Greg Posted March 30, 2015 Share Posted March 30, 2015 Gio, I think that you need to pick starting and ending points that track a complete record. You need to use Lion Fund data for the entire time - up to the present and use Biglari Holdings data from initial investments in SNS to the present. A lot of this data is conveniently available from the SEC. I have posted some of it above. You may find that things are very different from what you are raving about. Greg Link to comment Share on other sites More sharing options...
giofranchi Posted March 30, 2015 Share Posted March 30, 2015 Greg, are we talking about the same topic? I am talking about investment returns. Are you? I just find to be very rare a CAGR of 13.6% in those 9 years during which we witnessed the S&P500 cut in half twice... That's why I am asking if someone knows a stock market manager who has managed to do better! ;) Gio Link to comment Share on other sites More sharing options...
Greg Posted March 30, 2015 Share Posted March 30, 2015 Gio, I think that we should look at returns to Lion Fund investors for the entire period 2000-March 2015 and to BH (SNS) investors for the entire period March 2007-March 2015. It is misleading to give returns for selected blocks of years and not give them for the entire record. If I lose money I do not omit the losses from my results. Greg Link to comment Share on other sites More sharing options...
giofranchi Posted March 30, 2015 Share Posted March 30, 2015 Greg, from 2000 to 2008 the CAGR has been 13.6%, than from 2009 to 2014 BH's average return from stock market investments has been 32.8% annual (instead of 17% for the S&P500). In 2015 CBRL stock price has already appreciated a lot... Probably, I am not understanding what you mean... Gio Link to comment Share on other sites More sharing options...
merkhet Posted March 30, 2015 Share Posted March 30, 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? bump Link to comment Share on other sites More sharing options...
BTShine Posted March 30, 2015 Share Posted March 30, 2015 Gio, I think that we should look at returns to Lion Fund investors for the entire period 2000-March 2015 and to BH (SNS) investors for the entire period March 2007-March 2015. It is misleading to give returns for selected blocks of years and not give them for the entire record. If I lose money I do not omit the losses from my results. Greg Greg, Forgive me if you have already posted this. Could you post the data of Mr. Biglari's returns that you think Gio and others should be viewing? Instead of asking Gio to compute his data differently maybe you could compute it for us and post? Again, my apologies if you've already posted this on here. Link to comment Share on other sites More sharing options...
frugalchief Posted March 30, 2015 Share Posted March 30, 2015 New (very short) letter by BH regarding BH performance http://www.sec.gov/Archives/edgar/data/93859/000092189515000757/defa14a07428036_03302015.htm Link to comment Share on other sites More sharing options...
loganc Posted March 31, 2015 Share Posted March 31, 2015 New (very short) letter by BH regarding BH performance http://www.sec.gov/Archives/edgar/data/93859/000092189515000757/defa14a07428036_03302015.htm I have no dog in this fight, but what is the deal with the rights issue in 2014? It clearly had the impact to goose his reported per share appreciation performance for 2014. Further, I find it interesting that he uses the positive SSS for SnS over a long period as justification for great management when he said the following in the 2009 AR: Furthermore, I have long postulated that same-store sales do not constitute the main, exclusive, or most important metric to evaluate results. If the main objective of management is growth in same-store sales, then hovering over that idea looms the ominous issue that the resultant number could be manipulated, for example, by spending heavily on marketing without achieving an appropriate return on investment. Why not report some sort of cash earnings for SnS over time, instead of SSS, to justify superior management? Edit: All this being said, the CBRL investment has obviously been quite good. So, I'll give credit where credit is due. Link to comment Share on other sites More sharing options...
giofranchi Posted March 31, 2015 Share Posted March 31, 2015 I have no dog in this fight, but what is the deal with the rights issue in 2014? It clearly had the impact to goose his reported per share appreciation performance for 2014. No: the effect of a rights offering is not taken into consideration while computing the BVPS appreciation for the incentive agreement. Gio Link to comment Share on other sites More sharing options...
loganc Posted March 31, 2015 Share Posted March 31, 2015 I have no dog in this fight, but what is the deal with the rights issue in 2014? It clearly had the impact to goose his reported per share appreciation performance for 2014. No: the effect of a rights offering is not taken into consideration while computing the BVPS appreciation for the incentive agreement. Gio I have no idea about incentive compensation, but the Biglari Holdings (BH) stock return for 2014 shown in the Schedule 14a filing takes into account the rights offering and is higher than if you simply look at the change in price of the shares between the end of the year 2013 and the end of the year 2014. Link to comment Share on other sites More sharing options...
giofranchi Posted March 31, 2015 Share Posted March 31, 2015 I have no idea about incentive compensation, but the Biglari Holdings (BH) stock return for 2014 shown in the Schedule 14a filing takes into account the rights offering and is higher than if you simply look at the change in price of the shares between the end of the year 2013 and the end of the year 2014. Stock return of course! The incentive, instead, is calculated based on the BVPS increase, without taking into consideration the effect of the rights offering. Effect that, truth be told, would have been slightly negative for Biglari’s incentive compensation… Because new shares have been sold below BVPS. ;) Gio Link to comment Share on other sites More sharing options...
loganc Posted March 31, 2015 Share Posted March 31, 2015 I have no idea about incentive compensation, but the Biglari Holdings (BH) stock return for 2014 shown in the Schedule 14a filing takes into account the rights offering and is higher than if you simply look at the change in price of the shares between the end of the year 2013 and the end of the year 2014. Stock return of course! The incentive, instead, is calculated based on the BVPS increase, without taking into consideration the effect of the rights offering. Gio Again, I don't care about the incentive. I am just talking about the numbers he is putting in the 14a. It appears to me that the return from owning the BH shares was something like -21% rather than -14% that he reports. He includes the returns from shareholders that exercised the rights and the subsequent return. Again, why did he do a rights offer? Edit: Gio, I think you have a lot of better ideas than this. Why allocate capital here when you can do more at Liberty Global or Valeant? Link to comment Share on other sites More sharing options...
giofranchi Posted March 31, 2015 Share Posted March 31, 2015 Again, why did he do a rights offer? Edit: Gio, I think you have a lot of better ideas than this. Why allocate capital here when you can do more at Liberty Global or Valeant? Why?!… Through the rights offering I have been able to buy shares well below BVPS after all the rights were exercised twice now. Why not??!!… Which shareholder wouldn’t love that?! BH is not yet a billion dollar company (lots of room to grow!). Biglari is my age. He is a wonderful investor and operator. At least so far. Despite the fact people on this board don’t like him, if he keeps business results at the level of the last 5 years, he will certainly accomplish great things in the future. If, on the other hand, business results deteriorate (for whatever reason), I will change my mind. Stock price alone is not able to change it. ;) Cheers, Gio Link to comment Share on other sites More sharing options...
loganc Posted March 31, 2015 Share Posted March 31, 2015 Again, why did he do a rights offer? Edit: Gio, I think you have a lot of better ideas than this. Why allocate capital here when you can do more at Liberty Global or Valeant? Why?!… Through the rights offering I have been able to buy shares well below BVPS after all the rights were exercised twice now. Why not??!!… Which shareholder wouldn’t love that?! BH is not yet a billion dollar company (lots of room to grow!). Biglari is my age. He is a wonderful investor and operator. At least so far. Despite the fact people on this board don’t like him, if he keeps business results at the level of the last 5 years, he will certainly accomplish great things in the future. If, on the other hand, business results deteriorate (for whatever reason), I will change my mind. Stock price alone is not able to change it. ;) Cheers, Gio There is no "free lunch" sir. Doing rights offers is a dilutive measure and the timing that he did it is very suspect. Again, I think you have other ideas that are better. Link to comment Share on other sites More sharing options...
giofranchi Posted March 31, 2015 Share Posted March 31, 2015 There is no "free lunch" sir. Doing rights offers is a dilutive measure and the timing that he did it is very suspect. Except that I had the chance to buy below BVPS after all the new shares issued were accounted for. Would you define having the cash at the right time to take advantage of the right opportunity a “free lunch”?!... I don’t! There were two rights offerings, the first in 2013, the second in 2014... Also the timing of the first rights offering is "suspect"? Again, I think you have other ideas that are better. Well, we will see! ;) Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted March 31, 2015 Share Posted March 31, 2015 It is, of course, true that the proceeds from the Rights Offerings did increase the "Cash & Investments" figure that Biglari mentions in the annual report - so it should be discounted from the business and investing success that have grown Biglari Holding's cash and investments pile from $1.6 million to over $900 million over the last few years. And that’s exactly what Biglari always does while discussing results in his AL. :) Gio Link to comment Share on other sites More sharing options...
frugalchief Posted March 31, 2015 Share Posted March 31, 2015 So ISS does recommend voting BLUE proxy for BH incumbents. http://www.businesswire.com/news/home/20150331005784/en/ISS-Confirms-Biglari-Holdings%E2%80%99-Position-Groveland-Nominees#.VRqomZPF_fQ Link to comment Share on other sites More sharing options...
gg Posted March 31, 2015 Share Posted March 31, 2015 Has anyone here read the original reports from ISS or Glass Lewis? It would be great if someone can post them! Link to comment Share on other sites More sharing options...
merkhet Posted March 31, 2015 Share Posted March 31, 2015 So ISS does recommend voting BLUE proxy for BH incumbents. http://www.businesswire.com/news/home/20150331005784/en/ISS-Confirms-Biglari-Holdings%E2%80%99-Position-Groveland-Nominees#.VRqomZPF_fQ While the language in that press release is technically accurate - this is somewhat nuanced and the language that Biglari Holdings is using there is taking advantage of the nuances. So sneaky to conflate not voting for Groveland with voting for incumbents. Link to comment Share on other sites More sharing options...
frugalchief Posted March 31, 2015 Share Posted March 31, 2015 Side question, off topic of proxy. How long can Biglari omit the purchase(s) from the 13f filing? Link to comment Share on other sites More sharing options...
gfp Posted March 31, 2015 Share Posted March 31, 2015 10/K amended to include financial statements of The Lion Fund II http://www.sec.gov/Archives/edgar/data/93859/000092189515000778/form10ka207428007_09242014.htm Link to comment Share on other sites More sharing options...
frugalchief Posted March 31, 2015 Share Posted March 31, 2015 10/K amended to include financial statements of The Lion Fund II http://www.sec.gov/Archives/edgar/data/93859/000092189515000778/form10ka207428007_09242014.htm So Sardar withdrew $12.7 million from BCC. Assuming that's probably his taxes on the $34.4 million he made? Link to comment Share on other sites More sharing options...
RichardGibbons Posted April 1, 2015 Share Posted April 1, 2015 Logan -- I would suggest if you thought about it more you would include the Rights in a return. Even most of the most vocal critics of Biglari understand that if you could buy something for $250 per share that is now worth $420 per share - you should include that in the return. Just like it would be faulty for someone to factor the Rights Offering shares they received into their return without including the $250 they paid for those rights offerings shares - it would simply be incomplete to discount the return from a share a shareholder purchased for $250 that is currently worth far more than that. If the share price was currently worth less than $250 per share than those Rights Offerings shares should also definitely be used to make the return negative. But to just ignore the fact that the shareholders received the right to pay $250 for something that is now worth $420 - is to simply ignore part of the return. Look at the thread on these rights. It baffles me that you and Gio still think this rights offer is good for you as shareholders. I'm worried that someone will actually believe you. Here's a simple thought exercise. If it benefits the shareholder, why shouldn't Biglari today issue rights to more shares to you below book value? And more when that right offering is done? And another after that! It'll be a money printing machine! In fact, every company trading below book should do it on an ongoing basis. Just issue more and more rights, and we'll all be billionaires! It's a zero-sum game for shareholders. Actually, it's a negative sum game, because issuing rights has a cost. So it's zero sum, minus the cost of issuing rights. So yeah, you can count it in your "return", but you should view it as a huge negative. Of course, if you're Biglari, it's great! More assets under management! More captive capital! More management fees! Richard AKA Vocal Critic of Biglari (auditioning for the "most vocal" title) Link to comment Share on other sites More sharing options...
innerscorecard Posted April 1, 2015 Share Posted April 1, 2015 Logan -- I would suggest if you thought about it more you would include the Rights in a return. Even most of the most vocal critics of Biglari understand that if you could buy something for $250 per share that is now worth $420 per share - you should include that in the return. Just like it would be faulty for someone to factor the Rights Offering shares they received into their return without including the $250 they paid for those rights offerings shares - it would simply be incomplete to discount the return from a share a shareholder purchased for $250 that is currently worth far more than that. If the share price was currently worth less than $250 per share than those Rights Offerings shares should also definitely be used to make the return negative. But to just ignore the fact that the shareholders received the right to pay $250 for something that is now worth $420 - is to simply ignore part of the return. Look at the thread on these rights. It baffles me that you and Gio still think this rights offer is good for you as shareholders. I'm worried that someone will actually believe you. Here's a simple thought exercise. If it benefits the shareholder, why shouldn't Biglari today issue rights to more shares to you below book value? And more when that right offering is done? And another after that! It'll be a money printing machine! In fact, every company trading below book should do it on an ongoing basis. Just issue more and more rights, and we'll all be billionaires! It's a zero-sum game for shareholders. Actually, it's a negative sum game, because issuing rights has a cost. So it's zero sum, minus the cost of issuing rights. So yeah, you can count it in your "return", but you should view it as a huge negative. Of course, if you're Biglari, it's great! More assets under management! More captive capital! More management fees! Richard AKA Vocal Critic of Biglari (auditioning for the "most vocal" title) Counting something as part of a return and it being the right decision or a pro-shareholder action are separate issues. For example, it's obvious that dividends should be counted as part of total return. Saying that isn't saying that the companies which paid out these dividends were correct to pay them out. Link to comment Share on other sites More sharing options...
giofranchi Posted April 1, 2015 Share Posted April 1, 2015 Here's a simple thought exercise. If it benefits the shareholder, why shouldn't Biglari today issue rights to more shares to you below book value? And more when that right offering is done? And another after that! It'll be a money printing machine! In fact, every company trading below book should do it on an ongoing basis. Just issue more and more rights, and we'll all be billionaires! Richard, this is not serious, is it?! You must know that a rights offering is a way to raise capital. You raise capital only when you know how to use it productively, otherwise your returns on it would be disappointing, and shareholders will suffer (Biglari being a shareholder suffers too) (like I have often said, should results start to disappoint, I will change my mind on the BH investment). What I am saying is that among all the various ways capital could be raised a rights offering is by far the best and the most advantageous to shareholders who are not sleeping at the wheel! ;) Gio Link to comment Share on other sites More sharing options...
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