BH - Biglari Holdings

[S2S]

The idea that if shareholders don't like Biglari they should sell is crazy. If Biglari owned 75% of the company, he could say that and it may be a legitimate point. But of course he owns very little, and so if shareholders collectively don't like Biglari, then he should be the one to leave.

 

The problem with Biglari as others have noted is not just the compensation scheme. The problem is the convoluted structures Biglari is setting up to give himself more money and more control. At the very least what is needed is a clearer organizational structure.

 

"If" is the keyword. One thing we learned from the proxy results (or what has been disclosed, at least) is that BH's current shareholder base - on weighted basis - likes Biglari and all that involves enough.

 

By no mean I am making a straight comparison, but the way Bezos run AMZN (no accounting earnings or cash flows for over a decade) has been called all sort of names by many - some of which are in likelihood former AMZN shareholders or potential investors. Has it mattered so far? Not if you ask the current shareholder base, which includes traditionally well-regarded fundamental investors such as Capital Group.

[philly value]

The idea that if shareholders don't like Biglari they should sell is crazy. If Biglari owned 75% of the company, he could say that and it may be a legitimate point. But of course he owns very little, and so if shareholders collectively don't like Biglari, then he should be the one to leave.

 

The problem with Biglari as others have noted is not just the compensation scheme. The problem is the convoluted structures Biglari is setting up to give himself more money and more control. At the very least what is needed is a clearer organizational structure.

 

"If" is the keyword. One thing we learned from the proxy results (or what has been disclosed, at least) is that BH's current shareholder base - on weighted basis - likes Biglari and all that involves enough.

 

By no mean I am making a straight comparison, but the way Bezos run AMZN (no accounting earnings or cash flows for over a decade) has been called all sort of names by many - some of which are in likelihood former AMZN shareholders or potential investors. Has it mattered so far? Not if you ask the current shareholder base, which includes traditionally well-regarded fundamental investors such as Capital Group.

 

That is not a valid conclusion to draw from the proxy results. The proxy results show that shareholders prefer Biglari over Groveland, which given the circumstances is not surprising. They do not show that investors are happy with Biglari overall.

[Parsad]

I will certainly not be sad for him if he get ultimately fired.

 

Ahahah!!

You want to fire Federer just because he has become a billionaire at 33 swinging a tennis racket?! ;D

 

Your answer might be: Biglari is no Federer.

 

Then I ask you again what I have asked some posts ago: show me the track record of a stock market investment professional which is better than Biglari’s since 2000.

 

Until now no one has answered. ;)

 

Cheers,

 

Gio

 

Without significant leverage - Allan Mecham at Arlington Value.  With significant leverage - Ericopoly.  Cheers!

[frugalchief]

This is the most accurate media post I've read in a while.

 

http://www.ibj.com/articles/52692-biglari-sticks-it-to-critics-after-big-shareholder-win

[Cevian]

"“There are more idiots in the stock market than I previously thought,” Biglari said. “And I had low expectations.”

 

Why does he have to say thing like this?

[merkhet]

"“There are more idiots in the stock market than I previously thought,” Biglari said. “And I had low expectations.”

 

Why does he have to say thing like this?

 

Are you looking for an answer other than "hubris"?

[Spekulatius]

I will certainly not be sad for him if he get ultimately fired.

 

Ahahah!!

You want to fire Federer just because he has become a billionaire at 33 swinging a tennis racket?! ;D

 

Your answer might be: Biglari is no Federer.

 

Then I ask you again what I have asked some posts ago: show me the track record of a stock market investment professional which is better than Biglari’s since 2000.

 

Until now no one has answered. ;)

 

Cheers,

 

Gio

If Federer is not good at playing Tennis any more, he won't win and will stop earning the big bucks at some point ( advertising and promotion income will peter out over time, price money will dry out immediately). He won't even be able to play on the important tournaments any more, if he does not qualify.

If Sadir stops to perform well, his current arrangement guarantees that he stays in charge of BH and he will continue to earn big bucks. Then shareholders will have one hell of a problem because he has entrenched himself so hard into BH, that he will be nearly impossible to get rid of.

[ScottHall]

This thread devolved into pointless bickering long ago. Unlikely you will change each other's minds, why not go spend time with family and friends?

[giofranchi]

Without significant leverage - Allan Mecham at Arlington Value. 

 

Thank you Sanjeev!

 

Would you please let me know more about Allan Mecham? Where could I find his track record?

 

Cheers,

 

Gio

 

[giofranchi]

If Federer is not good at playing Tennis any more, he won't win and will stop earning the big bucks at some point ( advertising and promotion income will peter out over time, price money will dry out immediately). He won't even be able to play on the important tournaments any more, if he does not qualify.

If Sadir stops to perform well, his current arrangement guarantees that he stays in charge of BH and he will continue to earn big bucks. Then shareholders will have one hell of a problem because he has entrenched himself so hard into BH, that he will be nearly impossible to get rid of.

 

Well, but I don’t care: like I have always said, as soon as I see irrational business choices and/or deteriorating business results, I am gone. Period.

 

What’s wonderful with a very low stock price is that I am not likely to suffer a significant loss of capital if that happens! ;)

 

Gio

 

[wachtwoord]

If Federer is not good at playing Tennis any more, he won't win and will stop earning the big bucks at some point ( advertising and promotion income will peter out over time, price money will dry out immediately). He won't even be able to play on the important tournaments any more, if he does not qualify.

If Sadir stops to perform well, his current arrangement guarantees that he stays in charge of BH and he will continue to earn big bucks. Then shareholders will have one hell of a problem because he has entrenched himself so hard into BH, that he will be nearly impossible to get rid of.

 

Well, but I don’t care: like I have always said, as soon as I see irrational business choices and/or deteriorating business results, I am gone. Period.

 

What’s wonderful with a very low stock price is that I am not likely to suffer a significant loss of capital if that happens! ;)

 

Gio

 

While some of the risk has been priced in I think you are underestimating the downside significantly. For anything but token holdings I think you should be willing to hold the stock forever because there isn't always an option to economically exit the position. (“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”)

 

I sure as hell would not want to be 'married' to mr. Biglari for the nest 10 years. He will surely skin me alive ;)

[giofranchi]

While some of the risk has been priced in I think you are underestimating the downside significantly. For anything but token holdings I think you should be willing to hold the stock forever because there isn't always an option to economically exit the position. (“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”)

 

I simply don’t see business that way… Things change… Quite too often and unpredictably… As long as a business remains what I think it is, I’ll gladly keep it for a very long time… The longer, the better!… But, as soon as I realize that business is no longer what I thought it was, I am gone… No matter what! Am I losing some capital? So be it!... I have always behaved this way, and results until now on average have been more than satisfactory… As I have said, BH has also the advantage of a very low stock price!

 

Cheers,

 

Gio

 

[wachtwoord]

So if you want out and the only offer is a penny a share you'll do a market sell? ;)

[giofranchi]

So if you want out and the only offer is a penny a share you'll do a market sell? ;)

 

Of course valuation matters a lot! And that’s why I keep repeating BH’s low stock price is a very good thing. :)

 

Cheers,

 

Gio

 

[wachtwoord]

That's what I'm warning you for. When you're in you can never be sure you can get out. So better make sure you feel comfortable staying put indefinitely if you end up locked in.

[giofranchi]

So better make sure you feel comfortable staying put indefinitely if you end up locked in.

 

Ah! Of course it would be better to buy something and let it compound at 15%-20% for 30 years… Yet, though that’s the kind of business I am looking for, I know there is a difference between theory and practice! ;)

 

Business results at BH have been excellent so far. How to be sure they will never deteriorate in the future?

 

I don’t know... Neither I know how to answer that question for any other business I own.

 

Gio

 

[jimjam]

I'm curious if anyone attending the annual meeting could relay any comments about the First Guard subsidiary.

 

I recognise that this is a minuscule investment, but did SB speak about its long term competitive advantage in terms of price and service?

 

Is this a GEICO-like business for which it might be possible to deploy capital at attractive returns to grow their market share in the trucker insurance market?

 

Does anyone know why their website has been down every time I've tried to connect over the past week (www.1stguard.com)? At least from Europe it seems to simply hang when I try to open the site via an android smartphone and also via Google Chrome on Mac OS X.

 

Cheers

[Jurgis]

Does anyone know why their website has been down every time I've tried to connect over the past week (www.1stguard.com)? At least from Europe it seems to simply hang when I try to open the site via an android smartphone and also via Google Chrome on Mac OS X.

 

Website opens fine for me (Firefox on PC).

 

It even has a Maxim girl on landing page - what's a better way to steer truckers to buy insurance and Maxim at the same time!  ;D Just think about cross business opportunities.  ::)

[frugalchief]

I'm curious if anyone attending the annual meeting could relay any comments about the First Guard subsidiary.

 

I recognise that this is a minuscule investment, but did SB speak about its long term competitive advantage in terms of price and service?

 

Is this a GEICO-like business for which it might be possible to deploy capital at attractive returns to grow their market share in the trucker insurance market?

 

Does anyone know why their website has been down every time I've tried to connect over the past week (www.1stguard.com)? At least from Europe it seems to simply hang when I try to open the site via an android smartphone and also via Google Chrome on Mac OS X.

 

Cheers

 

Everything was positive about First Guard and how much of a gem the company was.  SB kept saying that management is high-quality.

 

FG is obviously a niche insurance business.  There are no set-in-stone objectives for it to grow.  SB is allowing management to continue doing their thing.

 

It's very profitable right now (YE 2014).  Revenues/profits should increase some as ceded revenues to reinsurer are diminishing.

[frugalchief]

I would be grateful for any notes you may have taken, no matter how limited. They can't possibly be as limited as what's on Twitter, which makes it appear that the entire five-hour meeting was Biglari calling everyone idiots, while looking both dishonest and high on painkillers. There may have been some of that, but I'm sure that's not all there was!

 

It all depends upon which camp people are in.  The anti-Biglari shareholder/hater will certainly say what you found on Twitter, no matter what is shared.  I was surprised by the amount of anti-Biglari shareholders who where there.  It just doesn't make sense why people still hold stock when you think the CEO/management is "stealing" from you.  (and spend the $$ to attend the meeting to voice it.  I understand we all have a voice, but come on....).

 

I will say the philosophy in this thread was brought up during the meeting.  For those of us who have studied, read, and invested a lot of time and energy into BH, what has been mentioned here was talked about in the meeting.  That said, there are a lot of un-informed investors who don't understand (hence, the "idiots" term), yet try to change the rules of the game. 

 

I'm usually a huge giver, but I might limit the notes I share.  Not to stand up for Sardar, but anything posted will only fuel those who don't like the guy to continue the un-needed bashing that is unwarranted here.  If discussion was constructive it'd be something else.

 

Notes won't change anyone's opinion.

 

We are all here to share - that's where the value of this board is - sharing.  That's why I joined, was to participate and share my views on something and see others thoughts.  So, with that, here are my notes.

 

A few points:

• Accuracy of some points might not be 100%.  There are some points I notated that I might be taking it out of context - sitting and writing for 6 hrs can make the mind go numb.
  
• If you have questions or seek an explanation, please ask.  I'll do my best to answer.  Notes are just that - short takes of a long discussion, which happened to last 6 hours last week.  I tried to only catch the most important items.
  

 

I hope you enjoy and find the details useful to your analysis of BH.

 

Cheers,

FrugalChief

BH_Meeting_Notes.pdf

[TheValueDude]

I would be grateful for any notes you may have taken, no matter how limited. They can't possibly be as limited as what's on Twitter, which makes it appear that the entire five-hour meeting was Biglari calling everyone idiots, while looking both dishonest and high on painkillers. There may have been some of that, but I'm sure that's not all there was!

 

It all depends upon which camp people are in.  The anti-Biglari shareholder/hater will certainly say what you found on Twitter, no matter what is shared.  I was surprised by the amount of anti-Biglari shareholders who where there.  It just doesn't make sense why people still hold stock when you think the CEO/management is "stealing" from you.  (and spend the $$ to attend the meeting to voice it.  I understand we all have a voice, but come on....).

 

I will say the philosophy in this thread was brought up during the meeting.  For those of us who have studied, read, and invested a lot of time and energy into BH, what has been mentioned here was talked about in the meeting.  That said, there are a lot of un-informed investors who don't understand (hence, the "idiots" term), yet try to change the rules of the game. 

 

I'm usually a huge giver, but I might limit the notes I share.  Not to stand up for Sardar, but anything posted will only fuel those who don't like the guy to continue the un-needed bashing that is unwarranted here.  If discussion was constructive it'd be something else.

 

Notes won't change anyone's opinion.

 

We are all here to share - that's where the value of this board is - sharing.  That's why I joined, was to participate and share my views on something and see others thoughts.  So, with that, here are my notes.

 

A few points:

• Accuracy of some points might not be 100%.  There are some points I notated that I might be taking it out of context - sitting and writing for 6 hrs can make the mind go numb.
  
• If you have questions or seek an explanation, please ask.  I'll do my best to answer.  Notes are just that - short takes of a long discussion, which happened to last 6 hours last week.  I tried to only catch the most important items.
  

 

I hope you enjoy and find the details useful to your analysis of BH.

 

Cheers,

FrugalChief

 

Many thanks for the notes.

[mateo999]

I'm curious if anyone attending the annual meeting could relay any comments about the First Guard subsidiary.

 

I recognise that this is a minuscule investment, but did SB speak about its long term competitive advantage in terms of price and service?

 

Is this a GEICO-like business for which it might be possible to deploy capital at attractive returns to grow their market share in the trucker insurance market?

 

Does anyone know why their website has been down every time I've tried to connect over the past week (www.1stguard.com)? At least from Europe it seems to simply hang when I try to open the site via an android smartphone and also via Google Chrome on Mac OS X.

 

Cheers

 

In addition to Frugalchief's comments, the other thing i'll note is that SB essentially downplayed the role of float for FG.  He made a broad comment along the lines of "a lot of people want to get into insurance for the float... and then you meet the regulators!"

[OracleofCarolina]

Cracker Barrel reupped their "poison pill" which was expiring last week.

http://www.sec.gov/Archives/edgar/data/1067294/000119312515124393/d907511d8k.htm

 

[innerscorecard]

Frugalchief, thank you very much for posting your notes for everyone, and for the time it took you to take, edit and type them. As compared to previous years, where several blogs and articles had good meeting notes for the annual meeting, I don't see a lot of comprehensive notes other than yours floating around this year (everyone please correct me if I'm wrong - I'm sure we'd all appreciate links to other notes as well to flesh out some point or other).

[Txvestor]

Frugalchief,

Even as we disagree on much. Your effort and generosity in posting your meeting notes on this board is much appreciated. As was NBLs lengthy analysis earlier. It is always useful(perhaps more useful) to hear the perspective of someone with whom you disagree.