looking further into this, my questions on the past page are still unanswered and it looks worse and worse to me. In particular, I see that Biglari has aggressively used shareholder money to buy stock in Air T and Insignia, and was doing so indiscriminately, paying a premium by amassing a large stake quickly. There is no way that these purchases were coincidences given Groveland's activist stakes in both. I wonder how shareholders can defend this action? Or do you just cast it aside because it is relatively small and add it to the "toll"? If Steak n Shake and the other core businesses were blowing it out of the water, maybe there would be more of an argument here for Biglari's genius. But operating income of $26M from Western/SnS versus debt of over $200M isn't very promising from what I see. Even if you allow for the fact G&A may be elevated for franchising, add maybe $10M to that figure and get to $36M, for a business growing modestly. Other than that, you have Maxim, a tiny call option, and First Guard, which looks like a legitimately good company but one which will not move the needle. Then you have cash / investments which will be again and again transferred to the Lion Fund where Biglari takes his full 25% over 6 and his track record is based on buying one stock. I don't know. The whole situation makes no sense to me. Link to comment Share on other sites More sharing options...
tombgrt Posted March 29, 2015 Share Posted March 29, 2015 Biglari is also the kind of guy that I would see closing his fund in the first few years if things didn't go so well. The Lion Fund gained 50.8% & 30.4% in year 1 & 2 versus -9.1% & -11.9% for the S&P500. To put this in perspective, a dollar put into the fund was worth almost $2 vs around $0.8 for the S&P500. Not a bad basis to build your "track record" on, especially if you are planning to lure investors in by imitating Buffett. So he had two stellar years at the start, a small capital base and a few concentrated bets. Is that enough to call him a genius? I seriously doubt it. In any case, I would never give his track record as much weight as others because of how short it is, his level of concentration and his character. I'd rather go with a guy like Francis Chou who refunds fees (!!) when things don't go as they should, who has a long enough and proven track record and does his own thing. And NBL0303, what is up with that font? Could you change it so we can keep reading all posts in the same format? Maybe it's just me but I find it annoying as hell to read. Link to comment Share on other sites More sharing options...
gg Posted March 29, 2015 Share Posted March 29, 2015 And to stay on point.... Is anyone on here going to the Annual Meeting? Maybe we could be productive and come up with a list of good question that we would like to get asked? Also, does anyone have copies of the ISS or Glass Lewis reports? Link to comment Share on other sites More sharing options...
Greg Posted March 29, 2015 Share Posted March 29, 2015 Below is from a 13d filed in 2007. There was a 1:20 reverse split in 2009. There were rights offerings. You can calculate the return on investment before and after fees. Is this a good return for investors? For Mr. Biglari? TRANSACTIONS IN SECURITIES OF STEAK N SHAKE DURING THE PAST TWO YEARS TRANSACTIONS IN COMMON STOCK Shares Purchased Price Per Share ($) Date of Purchase ---------------- ------------------- ---------------- THE LION FUND, L.P. ------------------- 25,000 16.7683 03/22/07 60,000 16.8493 03/23/07 68,000 17.0291 03/26/07 2,900 16.7966 03/27/07 13,300 16.7065 03/28/07 14,500 16.6361 03/29/07 20,600 16.6775 03/30/07 10,100 16.6889 04/02/07 10,200 17.0796 04/04/07 4,000 17.0608 04/05/07 38,300 16.9491 04/09/07 27,400 16.8361 04/10/07 17,144 16.7367 04/11/07 29,594 16.5294 04/12/07 1,000 16.4540 04/13/07 12,100 16.6511 04/17/07 8,919 16.5621 04/18/07 1,400 16.5114 04/19/07 16,200 16.7565 04/23/07 5,500 16.7238 04/24/07 10,943 16.8093 04/26/07 2,900 16.7317 04/27/07 27,800 16.3508 05/01/07 2,000 15.2050 06/22/07 6,000 14.9258 06/25/07 85,000 17.1033 06/26/07 20,000 17.0338 06/27/07 140,000 17.0646 06/28/07 53,300 16.7723 06/29/07 3,000 16.5680 07/02/07 10,000 16.7836 07/03/07 6,000 16.6042 07/05/07 6,000 15.6992 07/26/07 7,500 15.6211 07/27/07 12,500 15.0877 07/30/07 18,000 15.2569 07/31/07 9,300 15.0200 08/01/07 17,000 14.9690 08/03/07 3,000 14.7708 08/06/07 ---------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 21 of 29 Pages ---------------------- ---------------------- 2,000 16.0100 08/07/07 12,800 13.3579 08/13/07 70,000 13.6622 08/14/07 18,000 14.0286 08/15/07 WESTERN SIZZLIN CORP. --------------------- 1,500 16.4293 03/07/07 3,200 16.5570 03/08/07 845 16.6410 03/09/07 8,700 16.8379 03/12/07 6,000 16.7830 03/13/07 700 16.7929 03/14/07 2,000 16.8065 03/15/07 30,000 14.9658 05/10/07 1,500 16.6007 07/18/07 3,000 16.8190 07/19/07 4,500 15.6992 07/26/07 7,500 15.6111 07/27/07 12,500 15.0777 07/30/07 12,000 15.2569 07/31/07 4,000 15.0200 08/01/07 3,000 14.9690 08/03/07 1,600 14.7708 08/06/07 3,000 13.3579 08/13/07 30,000 13.6622 08/14/07 7,300 14.0286 08/15/07 BIGLARI CAPITAL CORP. --------------------- 500 16.7099 04/11/07 Link to comment Share on other sites More sharing options...
tombgrt Posted March 29, 2015 Share Posted March 29, 2015 Biglari is also the kind of guy that I would see closing his fund in the first few years if things didn't go so well. The Lion Fund gained 50.8% & 30.4% in year 1 & 2 versus -9.1% & -11.9% for the S&P500. To put this in perspective, a dollar put into the fund was worth almost $2 vs around $0.8 for the S&P500. Not a bad basis to build your "track record" on, especially if you are planning to lure investors in by imitating Buffett. So he had two stellar years at the start, a small capital base and a few concentrated bets. Is that enough to call him a genius? I seriously doubt it. In any case, I would never give his track record as much weight as others because of how short it is, his level of concentration and his character. I'd rather go with a guy like Francis Chou who refunds fees (!!) when things don't go as they should, who has a long enough and proven track record and does his own thing. And NBL0303, what is up with that font? Could you change it so we can keep reading all posts in the same format? Maybe it's just me but I find it annoying as hell to read. You seem to trying to be making the point that Sardar Biglari's personal stock picking and his associated investing track record is not really that great. It is a very strange way to begin by making this point by pointing out that he had a 50% and a 30% return over the first few years. I would just say that his track record, over any period of time you look at at the Lion Fund is really good. Let's take the Lion Fund out of it though. Even though it is somewhat public to those of us on this board, but we don't know all the details of investments/timing/etc. Let's just take Sardar Biglari's 10-year track record as an investor in and through public vehicles starting with Western Sizzlin. This has nothing to do with the Lion Fund and these were all publicly reported investments and prices/etc. so there is little or no ambiguity about results. You have essentially six large stock picks in this era: Western Sizzlin, Friendly's, Steak n Shake, Fremont, Penn Miller's, and Cracker Barrel. He is six for six on these. He indeed does have smaller less successful, or even unsuccessful, investments during that time - ITEX, Unico, CCA, a few others. These have not fared as well, but these all cost less than 1/100th as those large investments. Thus, with all of the significant investments - he is six for six. I personally am not counting on number 7, but you are trying to detract from his investment track record without a reasonable basis for doing so. I think what you're point really is, is the following - Biglari's track record as a corporate governor, public company CEO, unscrupulous business operator, etc. And that has turned you off so much, you do not want to invest in Biglari's company and you would rather invest in someone you trust like Francis Chou. This is a very fair point, and may even be very smart and smarter than my thinking that the huge valuation discount current being applied to Biglari Holdings makes it a very attractive investment even with Sardar Biglari's personal entanglements with the company. The point though is that you really really really distrust Biglari and maybe really really really dislike him. You also strongly object to him not respecting shareholder's money, as you see it. Neither of those points though, lead to the conclusion that he does not have an outstanding investing track record. Indeed, I have been a successful investor, and I've given most of my intellectual life to this craft, and am proud of my results, but I'm not sure I would want my 2006-2015 stock picking and the associated track record side by side on this board with Biglari's public track record over that same time (Western Sizzlin, Steak n Shake, Friendly's, Fremont, Penn Millers, Cracker Barrel, even with the small CCA/Unico/whatever else, investments thrown in). I know a few well known investors' track records that are private from the general public, and they are very good over this time, but I do not think even they would enjoy seeing them side by side with this track record over this time frame. Regarding the font, I'm very sorry that you find this font annoying. It is more enjoyable and easier for me to read fast than other fonts. I find it a strange request to say that you find someone else's font choice (in a normal font, not an extreme or weird one), "annoying as hell" and sort of demand they change. I would say, yes it is just you who would think to ask that. As investors most of us spend all of our day reading and we essentially never get to choose the font of whatever we are reading (whether an annual report, Wall Street Journal, whatever). No, I'm trying to make the point that outsized early returns can skew CAGR over shorter periods of time (I still define 10-15 years under this for investing track records). I'm also pointing out that I think that Biglari is so cunning that he will do almost anything to enrich himself. Even, for example, closing a fund that performed poorly just to open another. No, this didn't happen (not that I can tell) but it does elsewhere and he's the kind of guy to do it. I said it to further illustrate how you have to take early performance with a grain of salt. On the 6 on 6: If the average good investor generally had it right (= at least break even or better) 80% of time in the last few years (given the time frame I'd say 80% is conservative), that means Biglari still had 1 chance in 4 to get all 6 right just by luck (within his skill). Meaning that it is theoretically easily possible that two out of his next four big bets are wrong. And even if this does (or doesn't) happen you haven't "proven" anything, the time frame and number of stock picks is just too short. So I don't see how this adds to the argument that he is a genius, too early and speculative. And to be clear, I'm not saying he got his returns by mere luck or that he is a bad investor. I'm only asking BH investors to at least be critical and see that his track record simply isn't enough to call him a genius just like Watsa hasn't lost his marbles because he has been performing subpar for a couple of years. -- On the font: Not demanding anything, I wouldn't dare. Just asking nicely if you could consider it. I added the "maybe it's just me" to underline how I might be the one with the problem. But you have to help me out here... You say that you find it easier to read your selected font right? But how does this effect you since you can only change the font of your posts?! Or do you actively reread your posts after posting them? After all, you write your posts in the standard font just like anyone else so it's no help there. No changing it before you actually post something. Odd... Link to comment Share on other sites More sharing options...
merkhet Posted March 29, 2015 Share Posted March 29, 2015 NBL, I think someone asked you a few posts ago why you thought Air T and Insignia were good investments, but I don't recall seeing you address this. What are people missing when they view this as an indication of Biglari being thin skinned and misallocating capital? Link to comment Share on other sites More sharing options...
DanielGMask Posted March 29, 2015 Share Posted March 29, 2015 I don't know. The whole situation makes no sense to me. This seems clear. I would start by suggesting that "warrant the reputation he is being given" could mean so many things in the context of Biglari. Most people on this board are NOT arguing that Biglari is a genius or one of the best investors of the world. If you read through this entire thread, which I would recommend if you're interested in this company, for every defender or quasi-defender of Biglari, there are many more people's attitudes of him that are skeptical of him. The skeptics range from - "he is a poor investor and business and unethical and thus the worse combination of person" to a variety of other skeptical takes. Gio is an obvious exception - but he has not persuaded anyone and his takes, while sometimes thoughtful, boil down to: "Everything is awesome." Obviously, he has put his faith in Biglari, the person, being a genius investor and that is his is right to do it. And that is his style - invest in public vehicles with great investors at the top and count on them to generate great returns with investing. This style obviously works incredibly well if one would have picked a youngish (meaning less than 65) Warren Buffett or a few others like that. I respect Gio's "Everything is Awesome" approach but there are a few others of us who are interested in the company because of its intrinsic value, without counting on Biglari being a great investor (though if he is an awful investor going forward that will eviscerate value in any circumstance - as with any company). If you think that this thread has represented hagiography of Sardar Biglari, then read closer. It mostly represents the viewpoint of the charged skeptics of Biglari. Those of us value investors valuing the company, I think would suggest that you begin by looking much deeper than Steak n Shake's one-year GAAP operating income of $26.5 million. One-year GAAP figures, PARTICULARLY for this company, are not going to shed very much light on intrinsic value. You could just as easily have taken the 2011 or 2012 Steak n Shake numbers of $75 million positive cash flow and $50 million in GAAP operating earnings and carried them forward indefinitely. That is obviously an intellectually easier approach, but most value investors would suggest looking much deeper and trying to understand the business beyond the raw GAAP numbers of any given year or timeframe. In this case, just like the $75 million in free cash flow a few years ago was predictably and understandably recur year over year for the next few years, in this case this past year's operating earnings are clearly not reflective of the intrinsic value of the business. Just in the year you are using that generated the operating earnings number you are throwing out - Steak n Shake spent about $10 million buying its corporate headquarters in Indianapolis, renovating it and beginning to fill it with tenants. Simply not undertaking this action would have meant $10 million (or $9.4 million minus the rent they would've paid) more in operating earnings. Additionally, as anyone who has researched Steak n Shake over the last year has learned, almost every Steak n Shake unit underwent a $20k to $30k upgrade. This also represents nearly a $10 million cost - and Sardar Biglari personally got nothing for doing these upgrades/face lifts - in fact it probably cost him something - and without doing this Steak n Shake's operating earnings last year alone would be $10 million higher. Steak n Shake also spent more than $5 million on redoing their poor point-of-sale systems storewide (which included creating online ordering which was just introduced this month I believe). None of this even relates to the franchising initiative, opening the Malibu store, the food truck, the modest costs associated with introducing Steak n Shake frozen food products in 2,500 Wal-Marts, etc. All of these actions detract from Steak n Shake's operating earnings, and make people even more skeptical of Biglari in the short-run, but clearly are seen as investments that, Biglari at least, believes will generate an attractive return over the short-run. Steak n Shake's killer quarter this quarter with 6.6% same store sales growth probably involves a lot of factors (gas prices, etc.) but the unit face lifts and those sorts of re-investments in Steak n Shake seem to be working. The point is - think deeper about the business. The $75 million in free cash flow in one year a few years ago was probably not representative of the current value of Steak n Shake nor is one-year operating earnings from a year in which they re-invested a lot of money back into Steak n Shake on the above mentioned items. On a different front, ask yourself why Biglari was re-invested so much in Steak n Shake last year when he had previously kept CapEx sooooo low for so long. I think it is because he had a ton of cash and plenty of ways of getting even more cash (the rights offering, modest debt increases, and of course the $135 million the company just got from the prepaid variable price sales forward contract that is backed by 25% of the company's Cracker Barrel shares). Despite all of the cash in the company for the last few years, Biglari had not made any meaningful stock purchases since Cracker Barrel four years ago. He additionally did not This gets at your other point - you are acting as if Sardar Biglari's investing track record is tarnished because his recent incredible stock picking (putting almost all of his company's money in one stock that then quadrupled in four years) involves him picking one stock and not many over the previous few years. I view this as much the opposite. Just like Buffett and most of the investors that I admire concentrate a lot of capital into one or a few stock ideas at a given time - I think it speaks well of Biglari that he invested a whole lot in his best idea and nothing in inferior ideas. This is the sort of approach that I am looking for personally in any capital allocator - whether a business manager or an investor. Additionally, though, his reputation as a stock picker is not based on this one investment. He had a ten year or so track record at the Lion Fund prior to Steak n Shake in which he achieved 20% per year over nearly a decade. Additionally, his public investments since taking over Western Sizzlin and then Steak n Shake have all been nearly home runs or triples - at least all of his big ones have been (his small investments have actually performed poorly over the years - ITEX, CCA, Unico, a few others) but the big ones were hundreds of times larger than all of the small ones. And the big ones have been a series of success upon success: first the turnaround of Western Sizzlin, which began as a stock pick but worked out well for his investors in the long run. From Western Sizzlin, to Friendly's, to Steak n Shake, to Freemont Insurance, to Penn Miller's Insurance, to Cracker Barrel. There are many thoughtful critiques of Biglari, and Biglari Holdings' businesses, that can be made and have been made in this space, but the idea that his investment track record is tarnished because he does not make large stock purchases very often is off base. This is actually probably the best thing about him as an investor and capital allocator. And it is not one investment, just the above list is six large public stock investments and they have all worked out very well (with the possible exception, hugely ironically, of Steak n Shake - now Biglari Holdings - depending on when an investor bought and sold it in the last few years - but it has worked out well thus far for the Lion Fund investors and Western Sizzlin shareholders, who are the constituencies that Biglari was earning a return for when he was buying Steak n Shake's stock). The point being, I personally am not counting on Biglari hitting another home run with an investment, but that doesn't mean his track record is not outstanding. I'm not trying to offer an apologetic of Sardar Biglari but it is like you haven't read very much about any of this before you posted a long series of thoughts on this value investing message board. My point is that I think further thinking and lots of further reading would illuminate all of these issues to a much greater extent. The main points are that just his public track record, is six large stock purchases and he is six for six. Secondly, the Lion Fund has a pretty public record, at least on this board, that had about 20% annual returns for about a decade. Thirdly, him only buying one stock the last few years, and then that stock going from $40 to $150, does not detract from that record, it enhances it. There are many other thoughtful critiques, but this is not one of them. I don't think you should denigrate an opinion as valuable "thoughtful" or not just because somebody hasn't read the whole thread or is not an expert in this guy (I'm no expert on this guy or the company) and I'm not going to read this whole thread, but still I'm going to share my point of view, which is what this forum is for. I don't like the guy, I don't like the incentives the way they are and I think that when management's trustworthiness and the incentives are not perfect (yep, perfect), I should not risk my money. I'd rather pass on a good thing than get on the wrong train. Good luck to those who think this is the beginning of an amazing story as that of Buffett, my guess is that you are about to get dissapointed. Link to comment Share on other sites More sharing options...
frugalchief Posted March 29, 2015 Share Posted March 29, 2015 And to stay on point.... Is anyone on here going to the Annual Meeting? Maybe we could be productive and come up with a list of good question that we would like to get asked? Also, does anyone have copies of the ISS or Glass Lewis reports? I will be there. Been trying to think of some questions... Link to comment Share on other sites More sharing options...
frugalchief Posted March 29, 2015 Share Posted March 29, 2015 One aspect of the Biglari/Groveland proxy fight that has crystallized in my mind over the last few days (this was probably more obvious to others much sooner, but forgive me, I'm slower than most of you all), is this: Biglari will very likely be vulnerable to a well-positioned activist next year. Groveland, to me, seems like the easiest challenger Biglari could face in many ways. If a better positioned activist, or just institutional shareholder, seeks to either remove the entire board and fight about the change-of-control payments, or at least partly takeover the board - that could be very formidable opposition for the incumbents. In this context, better positioned, to me, means primarily a large ownership stake but also more specific operational plans, a Chairman-nominee who will be focused entirely on Biglari Holdings, those sorts of things. Given this, since Sardar Biglari and Phil Cooley are nothing if not smart and interested in their own places in this enterprise, they will be thinking about this as well. It would be very surprising if they didn't do anything to try to head off a challenge like this from a more serious challenger next year. I've begun thinking about what their reaction, after the election is final and all of that, will be. They have so many options that this is unpredictable. I know many people on this board will say, "they'll just pass another poison pill/licensing agreement/self-interested protective measure" kind of thing. I don't think they'll go that route, or at least exclusively along that route, because that would double-down on the problem. They could try just to make change-of-control terms more onerous, but I think, in terms of their own self-interest, that would be counter-productive for maintaining control purposes. This is relevant for those of us that think Sardar Biglari is likely to generate significant value for shareholders over the coming years and would rather have him keep his job and thus are already thinking about the long-term implications of this proxy contest, even if the incumbents prevail in full this year. -The first obvious point to mention, that seems lost on many people in the business world, but I know is understood here in the CoBF world. Proxy contests are mostly decided by recent share price performance (meaning over the previous year or two). Investors, even many of those who claim to be long-term, are so incredibly short-term focused that a stock price going down for a year is actually used as evidence against incumbents in proxy contests. (Instead, the evidence that should properly used, for us value investors, are only facts relating to the intrinsic value of the business and not the short-term stock performance.) If Biglari Holdings were at $800 per share right now, there would be so much less shareholder discontentment even with all of the other issues. (I for one am glad it is not at $800 per share yet, because then I likely wouldn't be a shareholder.) So - the share price performance over the next year is obviously an important factor in all of this. There are so many other directions this could go that it is a ridiculously incomplete menu listed here, but to enumerate a few more of these, here is a brief menu of possible options: -A more likely option than merely instituting another poison pill type protective measure would be that Biglari could have the company and/or the Lion Fund assets unrelated to Biglari Holdings, continue to buy up BH shares over the next year - or do a tender offer or something to that effect to add to his voting position. This could also have potential issues, but less so than additional poison pill type measure. As a shareholder, I would love if the company kept buying shares - since the company's shares are so undervalued. I wouldn't mind, and would maybe prefer, if the company spent all of its $300 million buying shares back. (That, of course, will not happen.) So - continued repurchases of Biglari Holdings are one possible response (both by itself or in conjunction with other actions). --Biglari Holdings could be taken private. Sardar Biglari, his non-BH partners in the Lion Fund, and other people in his orbit, could probably arrange for cheap financing and enough cash to buyout the company for a price that would be attractive to them but also pay a significant premium to the current share price. This of course would foil Biglari's seeming ambition to build a Berkshire type public vehicle, but this could allow him to continue building the enterprise without the problems/criticisms/proxy challenges. --There are innumerable "transformative" transactions that could occur that would make the company look entirely different a year from now. I'm not going to suggest possibility, but those of you are dealmakers could imagine all of the different acquisition/merger type scenarios that could be engineered for a company like this. --Biglari could liquidate his own, very significant, probably approaching $75 million or even $100 million (given the $50 million reallocated in the last few years, plus all of his previous reallocations from 2001-2010 as the General Partner of the Lion Fund), stake in the Lion Funds and use it to purchase a significant portion of Biglari Holdings. This could be coupled with a waiver/re-formation of the incentive agreement or some other of these entanglements. --Biglari could agree to sell the company; at the current asset prices - he could get a huge premium for the company because it would be the $1.5 billion plus of assets for the company but without the reasons that $1.5 billion asset base has been selling for $750 million for much of the last six months, namely Biglari's compensation, licensing agreement, personality, and other entanglements. This, of course, is unlikely in the sense that the company is named after him and it is obvious he wants the chance to play out the long-term initiatives he has spent so much effort on building. --He also may be counting on the turnaround at Maxim and other positive business developments to take hold and make next year's proxy fight, assuming there is one, less difficult - but I don't think he'll be that passive about this. Two other things to point out: --Just like with 3G or Berkshire or other serial, but disciplined and value-focused acquirers, Biglari Holdings could change overnight with a significant acquisition. Berkshire and even 3G and even Valeant (though Valeant's have been much shorter) have had time periods where they seem stagnant or no dealmaking is happening for an extended period, and then, BAM, one morning you wake up and Berkshire is buying Burlington Northern. I'm not making a comparison between Biglari and Berkshire here in any sense other than the fact that Biglari's strategy is intentionally in the same vein as Berkshire and they similarly have periods where you don't hear much about the company or like now where they haven't made a meaningful stock purchase is many years and its two acquisitions were small and didn't really move the dial in the short-run, but we know they are active hunters and they could get a target, and potentially a big one, at any time. Biglari Holdings has owned an insurance company for over a year now and their AMBest and other ratings have remained at the top levels, and so they could be in the game for a larger insurance acquisition. --The other thing I wanted to mention is that a more serious proxy challenger next year would likely be good for shareholders in the short-run. The new proxy challenger would likely own a large-ish stake (10% give or take) to make their time, effort and investment worthwhile - so they would have to purchase those shares over the next six months. Or, if the next proxy challenger is a current shareholder, they have to be a large and committed shareholder and run a serious contest in a pro-shareholder way. Given that, if Biglari is proxied again, it may be a negative for the long-run for people that really believe in Sardar Biglari's vision and ability, but in the short-run, it should work out for shareholders. The main point is that I don't think Biglari and Phil are going to just passively wait to be proxied again. I would expect that they will be thinking about it and planning for it and it will be interesting to see what shape those plans take. NBL, I think all those are great ideas along with the dual class structure. A part of me thinks that all this (proxy contest, shareholders who don't understand Sardar) are symptoms to the issue(s). I say this b/c when I'm not proactive in my business, this is when issues come up. A small amount of disclosure and orating of objectives, goals, strategy, are beneficial so shareholders understand - and you keep the ones who want to stay and get rid of those who don't agree. Most of us understand Sardar, and that's why we are investors (or not). But there are some who expect totally something different from reality. I know everyone has their own right to own what they want, but a minority shareholder trying to do a 180 of an enterprise that is heading in the right direction, screws everyone involved. While out of town this week I spent some time reading TLF letters that some members posted. There were some gems in these that I kinda wish Sardar would outline to BH shareholders. I've read, re-read, re-read, re-read the BH and Western Sizzlin letters over the years to understand what he is trying to do - each time seeing something in a different view. But TLF letters are deeper. They show the origin of why Sardar is the way he is. But they shine more light on his objectives that he hasn't provided to BH shareholders (those who don't already know). Disclosure: those who don't believe in Sardar or BH should just skip this post. You are wasting your time. I'm not trying to change your mind, and this definitely won't do the job. Here are some of the snippets I found enlightening along with my thoughts: 2002 The Partnership Guidelines - I would think putting a list like this together (like BRK) and sharing with BH shareholders would help get a better shareholder base that is aligned with Sardar's thoughts. Pg 6 - "...from 2001 letter "When full appraisal was reached in a security, we typically reallocated capital to more undervalued issues." The operative word was "typically," hence the italics, because we maintained our top concentrated positions and did not sell. When a stock is perceived to be fairly or overly valued, we will not be so eager to sell solely because of price, for it both management and the future economics of the business are sound and promising, the fair-or-overvaluation would be perceptual and not real." [This helps me understand the CBRL stake and the variable contract he took out> Pg 9 - regarding becoming a controlling shareholder...."we would like to see company progress in earnings improvements, intelligent reallocation of capital, etc., while the stock price remains stagnant as we acquire it. We would sacrifice short-term performance even if the stock lags behind a newly rising market, for there will come a time when we would receive better and richer long term gains." [this is exactly my thought on BH and has been for years. Since I'm a net buyer for decades, I hope he keeps increasing the business value and the stock price stays where it is. It's bad for BH from the "activist" standpoint, but overall, it will make each of us wealthier over time.> Pg 9 - "In conclusion to our three categories, you can be certain of one thing: I will venture into an investment only when much is to be gained and little to be lost. If I have to wait very long to find such situations, I will. That may be a very awkward approach in this accelerated day and age, but it's the only way I know to maximize wealth." [Point proven so far with the First Guard and Maxim buy, and CBRL purchase. He has been able to minimize the downside so far (CCA Industries, Unico, ITEX> Pg 14 - "As a result [speaking about Bill Ruane and Sequoia Fund's being a mutual fund vs. investment partnership....management/asset fee vs. performance fee], I decided that if an investor is taking a chance with me, I think it's only fair for me to base my reward on my ability." [i'm happy with Sardar's performance fee's he earns at BCC/TLF and BH. He increases my wealth, he gets paid. But if he doesn't, he doesn't get paid. He has incentive to increase our wealth to get paid.> 2003 Pg. 7 - quote from Intelligent Investor - "Timing is of great psychological importance to the speculator because he wants to make his profit in a hurry." [Groveland??> Pg. 7 - "Winston Churchill was fond of quoting a Roman saying, "If you want peace, prepare for war." Investors would be wise to take a similar view: If you want prosperity, prepare for adversity." [adversity = media, uninformed speculators/investors, proxy contests, etc.> Pg. 12 - "with only a performance fee, the manager's primary goal must be to attain the highest return possible, not the most assets." [however, highest return for long periods will result in more assets. Sardar's concentration on beating S&P over 5+ year intervals and achieving highest returns possible help make long-term shareholders wealthier> 2007 Pg 3 - [and as mentioned above] - "...the ideal combination is for intrinsic value per share to grow while market price drops b/c such a trend can't continue, but when it corrects, shareholders can realize considerable profit." Pg4 - "...our simple policy is that if we can't measure risk, we cannot properly manage it." [sardar measures and appropriately invests based on risk. Track record over past decade attests to it and see next point> Pg 4 - "...rather, it is permanent loss of capital we earnestly seek to avoid." Pg 6 - "Western is a home base if we plan to own a business completely..." [this was Sardar's first statement about using public company as operating business owner vs. TLF. I doubt TLF would ever be an operating business owner> Pg10 - "I want Steak n Shake to be best-in-class in product, in menu, in customer metrics, and in financial returns." [sardar made this statement 8 years ago. He's committed to these items and shown his results of doing so.> Pg 14 - regarding Roman engineer standing underneath arch when completed...."Thus his concern for the quality of the arch was intensely personal, and it is not surprising that so many arches survived." [i.e., BH being named after Biglari.] 2008 Pg 4 - "We do not change our tune: I have long said, and I never tire of repeating, our credo: "Yearly or semi-annual numbers are not indicative of our progress....The important number to bear in mind is in longer-term figures, not less than five years." [sardar has repeatedly stated this, but of course it is something overlooked to the speculator and short-term profiter> Pg 13 - "...that no one should join if he or she does not believe in a long-term horizon, pegged at no less than five years." [again, it has been repeatedly said, but not followed.] I thought these items were great to show the younger Sardar and reflects that his attitude hasn't changed much over the years. He certainly ignores the crowd. "You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right." - Benjamin Graham Those who don't like Sardar won't appreciate any of this. Some may even use to to defend their dislike. That's fine. But it may help a future shareholder who is on the fence and can't fully understand BH. Just my point of view and take from his letters. Cheers! Link to comment Share on other sites More sharing options... frugalchief Posted March 29, 2015 Share Posted March 29, 2015 (Unless of course you believe that successful investing means to Ignore the Crowd. If one thinks that you pay a very high price for a cheery consensus. If one thinks that you have to swallow some calories to get an attractive investment. If one thinks that the crowd is sometimes wrong, but almost never fully right on investing matters. If one would prefer Biglari Holdings will all of these issues that frustrate so many people, if we can get it at less than 50 cents on the dollar. In other words, if you prefer Biglari Holdings with the Biglari issues at $775 million, rather than a unproblematic, fairly compensated Sardar Biglari but with Biglari Holdings trading for $1.6 billion. So the question in this case is, should the crowd be followed or ignored?)[/font][/size] There is quite a crowd I ignore here regarding this investment, even though some past discussions have been cheery. We've pretty much beat the horse dead already. Link to comment Share on other sites More sharing options... Parsad Posted March 30, 2015 Share Posted March 30, 2015 Surprisingly accurate article in the NY Post about the BH proxy contest: http://nypost.com/2015/03/27/steak-n-shake-boss-and-potential-replacements-feeling-the-heat/ The article has it right...Sardar has to go, but Groveland aren't the right guys to do it. Cheers! Link to comment Share on other sites More sharing options... wescobrk Posted March 30, 2015 Share Posted March 30, 2015 One thing that article doesn't seem to grasp at all, and other articles and Groveland for that matter, doesn't grasp - is that adding "by Biglari" to Steak n Shake has nothing to do with Steak n Shake. I'm not defending the addition of the "by Biglari" - I don't care either way about it - although I'm sure many of the Biglari haters who are fixated on him will take this post as a chance to respond with how much they hate him and the addition of his name to Steak n Shake - but this just about the concept of it. The point is not to help Steak n Shake's brand - but rather to help Biglari's brand. The favorable take is that Biglari is trying to build long-term value by making the brand associated with different brands and companies to become a sort of business brand in itself. This may help them in their serial acquisitions if people have heard of Biglari. (Of course, a Google search of him, will also cause some problems for him as a serial acquirer because of the negative feelings out there about him.) The negative take on the by Biglari tag is of course that it is merely an ego play. But in no circumstance is the point of it to help Steak n Shake - that misreads this situation from all perspectives. The point is to try to build a brand like Berkshire has - where even though Geico and Dairy Queen and Nebraska Furniture Mart are separate brands - Berkshire is a strong business brand as well - that has positive associational effects. Of course over the last couple of years, Buffett has seemed to take notice of Berkshire's brand and begin to trade on it. For instance, Berkshire renamed MidAmerican Energy to Berkshire Hathaway Energy and they have renamed hundreds of local real estate offices they own to Berkshire Hathaway Home Services and they have now named Van Tuyl's auto dealers, Berkshire Hathaway Automotive. This is an attempt at what Biglari is doing with the "by Biglari" tag - it has nothing to do with Steak n Shake. (Some people may think it actually hurts the brand, I don't think it is significant enough to hurt it at all - almost no one even notices it I'm sure.) Anyway, I just thought it was interesting that even the critique of "by Biglari" doesn't quite understand this. Thanks for the post, Nbl. Very insightful. Link to comment Share on other sites More sharing options... hardcorevalue Posted March 30, 2015 Share Posted March 30, 2015 Berkshire was 'just' a bit more established before Buffett began trying to leverage the corporate name...... Link to comment Share on other sites More sharing options... TheValueDude Posted March 30, 2015 Share Posted March 30, 2015 Berkshire was 'just' a bit more established before Buffett began trying to leverage the corporate name...... You would think WEB, lover of compound interest, would have seen the value in doing the same with branding long ago... Link to comment Share on other sites More sharing options... Parsad Posted March 30, 2015 Share Posted March 30, 2015 One thing that article doesn't seem to grasp at all, and other articles and Groveland for that matter, doesn't grasp - is that adding "by Biglari" to Steak n Shake has nothing to do with Steak n Shake. I'm not defending the addition of the "by Biglari" - I don't care either way about it - although I'm sure many of the Biglari haters who are fixated on him will take this post as a chance to respond with how much they hate him and the addition of his name to Steak n Shake - but this just about the concept of it. The point is not to help Steak n Shake's brand - but rather to help Biglari's brand. The favorable take is that Biglari is trying to build long-term value by making the brand associated with different brands and companies to become a sort of business brand in itself. This may help them in their serial acquisitions if people have heard of Biglari. (Of course, a Google search of him, will also cause some problems for him as a serial acquirer because of the negative feelings out there about him.) The negative take on the by Biglari tag is of course that it is merely an ego play. But in no circumstance is the point of it to help Steak n Shake - that misreads this situation from all perspectives. The point is to try to build a brand like Berkshire has - where even though Geico and Dairy Queen and Nebraska Furniture Mart are separate brands - Berkshire is a strong business brand as well - that has positive associational effects. Of course over the last couple of years, Buffett has seemed to take notice of Berkshire's brand and begin to trade on it. For instance, Berkshire renamed MidAmerican Energy to Berkshire Hathaway Energy and they have renamed hundreds of local real estate offices they own to Berkshire Hathaway Home Services and they have now named Van Tuyl's auto dealers, Berkshire Hathaway Automotive. This is an attempt at what Biglari is doing with the "by Biglari" tag - it has nothing to do with Steak n Shake. (Some people may think it actually hurts the brand, I don't think it is significant enough to hurt it at all - almost no one even notices it I'm sure.) Anyway, I just thought it was interesting that even the critique of "by Biglari" doesn't quite understand this. NBL, your posts have been very good up until now. This argument holds no water, as the Buffett brand is stronger than the Berkshire Hathaway brand, yet Buffett has not renamed any company after himself. The Biglari name is on Steak'n Shake because of two things...Sardar's ego and to entrench himself. That's it! Any argument otherwise is ridiculous, as I was there when this happened and was one of the only shareholders to argue against it. You trying to tell me that it's because he's only trying to create a brand is silly! The letter I sent to the board is attached, and if anything, the name change was the canary in the coalmine! As you can see, I was as fond of the CEO as you or Gio are now. Incidentally, you do realize that the Colts released Manning and found themselves a quarterback of equal, if not better calibre, in Andrew Luck. Jim Irsay, the owner, could do that because Peyton Manning didn't have a $100M licensing agreement against the Colts! You shareholders have a golden noose around your necks right now, and the beneficiary is the CEO of the company in every capacity. Cheers!Letter_to_Steakn_Shake_-_January_31_2010.pdf Link to comment Share on other sites More sharing options... giofranchi Posted March 30, 2015 Share Posted March 30, 2015 Then you have cash / investments which will be again and again transferred to the Lion Fund where Biglari takes his full 25% over 6 and his track record is based on buying one stock. I don't know. The whole situation makes no sense to me. philly value, I think the best answer to what you are saying is provided by Biglari himself in his 2012 AL: Our approach to purchasing stocks is to concentrate capital into very few concerns. We focus our attention and capital in an attempt to increase returns yet concomitantly reduce investment risk. Therefore, we limit our appraisals and allocations to businesses we can rationally assess, immersing ourselves in understanding a business rather than attempting to study many shallowly. As a consequence, our range of investments may be narrow, but within it we must be supreme. Analysis that is a mile wide and an inch deep is fool’s gold. We purchase stocks for investment not speculation. Our old-fashioned, long-term investment approach is one that suits us. (emphasis mine) And don’t think for a minute this approach is not repeatable! It is a very entrepreneurial way of investing and one Biglari has used with great success many times in the past. NBL, the fact I stress what I like about BH doesn’t mean BH is an “Everything is awesome” situation to me… Instead, it is just a consequence of the fact so many people on this board stress what they don’t like about BH! A voice out of the pack is always needed! ;) Cheers, Gio Link to comment Share on other sites More sharing options... giofranchi Posted March 30, 2015 Share Posted March 30, 2015 As you can see, I was as fond of the CEO as you or Gio are now. Sanjeev, I am not fond of Biglari… I only like two things in this world, and Biglari certainly is not among them… Instead they are: girls and business results! ;D ;D As for business results, I have asked in this thread before: 1) Show me a money manager who did better than a CAGR of 13.6% during the 9 years from 2000 to 2008… No one has answered… 2) Show me another restaurant chain which has increased same store sales for 25 quarters in a row… Again no one has answered… As for girls, I am coming with Laura at the Fairfax dinner in a few days (if she doesn’t dump me in the meantime! ;D ;D), and I will be glad to introduce her to you! ;) Cheers, Gio Link to comment Share on other sites More sharing options... Greg Posted March 30, 2015 Share Posted March 30, 2015 Gio, To determine returns to Mr. Biglari's investors I think that you need to update Biglari's track record from 2008 to the present. I think that you should adjust for results earned on the amount of capital managed. You might start with the below data Below is from a 13d filed in 2007. There was a 1:20 reverse split in 2009. There were rights offerings. You can calculate the return on investment before and after fees. Is this a good return for investors? For Mr. Biglari? TRANSACTIONS IN SECURITIES OF STEAK N SHAKE DURING THE PAST TWO YEARS TRANSACTIONS IN COMMON STOCK Shares Purchased Price Per Share ($) Date of Purchase ---------------- ------------------- ---------------- THE LION FUND, L.P. ------------------- 25,000 16.7683 03/22/07 60,000 16.8493 03/23/07 68,000 17.0291 03/26/07 2,900 16.7966 03/27/07 13,300 16.7065 03/28/07 14,500 16.6361 03/29/07 20,600 16.6775 03/30/07 10,100 16.6889 04/02/07 10,200 17.0796 04/04/07 4,000 17.0608 04/05/07 38,300 16.9491 04/09/07 27,400 16.8361 04/10/07 17,144 16.7367 04/11/07 29,594 16.5294 04/12/07 1,000 16.4540 04/13/07 12,100 16.6511 04/17/07 8,919 16.5621 04/18/07 1,400 16.5114 04/19/07 16,200 16.7565 04/23/07 5,500 16.7238 04/24/07 10,943 16.8093 04/26/07 2,900 16.7317 04/27/07 27,800 16.3508 05/01/07 2,000 15.2050 06/22/07 6,000 14.9258 06/25/07 85,000 17.1033 06/26/07 20,000 17.0338 06/27/07 140,000 17.0646 06/28/07 53,300 16.7723 06/29/07 3,000 16.5680 07/02/07 10,000 16.7836 07/03/07 6,000 16.6042 07/05/07 6,000 15.6992 07/26/07 7,500 15.6211 07/27/07 12,500 15.0877 07/30/07 18,000 15.2569 07/31/07 9,300 15.0200 08/01/07 17,000 14.9690 08/03/07 3,000 14.7708 08/06/07 ---------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 21 of 29 Pages ---------------------- ---------------------- 2,000 16.0100 08/07/07 12,800 13.3579 08/13/07 70,000 13.6622 08/14/07 18,000 14.0286 08/15/07 WESTERN SIZZLIN CORP. --------------------- 1,500 16.4293 03/07/07 3,200 16.5570 03/08/07 845 16.6410 03/09/07 8,700 16.8379 03/12/07 6,000 16.7830 03/13/07 700 16.7929 03/14/07 2,000 16.8065 03/15/07 30,000 14.9658 05/10/07 1,500 16.6007 07/18/07 3,000 16.8190 07/19/07 4,500 15.6992 07/26/07 7,500 15.6111 07/27/07 12,500 15.0777 07/30/07 12,000 15.2569 07/31/07 4,000 15.0200 08/01/07 3,000 14.9690 08/03/07 1,600 14.7708 08/06/07 3,000 13.3579 08/13/07 30,000 13.6622 08/14/07 7,300 14.0286 08/15/07 BIGLARI CAPITAL CORP. --------------------- 500 16.7099 04/11/07 Greg Link to comment Share on other sites More sharing options... giofranchi Posted March 30, 2015 Share Posted March 30, 2015 Greg, I was asking about stock market investment returns during the nine years from 2000 to 2008. By the way BH stock market investment returns have trounced the S&P500 from 2009 to 2014, which is something very few hedge fund managers have achieved! ;) Cheers, Gio Link to comment Share on other sites More sharing options... Prev 59 60 61 62 63 64 65 66 67 68 69 Next Page 64 of 121 Create an account or sign in to comment You need to be a member in order to leave a comment Create an account Sign up for a new account in our community. It's easy! Register a new account Sign in Already have an account? Sign in here. Sign In Now Share More sharing options... Followers 0 Go to topic listing All Activity Home General Category Investment Ideas BH - Biglari Holdings × Existing user? Sign In Sign Up INVESTMENT FORUM Back POLITICS FORUM Browse Back Forums Events Staff Online Users Leaderboard Activity Back All Activity Search × Create New...
frugalchief Posted March 29, 2015 Share Posted March 29, 2015 (Unless of course you believe that successful investing means to Ignore the Crowd. If one thinks that you pay a very high price for a cheery consensus. If one thinks that you have to swallow some calories to get an attractive investment. If one thinks that the crowd is sometimes wrong, but almost never fully right on investing matters. If one would prefer Biglari Holdings will all of these issues that frustrate so many people, if we can get it at less than 50 cents on the dollar. In other words, if you prefer Biglari Holdings with the Biglari issues at $775 million, rather than a unproblematic, fairly compensated Sardar Biglari but with Biglari Holdings trading for $1.6 billion. So the question in this case is, should the crowd be followed or ignored?)[/font][/size] There is quite a crowd I ignore here regarding this investment, even though some past discussions have been cheery. We've pretty much beat the horse dead already. Link to comment Share on other sites More sharing options...
Parsad Posted March 30, 2015 Share Posted March 30, 2015 Surprisingly accurate article in the NY Post about the BH proxy contest: http://nypost.com/2015/03/27/steak-n-shake-boss-and-potential-replacements-feeling-the-heat/ The article has it right...Sardar has to go, but Groveland aren't the right guys to do it. Cheers! Link to comment Share on other sites More sharing options...
wescobrk Posted March 30, 2015 Share Posted March 30, 2015 One thing that article doesn't seem to grasp at all, and other articles and Groveland for that matter, doesn't grasp - is that adding "by Biglari" to Steak n Shake has nothing to do with Steak n Shake. I'm not defending the addition of the "by Biglari" - I don't care either way about it - although I'm sure many of the Biglari haters who are fixated on him will take this post as a chance to respond with how much they hate him and the addition of his name to Steak n Shake - but this just about the concept of it. The point is not to help Steak n Shake's brand - but rather to help Biglari's brand. The favorable take is that Biglari is trying to build long-term value by making the brand associated with different brands and companies to become a sort of business brand in itself. This may help them in their serial acquisitions if people have heard of Biglari. (Of course, a Google search of him, will also cause some problems for him as a serial acquirer because of the negative feelings out there about him.) The negative take on the by Biglari tag is of course that it is merely an ego play. But in no circumstance is the point of it to help Steak n Shake - that misreads this situation from all perspectives. The point is to try to build a brand like Berkshire has - where even though Geico and Dairy Queen and Nebraska Furniture Mart are separate brands - Berkshire is a strong business brand as well - that has positive associational effects. Of course over the last couple of years, Buffett has seemed to take notice of Berkshire's brand and begin to trade on it. For instance, Berkshire renamed MidAmerican Energy to Berkshire Hathaway Energy and they have renamed hundreds of local real estate offices they own to Berkshire Hathaway Home Services and they have now named Van Tuyl's auto dealers, Berkshire Hathaway Automotive. This is an attempt at what Biglari is doing with the "by Biglari" tag - it has nothing to do with Steak n Shake. (Some people may think it actually hurts the brand, I don't think it is significant enough to hurt it at all - almost no one even notices it I'm sure.) Anyway, I just thought it was interesting that even the critique of "by Biglari" doesn't quite understand this. Thanks for the post, Nbl. Very insightful. Link to comment Share on other sites More sharing options...
hardcorevalue Posted March 30, 2015 Share Posted March 30, 2015 Berkshire was 'just' a bit more established before Buffett began trying to leverage the corporate name...... Link to comment Share on other sites More sharing options...
TheValueDude Posted March 30, 2015 Share Posted March 30, 2015 Berkshire was 'just' a bit more established before Buffett began trying to leverage the corporate name...... You would think WEB, lover of compound interest, would have seen the value in doing the same with branding long ago... Link to comment Share on other sites More sharing options...
Parsad Posted March 30, 2015 Share Posted March 30, 2015 One thing that article doesn't seem to grasp at all, and other articles and Groveland for that matter, doesn't grasp - is that adding "by Biglari" to Steak n Shake has nothing to do with Steak n Shake. I'm not defending the addition of the "by Biglari" - I don't care either way about it - although I'm sure many of the Biglari haters who are fixated on him will take this post as a chance to respond with how much they hate him and the addition of his name to Steak n Shake - but this just about the concept of it. The point is not to help Steak n Shake's brand - but rather to help Biglari's brand. The favorable take is that Biglari is trying to build long-term value by making the brand associated with different brands and companies to become a sort of business brand in itself. This may help them in their serial acquisitions if people have heard of Biglari. (Of course, a Google search of him, will also cause some problems for him as a serial acquirer because of the negative feelings out there about him.) The negative take on the by Biglari tag is of course that it is merely an ego play. But in no circumstance is the point of it to help Steak n Shake - that misreads this situation from all perspectives. The point is to try to build a brand like Berkshire has - where even though Geico and Dairy Queen and Nebraska Furniture Mart are separate brands - Berkshire is a strong business brand as well - that has positive associational effects. Of course over the last couple of years, Buffett has seemed to take notice of Berkshire's brand and begin to trade on it. For instance, Berkshire renamed MidAmerican Energy to Berkshire Hathaway Energy and they have renamed hundreds of local real estate offices they own to Berkshire Hathaway Home Services and they have now named Van Tuyl's auto dealers, Berkshire Hathaway Automotive. This is an attempt at what Biglari is doing with the "by Biglari" tag - it has nothing to do with Steak n Shake. (Some people may think it actually hurts the brand, I don't think it is significant enough to hurt it at all - almost no one even notices it I'm sure.) Anyway, I just thought it was interesting that even the critique of "by Biglari" doesn't quite understand this. NBL, your posts have been very good up until now. This argument holds no water, as the Buffett brand is stronger than the Berkshire Hathaway brand, yet Buffett has not renamed any company after himself. The Biglari name is on Steak'n Shake because of two things...Sardar's ego and to entrench himself. That's it! Any argument otherwise is ridiculous, as I was there when this happened and was one of the only shareholders to argue against it. You trying to tell me that it's because he's only trying to create a brand is silly! The letter I sent to the board is attached, and if anything, the name change was the canary in the coalmine! As you can see, I was as fond of the CEO as you or Gio are now. Incidentally, you do realize that the Colts released Manning and found themselves a quarterback of equal, if not better calibre, in Andrew Luck. Jim Irsay, the owner, could do that because Peyton Manning didn't have a $100M licensing agreement against the Colts! You shareholders have a golden noose around your necks right now, and the beneficiary is the CEO of the company in every capacity. Cheers!Letter_to_Steakn_Shake_-_January_31_2010.pdf Link to comment Share on other sites More sharing options...
giofranchi Posted March 30, 2015 Share Posted March 30, 2015 Then you have cash / investments which will be again and again transferred to the Lion Fund where Biglari takes his full 25% over 6 and his track record is based on buying one stock. I don't know. The whole situation makes no sense to me. philly value, I think the best answer to what you are saying is provided by Biglari himself in his 2012 AL: Our approach to purchasing stocks is to concentrate capital into very few concerns. We focus our attention and capital in an attempt to increase returns yet concomitantly reduce investment risk. Therefore, we limit our appraisals and allocations to businesses we can rationally assess, immersing ourselves in understanding a business rather than attempting to study many shallowly. As a consequence, our range of investments may be narrow, but within it we must be supreme. Analysis that is a mile wide and an inch deep is fool’s gold. We purchase stocks for investment not speculation. Our old-fashioned, long-term investment approach is one that suits us. (emphasis mine) And don’t think for a minute this approach is not repeatable! It is a very entrepreneurial way of investing and one Biglari has used with great success many times in the past. NBL, the fact I stress what I like about BH doesn’t mean BH is an “Everything is awesome” situation to me… Instead, it is just a consequence of the fact so many people on this board stress what they don’t like about BH! A voice out of the pack is always needed! ;) Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted March 30, 2015 Share Posted March 30, 2015 As you can see, I was as fond of the CEO as you or Gio are now. Sanjeev, I am not fond of Biglari… I only like two things in this world, and Biglari certainly is not among them… Instead they are: girls and business results! ;D ;D As for business results, I have asked in this thread before: 1) Show me a money manager who did better than a CAGR of 13.6% during the 9 years from 2000 to 2008… No one has answered… 2) Show me another restaurant chain which has increased same store sales for 25 quarters in a row… Again no one has answered… As for girls, I am coming with Laura at the Fairfax dinner in a few days (if she doesn’t dump me in the meantime! ;D ;D), and I will be glad to introduce her to you! ;) Cheers, Gio Link to comment Share on other sites More sharing options...
Greg Posted March 30, 2015 Share Posted March 30, 2015 Gio, To determine returns to Mr. Biglari's investors I think that you need to update Biglari's track record from 2008 to the present. I think that you should adjust for results earned on the amount of capital managed. You might start with the below data Below is from a 13d filed in 2007. There was a 1:20 reverse split in 2009. There were rights offerings. You can calculate the return on investment before and after fees. Is this a good return for investors? For Mr. Biglari? TRANSACTIONS IN SECURITIES OF STEAK N SHAKE DURING THE PAST TWO YEARS TRANSACTIONS IN COMMON STOCK Shares Purchased Price Per Share ($) Date of Purchase ---------------- ------------------- ---------------- THE LION FUND, L.P. ------------------- 25,000 16.7683 03/22/07 60,000 16.8493 03/23/07 68,000 17.0291 03/26/07 2,900 16.7966 03/27/07 13,300 16.7065 03/28/07 14,500 16.6361 03/29/07 20,600 16.6775 03/30/07 10,100 16.6889 04/02/07 10,200 17.0796 04/04/07 4,000 17.0608 04/05/07 38,300 16.9491 04/09/07 27,400 16.8361 04/10/07 17,144 16.7367 04/11/07 29,594 16.5294 04/12/07 1,000 16.4540 04/13/07 12,100 16.6511 04/17/07 8,919 16.5621 04/18/07 1,400 16.5114 04/19/07 16,200 16.7565 04/23/07 5,500 16.7238 04/24/07 10,943 16.8093 04/26/07 2,900 16.7317 04/27/07 27,800 16.3508 05/01/07 2,000 15.2050 06/22/07 6,000 14.9258 06/25/07 85,000 17.1033 06/26/07 20,000 17.0338 06/27/07 140,000 17.0646 06/28/07 53,300 16.7723 06/29/07 3,000 16.5680 07/02/07 10,000 16.7836 07/03/07 6,000 16.6042 07/05/07 6,000 15.6992 07/26/07 7,500 15.6211 07/27/07 12,500 15.0877 07/30/07 18,000 15.2569 07/31/07 9,300 15.0200 08/01/07 17,000 14.9690 08/03/07 3,000 14.7708 08/06/07 ---------------------- ---------------------- CUSIP No. 857873-10-3 13D Page 21 of 29 Pages ---------------------- ---------------------- 2,000 16.0100 08/07/07 12,800 13.3579 08/13/07 70,000 13.6622 08/14/07 18,000 14.0286 08/15/07 WESTERN SIZZLIN CORP. --------------------- 1,500 16.4293 03/07/07 3,200 16.5570 03/08/07 845 16.6410 03/09/07 8,700 16.8379 03/12/07 6,000 16.7830 03/13/07 700 16.7929 03/14/07 2,000 16.8065 03/15/07 30,000 14.9658 05/10/07 1,500 16.6007 07/18/07 3,000 16.8190 07/19/07 4,500 15.6992 07/26/07 7,500 15.6111 07/27/07 12,500 15.0777 07/30/07 12,000 15.2569 07/31/07 4,000 15.0200 08/01/07 3,000 14.9690 08/03/07 1,600 14.7708 08/06/07 3,000 13.3579 08/13/07 30,000 13.6622 08/14/07 7,300 14.0286 08/15/07 BIGLARI CAPITAL CORP. --------------------- 500 16.7099 04/11/07 Greg Link to comment Share on other sites More sharing options...
giofranchi Posted March 30, 2015 Share Posted March 30, 2015 Greg, I was asking about stock market investment returns during the nine years from 2000 to 2008. By the way BH stock market investment returns have trounced the S&P500 from 2009 to 2014, which is something very few hedge fund managers have achieved! ;) Cheers, Gio Link to comment Share on other sites More sharing options...
Recommended Posts