BH - Biglari Holdings

[CalvinL]

http://www.biglariholdings.com/letters/2015/2015.pdf

 

;)

[Jurgis]

http://www.biglariholdings.com/letters/2015/2015.pdf

 

;)

 

WTF?

[Picasso]

It's like art.  The negative space says more about the business than any words to fill up that space could convey.  Beautiful.

[CalvinL]

Just a placeholder under the same pattern...I guess we will have to wait for the letter when its ready

[Jurgis]

It's like art.  The negative space says more about the business than any words to fill up that space could convey.  Beautiful.

 

I was expecting a cigar. Color me disappointed.

[OracleofCarolina]

Actual letter is up now.

[awindenberger]

Well, at this point investors have two choices:

 

1. Drink Biglari's Koolaid

 

2. Don't own the stock

 

I've always enjoyed the flavor of Biglari's Koolaid, and the recent letter was more of the same for me. Happy to be a shareholder, but I also understand its not for everyone.

[racemize]

"whereas Maxim requires our initially putting the milk into the cow"

 

Couldn't he have gone with something a little better?  Like we need to feed the cow so it can produce milk?  No one puts milk in a cow!

[jschembs]

"whereas Maxim requires our initially putting the milk into the cow"

 

Couldn't he have gone with something a little better?  Like we need to feed the cow so it can produce milk?  No one puts milk in a cow!

 

I believe this quote reflected his desires to have a more hands-on approach with the talent.

[racemize]

"whereas Maxim requires our initially putting the milk into the cow"

 

Couldn't he have gone with something a little better?  Like we need to feed the cow so it can produce milk?  No one puts milk in a cow!

 

I believe this quote reflected his desires to have a more hands-on approach with the talent.

 

oh my.

 

So, it has been a while since I read this thread.  Reading the letter, it seems like investments are now run back through Lion Fund.  So is his book value compensation scheme still in place or is it gone now?  If it is still in place, wouldn't the gains after Lion Fund fees he takes be counted towards the book value compensation?

[NBL0303]

"whereas Maxim requires our initially putting the milk into the cow"

 

Couldn't he have gone with something a little better?  Like we need to feed the cow so it can produce milk?  No one puts milk in a cow!

 

I believe this quote reflected his desires to have a more hands-on approach with the talent.

 

oh my.

 

So, it has been a while since I read this thread.  Reading the letter, it seems like investments are now run back through Lion Fund.  So is his book value compensation scheme still in place or is it gone now?  If it is still in place, wouldn't the gains after Lion Fund fees he takes be counted towards the book value compensation?

 

Oh my indeed.  You have quite a lot of reading to do to catch up on the company.  The investments were transferred to the Lion Fund three years ago.  A lot has happened since then.

[AzCactus]

I'm not quite sure if this company is ran for the owners of the business or exclusively for Biglari himself. 

[gg]

"whereas Maxim requires our initially putting the milk into the cow"

 

Couldn't he have gone with something a little better?  Like we need to feed the cow so it can produce milk?  No one puts milk in a cow!

 

I believe this quote reflected his desires to have a more hands-on approach with the talent.

 

+1

 

It's only February, but this one just might be the post of the year.

[Poor Charlie]

Have a question for the longs:

 

How do you feel about the majority of a BH's (a C-Corp) capital being tied up in a hedge fund and therefore subject to double taxation? 

 

From my perspective I'd rather have (non-insurance related) capital retained at the holding company to invest in (a) their current businesses or (b) buy new wholly owned businesses.  I don't mind Sardar's override but it seems like between his take and the double taxation his public investments will have to do very well (+500bps) just to match the indexes. 

[racemize]

"whereas Maxim requires our initially putting the milk into the cow"

 

Couldn't he have gone with something a little better?  Like we need to feed the cow so it can produce milk?  No one puts milk in a cow!

 

I believe this quote reflected his desires to have a more hands-on approach with the talent.

 

oh my.

 

So, it has been a while since I read this thread.  Reading the letter, it seems like investments are now run back through Lion Fund.  So is his book value compensation scheme still in place or is it gone now?  If it is still in place, wouldn't the gains after Lion Fund fees he takes be counted towards the book value compensation?

 

Oh my indeed.  You have quite a lot of reading to do to catch up on the company.  The investments were transferred to the Lion Fund three years ago.  A lot has happened since then.

 

That was a very helpful and informative post. 

[NBL0303]

 

That was a very helpful and informative post.

 

As was that one.

[valueyoda]

I am not sure whether he is ready to give up his Maxim pet project this year, and I am definitely not sure about his projections that the magazine will earn a profit in 2016. So far, it eats away all operating income. In addition, the restaurant earnings are peaking as well, as Western Sizzling is currently overearning and Steak and Shake's SSS is slowing down considerably. Also, what is the upside of Cracker Barrel at this point? I don't see any potential for a rerating of the stock anytime soon.

[racemize]

 

That was a very helpful and informative post.

 

As was that one.

 

Now that you've taken the time to make two posts seemingly only to berate me, do you feel like answering the simple question I asked in the first place that would have taken you less time? 

 

Edit: For anyone that is interested, after reading back through the thread for an hour or so, it appears that the incentive bonus for BH excludes investment returns from the LF. 

[kab60]

I have no milk in this cow but interesting how he says him now having complete ownership of BH means he can promise operating companies a permanent home.

[NBL0303]

 

That was a very helpful and informative post.

 

As was that one.

 

Now that you've taken the time to make two posts seemingly only to berate me, do you feel like answering the simple question I asked in the first place that would have taken you less time? 

 

Edit: For anyone that is interested, after reading back through the thread for an hour or so, it appears that the incentive bonus for BH excludes investment returns from the LF.

 

Didn't intend to berate you or initially to even knock you at all - I was trying to simply state that there is a plethora of reading available to figure out the company and like any investor I assumed you were going to begin reading through their security filings and this thread as any investor would when thinking about a company.

[Picasso]

Didn't you delete all your posts on this thread NBL?  Makes it harder for someone like racemize to follow your logic.

[NBL0303]

Didn't you delete all your posts on this thread NBL?  Makes it harder for someone like racemize to follow your logic.

 

There is still a plethora of information on this thread about BH and there was nothing special about my long-winded thoughts and valuation of BH.

[gaddis]

Perhaps someone on this board could help me understand why Biglari is able to vote the BH shares in LFII, why such shares remain outstanding, and why Biglari is able to receive an incentive reallocation on gains of Company common stock (pg. 48 of the AR)?  Indiana BCL § 23-1-27-2(a) says,

 

(a) A corporation may acquire its own shares. Unless a resolution of the board of directors or the corporation's articles of incorporation provide otherwise, shares so acquired constitute authorized but unissued shares.

 

I'm unable to find in the corporation's articles of incorporation a provision for repurchased common stock, so BH should be subject to this paragraph of IN BCL. 

 

Wouldn't "outstanding" shares have to first be issued?  And if the shares are not legally outstanding, could they be voted?

 

I understand that BH opted out of the Indiana Control Share Acquisitions Statute (§ 23-1-42-1) with the tender offer, but 23-1-27 would seem to apply.  What am I missing?

 

 

[NBL0303]

Perhaps someone on this board could help me understand why Biglari is able to vote the BH shares in LFII, why such shares remain outstanding, and why Biglari is able to receive an incentive reallocation on gains of Company common stock (pg. 48 of the AR)?  Indiana BCL § 23-1-27-2(a) says,

 

(a) A corporation may acquire its own shares. Unless a resolution of the board of directors or the corporation's articles of incorporation provide otherwise, shares so acquired constitute authorized but unissued shares.

 

I'm unable to find in the corporation's articles of incorporation a provision for repurchased common stock, so BH should be subject to this paragraph of IN BCL. 

 

Wouldn't "outstanding" shares have to first be issued?  And if the shares are not legally outstanding, could they be voted?

 

I understand that BH opted out of the Indiana Control Share Acquisitions Statute (§ 23-1-42-1) with the tender offer, but 23-1-27 would seem to apply.  What am I missing?

 

Good question.  Firstly, there are numerous legal technicalities implicated by this whole arrangement.  The simple answer is that even taken at face value without considering any other statutes, rules, regulations or policies, the statutory provision that you cite would allow for the voting arrangement by mode of a simple board resolution.  Most public company's boards pass hundreds of resolutions a year and very few of them are in the public record.  So you could imagine that the board via a two sentence resolution could allow those shares to be voted - at least according to the statute you referenced.

[mcmaaaaath]

Perhaps someone on this board could help me understand why Biglari is able to vote the BH shares in LFII, why such shares remain outstanding, and why Biglari is able to receive an incentive reallocation on gains of Company common stock (pg. 48 of the AR)?  Indiana BCL § 23-1-27-2(a) says,

 

(a) A corporation may acquire its own shares. Unless a resolution of the board of directors or the corporation's articles of incorporation provide otherwise, shares so acquired constitute authorized but unissued shares.

 

I'm unable to find in the corporation's articles of incorporation a provision for repurchased common stock, so BH should be subject to this paragraph of IN BCL. 

 

Wouldn't "outstanding" shares have to first be issued?  And if the shares are not legally outstanding, could they be voted?

 

I understand that BH opted out of the Indiana Control Share Acquisitions Statute (§ 23-1-42-1) with the tender offer, but 23-1-27 would seem to apply.  What am I missing?

 

Good question.  Firstly, there are numerous legal technicalities implicated by this whole arrangement.  The simple answer is that even taken at face value without considering any other statutes, rules, regulations or policies, the statutory provision that you cite would allow for the voting arrangement by mode of a simple board resolution.  Most public company's boards pass hundreds of resolutions a year and very few of them are in the public record.  So you could imagine that the board via a two sentence resolution could allow those shares to be voted - at least according to the statute you referenced.

 

But more directly, the shares have not been acquired by the company-- they were acquired by the Lion Fund I and Lion Fund II, which are private investment vehicles.