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BH - Biglari Holdings


accutronman

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I haven't done a deep dive into their financials yet, but when I get a chance I will write something up. My note about Biglari not selling at $150 is more based on the fact that the stock is here even though the company is still not implementing many of the things Biglari has suggested.

 

Ok. It sounds reasonable! ;)

 

Cheers,

 

Gio

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Wow, someone is willing to push the price up today. Up 7% on 15k volume. Perhaps someone new read my articles and agrees with my valuation.

 

There are a lot of services that send out reccomendations based on form 4 filings. The BH filing made it appear that the ceo purchased ~$250m worth of stock and all those buy alerts push an illiquid stock straight up (for a day).

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  • 2 weeks later...

Btshine has asked me through a PM why I sold some BH.

 

Basically, two reasons:

 

1) I think Biglari wants to buy much more stocks personally, and this process will take time. Given the fact he probably wants to buy them at bargain prices, the stock might continue to trade at a discount to a SOTPA valuation.

 

2) And probably the true reason: I used to be looking for companies with very long runways… the longer the better! But no more… I have changed my mind. Now I prefer companies which I think will do very well (meaning will make much money) during the next 5 years. I don’t like a much larger timeframe anymore… Because investing for long term results, in spite of short term pains, is good but many times I have witnessed might go to the detriment of the “sense of urgency” always needed in any business. Also, as an investor, when I see a very long runway, I tend to be “forgiving”: if I like what I see, I tend to be patient for a very long period of time… for too long! This might be dangerous imo for outside investors: we will always have information about a business that are incomplete at best, and business results are in the end the only thing we could truly rely upon.

Given the fact BH runway is so long, I don’t really mind missing the first part of the ride!

 

Cheers,

 

Gio

 

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So are you selling (part of) FFH as well because of reason two?

 

No, not the same reason…

 

What is your portfolio turnover ratio in the last year? Looks very high to me?

 

You have already asked me… It might be… I don’t really keep track of my portfolio turnover ratio: when I change my mind, and when I find something that I like more, I sell the old and buy the new.

 

Gio

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What does a short runway mean? Just that they trade at a low multiple of earnings right now?

 

BH looks like it trades at a fairly low multiple to me (pick your favorite SNS pre-tax profit from the top row). Note that this includes the impact of the JPM agreement (I treat it as a sale), but excludes any impact of taxes on the CBRL stake. It also doesn't account for any cash or the earnings (losses?) of First Guard and Maxim.

 

 

 

 

 

BHeps.png.5a91d1e6219220a78d45e74febcb9af9.png

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What does a short runway mean?

 

It means that I would be more careful from now on about investing in a company that spends lots of money from 2011 to 2015 in building a strong franchising network, the results of which might start becoming evident no sooner than 2016… even if I think it is the right strategy and the right way to invest shareholders’ capital.

 

I used to think I wanted long term thinking whatever the short term results might be, but I have changed my mind: now I want to see both long term thinking and good short term results.

 

Impossible? I think the companies I have bought redeploying the proceeds from my sale of BH and FFH have both displayed satisfactory long term thinking and posted strong business results during the past 5 years, and are well positioned to go on for the next 5 years. We will see!

 

Cheers,

 

Gio

 

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  • 2 weeks later...

Prem Watsa (or maybe one of his colleagues) has apparently taken a minuscule stake (0.04% of his portfolio) in BH!

Here's the data:

 

  http://www.dataroma.com/m/hist/hist.php?f=FFH&s=BH

 

Personally I would not put much weight on Prem Watsa. He is losing on almost every major equity investment in the past few years. EXCO, SD, BBRY, Eurobank.  :)

Wilbur Ross seems smarter than PM. I bet PM dragged WR into the Eurobank investment, and WR sized it properly.

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Personally I would not put much weight on Prem Watsa. He is losing on almost every major equity investment in the past few years. EXCO, SD, BBRY, Eurobank.  :)

 

Bank of Ireland http://www.rte.ie/news/business/2015/0330/690933-fairfax-to-sell-2-9-bank-of-ireland-stake/  ::)

 

I'd actually argue his positioning in Blackberry from the point he doubled his stake in 2011 all seems pretty brilliant. Consider that the bears on the business have been right for nearly 4 years and yet his investment in the common equity from back in 2011 has been in the green for the majority of that time. Sometimes substantially so. I'd also say that adding additional exposure via the 6% debentures which can convert was brilliant. High yield bond funds don't even yield 6% and are far less sound credits than Blackberry AND you don't get the equity upside if the turnaround is successful.

 

He hasn't made a ton of money on the investment yet, but he hasn't lost anything for being "wrong" and is extremely well positioning should things end up going right. I think that's pretty brilliant in its own right.

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Did anyone else notice that the number of ad pages in the September Maxim issue was up significantly compared to each of the previous four issues, and included some high quality consumer product names?  Has Maxim turned the corner?

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Did anyone else notice that the number of ad pages in the September Maxim issue was up significantly compared to each of the previous four issues, and included some high quality consumer product names?  Has Maxim turned the corner?

 

This is normal for all magazines.September is a bigger issue, Biglari even mentioned this would happen at the annual meeting.

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Personally I would not put much weight on Prem Watsa. He is losing on almost every major equity investment in the past few years. EXCO, SD, BBRY, Eurobank.  :)

 

Bank of Ireland http://www.rte.ie/news/business/2015/0330/690933-fairfax-to-sell-2-9-bank-of-ireland-stake/  ::)

 

This is the only bright spot in his recent 5 years of equity investments. But he is most likely just piggy backing on Wilbur Ross.

I forgot to add RFP into the list.  ::)

 

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