giofranchi Posted September 24, 2013 Share Posted September 24, 2013 I had exercised 100% of my over-subscription privileges and I got a 10.8% allotment. giofranchi Link to comment Share on other sites More sharing options...
giofranchi Posted September 25, 2013 Share Posted September 25, 2013 wellmont, I attach a series of articles in which the author summarizes the whole Biglari’s story until now. Hope this helps, giofranchibiglari-holdings-sardar-biglari-bet-the-jokey-part1.pdfbiglari-holdings-inc-sardar-biglari-bet-the-jokey-part2.pdfbiglari-holdings-inc-bet-the-jokey-part3.pdfbiglari-holdings-inc-bet-on-the-jokey-part4.pdfbiglari-holdings-inc-bet-the-jockey-part5.pdfbiglari-holdings-inc-bet-on-the-jokey-part6.pdfbiglari-holdings-inc-bet-the-jokey-part7.pdfbiglari-holdings-inc-bet-the-jockey-part8.pdf Link to comment Share on other sites More sharing options...
Kuhndan Posted September 27, 2013 Share Posted September 27, 2013 GIo, I had a caveat in Part VIII of the Seeking Alpha articles that it would be important to closely monitor Biglari's compenpensation. I'm not going to write Part IX, but the sale of Biglari Capital back to Sardar and the five year tie up of BH cash in the fund was a step too far for me. He gets to keep the original incentive compensation plan on the operating company and gains a hedge fund compensation arrangement as well. His take out of the company will serve to mute future returns going forward. Best of luck. Link to comment Share on other sites More sharing options...
giofranchi Posted September 27, 2013 Share Posted September 27, 2013 GIo, I had a caveat in Part VIII of the Seeking Alpha articles that it would be important to closely monitor Biglari's compenpensation. I'm not going to write Part IX, but the sale of Biglari Capital back to Sardar and the five year tie up of BH cash in the fund was a step too far for me. He gets to keep the original incentive compensation plan on the operating company and gains a hedge fund compensation arrangement as well. His take out of the company will serve to mute future returns going forward. Best of luck. Hi kuhndan, what a pity you won’t write Part IX… you really should! ;) Do you think Mr. Biglari wants to get control over BH and grow the company for many years to come, or is he only aiming to get rich through the compensation plan? Thank you! giofranchi Link to comment Share on other sites More sharing options...
giofranchi Posted September 27, 2013 Share Posted September 27, 2013 ....He gets to keep the original incentive compensation plan on the operating company and gains a hedge fund compensation arrangement as well..... This bothered me. So, I did not subscribe to rights issue, sold BH rights and bought into SHLD. Compensation structure must be changed. Yes, you might be right! But I wouldn’t swap fast-food and fast-food franchising for retailing, only because of the compensation structure. Of course, I don’t follow closely SHLD, and I cannot say how cheap the stock really is right now. Therefore, if you swapped because SHLD right now is a great bargain, that’s a completely different story! ;) giofranchi Link to comment Share on other sites More sharing options...
APG12 Posted September 27, 2013 Share Posted September 27, 2013 ....He gets to keep the original incentive compensation plan on the operating company and gains a hedge fund compensation arrangement as well..... This bothered me. So, I did not subscribe to rights issue, sold BH rights and bought into SHLD. Compensation structure must be changed. There was over-subscription value in the rights that was immediately lost upon sale. I guess it's really not a big deal because it only amounted to ~10% of the 20% subscription, or ~2% of your position size. Anyhoo, that statement sounds kind of misleading. He doesn't get compensated twice- he removed the CBRL stock from the operating company and put it into the hedge fund. He essentially removed the compensation cap. Whatever you think of his compensation, the fact remains that he doesn't get a big pay day unless the shareholders do well too. That's my bottom line on it. Link to comment Share on other sites More sharing options...
giofranchi Posted September 27, 2013 Share Posted September 27, 2013 Anyhoo, that statement sounds kind of misleading. He doesn't get compensated twice- he removed the CBRL stock from the operating company and put it into the hedge fund. He essentially removed the compensation cap. Whatever you think of his compensation, the fact remains that he doesn't get a big pay day unless the shareholders do well too. That's my bottom line on it. Yes! But it cannot go on changing so frequently, don’t you agree? I really want him to get full control over BH, so that he might stop worrying about control and concentrate only on achieving the best economic results possible. The faster we get there, the better. Then, I would want to see things stabilize! giofranchi Link to comment Share on other sites More sharing options...
wescobrk Posted September 27, 2013 Share Posted September 27, 2013 Cbrl is allowing a vote for his 20 dollar dividend. They advise against it but said in the proxy they will do it if more than half of shareholders vote for it. We know 20 percent is for it. I would be surprised if more than half didn't vote for it. Bh will have another almost hundred million. It's been 5 years and they have only bought western so far. Maybe we'll finally see an acquisition in the next few months. Link to comment Share on other sites More sharing options...
APG12 Posted September 27, 2013 Share Posted September 27, 2013 Yes! But it cannot go on changing so frequently, don’t you agree? I really want him to get full control over BH, so that he might stop worrying about control and concentrate only on achieving the best economic results possible. The faster we get there, the better. Then, I would want to see things stabilize! giofranchi Well, I don't see what you mean by 'changing so frequently'. I think the transaction will result in a greater pay day for Biglari and it also cleans up the accounting and makes the company easier to value correctly. There's nothing wrong with change in general so long as it's done for a rational purpose. They could transfer ownership back and forth all day but it's not going to change the economic outcome of the situation (other than his comp). The important thing is the investment strategy which has not been changing. Biglari already has full effective control over BH so I don't think him gaining majority voting share (if that's what you mean by full control) will change much. BH's investments have been performing spectacularly and I don't think the distraction of the hedge fund transaction can be blamed for anything either. The CBRL dividend vote is really just an issue of what debt level is safe for CBRL. Management has been paying down CBRL debt, and given the atrocious return on capital that this entails, that would imply that they believe the current debt level is already too high. It could be that Biglari is too aggressive with leverage or CBRL is too conservative. Has anyone looked into historical/safe restaurant leverage amounts? Link to comment Share on other sites More sharing options...
LC Posted September 27, 2013 Share Posted September 27, 2013 Here are the 2012 coverage ratios for a few others: Wendy's coverage is about 1x Jack in the Box is 7x Burger king's is 2x Mcdonalds is 16x Denny's is about 3x Sonic is about 3x CBRL is presently about 5.5x...a $20 dividend (if they can get the debt @ 4%) would drop the coverage ratio to just under 4x 2012's EBIT, or about 3x if we take a more normalized 5 years of history. Link to comment Share on other sites More sharing options...
APG12 Posted September 27, 2013 Share Posted September 27, 2013 Here are the 2012 coverage ratios for a few others: Wendy's coverage is about 1x Jack in the Box is 7x Burger king's is 2x Mcdonalds is 16x Denny's is about 3x Sonic is about 3x CBRL is presently about 5.5x...a $20 dividend (if they can get the debt @ 4%) would drop the coverage ratio to just under 4x 2012's EBIT, or about 3x if we take a more normalized 5 years of history. Ah, awesome! I'll be taking a good look at this when I get some time. Did you happen to take into account operating leases? I don't look forward to untangling all of that. :-\ Link to comment Share on other sites More sharing options...
wescobrk Posted September 27, 2013 Share Posted September 27, 2013 Biglari already has full effective control over BH" I disagree with this. He's failed 3x getting the votes for the b shares (postponed special meeting) I agree he can pretty much do anything else though. Link to comment Share on other sites More sharing options...
LC Posted September 27, 2013 Share Posted September 27, 2013 Unfortunately not! It was a quick back of the envelope calc for a friend just to see what the I/S would look like after Sardar's proposed dividend. Link to comment Share on other sites More sharing options...
APG12 Posted September 27, 2013 Share Posted September 27, 2013 Biglari already has full effective control over BH" I disagree with this. He's failed 3x getting the votes for the b shares (postponed special meeting) I agree he can pretty much do anything else though. True! There are some things he can't do, hence the compensation cap. Unfortunately not! It was a quick back of the envelope calc for a friend just to see what the I/S would look like after Sardar's proposed dividend. Ah shoot. I was hoping I could be lazy. heh. Link to comment Share on other sites More sharing options...
nwoodman Posted September 28, 2013 Share Posted September 28, 2013 Cbrl is allowing a vote for his 20 dollar dividend. They advise against it but said in the proxy they will do it if more than half of shareholders vote for it. We know 20 percent is for it. I would be surprised if more than half didn't vote for it. Bh will have another almost hundred million. It's been 5 years and they have only bought western so far. Maybe we'll finally see an acquisition in the next few months. Fingers crossed that is about to change and he makes Cheldin at UNAM an offer he can't refuse, like $17-$18 per share ;) cheers nwoodman Link to comment Share on other sites More sharing options...
ragu Posted October 1, 2013 Share Posted October 1, 2013 [but it cannot go on changing so frequently, don’t you agree? giofranchi, I believe the timing of this change was linked to the rights offering. To the best of my understanding, the BH stock held through the Lion Fund on behalf of the LP's (prior to the sale back to Sardar) would not have been eligible to participate in the rights offering(seeing as it was accounted for as Treasury stock). Best, Ragu Link to comment Share on other sites More sharing options...
giofranchi Posted October 2, 2013 Share Posted October 2, 2013 giofranchi, I believe the timing of this change was linked to the rights offering. To the best of my understanding, the BH stock held through the Lion Fund on behalf of the LP's (prior to the sale back to Sardar) would not have been eligible to participate in the rights offering(seeing as it was accounted for as Treasury stock). Best, Ragu Thanks, ragu! This of course makes a lot of sense. Somehow, I hadn’t thought of it… ::) Cheers! giofranchi Link to comment Share on other sites More sharing options...
ragu Posted October 2, 2013 Share Posted October 2, 2013 This of course makes a lot of sense. giofranchi, Welcome. I fear I didn't get this at first either. Phil had been pretty clear at the 2012 AM that the compensation cap would go away. So, my initial thought here was that this was a way to remove the cap and avoid a shareholder vote that wasn't likely to be favourable at any rate (time was also running out on Sardar's option to buy it back from BH). A day or two back, I ran into a filing that detailed the Lion Fund's change in shares owned as a result of the rights offering and it struck me that the rights could not have been exercised if the LF were still owned by BH. I find this handy when I analyze Sardar's actions: Never attribute to malice that which can be adequately explained by rationality. Best, Ragu Link to comment Share on other sites More sharing options...
giofranchi Posted October 2, 2013 Share Posted October 2, 2013 I find this handy when I analyze Sardar's actions: Never attribute to malice that which can be adequately explained by rationality. Best, Ragu I couldn’t agree with this more!! (even though we are the only ones... ;D ;D) giofranchi Link to comment Share on other sites More sharing options...
ragu Posted October 2, 2013 Share Posted October 2, 2013 I couldn’t agree with this more!! (even though we are the only ones... ;D ;D) I console myself with the knowledge that we're right. Best, Ragu Link to comment Share on other sites More sharing options...
wescobrk Posted October 3, 2013 Share Posted October 3, 2013 I believe the timing of this change was linked to the rights offering. To the best of my understanding, the BH stock held through the Lion Fund on behalf of the LP's (prior to the sale back to Sardar) would not have been eligible to participate in the rights offering(seeing as it was accounted for as Treasury stock)." Are you sure? The lion fund participated in multiple rights offerings when it had a huge stake in western sizzlin. Western didn't own the lion fund then, granted. Seems like a big oversight by someone if that is true. On a separate note, I don't expect to see any acquisition news until after the Cracker Barrel meeting, more specifically, after he receives the 95 million from the special dividend. His letter today by the way removes his two week notice to shareholders for selling cbrl. He can sell cbrl effective nov 15th unless he gets his board seats which looks very unlikely. The special dividend I expect will pass though. Link to comment Share on other sites More sharing options...
ragu Posted October 3, 2013 Share Posted October 3, 2013 wescobrk, A request. Could you please use the quote tags to enclose portions of the message that you are responding to? It'd make your responses much more readable. The lion fund participated in multiple rights offerings when it had a huge stake in western sizzlin. Western didn't own the lion fund then, granted. My understanding is that's precisely the difference between the 2 situations. Seems like a big oversight by someone if that is true. I am not sure I understand this. Big oversight by who and on what? His letter today by the way removes his two week notice to shareholders for selling cbrl. I saw the proxy solicitation after I saw your message. Sardar's notice of revocation suggests he is unlikely to get the nod of the proxy advisory firms again. It defies logic that they should advise against Sardar on the board. Mind-boggling doesn't even begin to describe it. They must've either read none of Sardar's correspondence on this issue or they simply don't understand what he has plainly demonstrated: CBRL management is duplicitous, been unable to address operational issues at a satisfactory pace and don't have the foggiest clue about capital allocation. Best, Ragu Link to comment Share on other sites More sharing options...
APG12 Posted October 7, 2013 Share Posted October 7, 2013 Fingers crossed that is about to change and he makes Cheldin at UNAM an offer he can't refuse, like $17-$18 per share ;) cheers nwoodman While I also hope that's the case, I wouldn't expect the purchase price to be so high. I also don't think the risk/reward of purchasing UNAM right now is very good. UNAM is an EXTREMELY conservatively run company. Their investment portfolio is 85% in treasuries, 9% in CDs and 6% in money market accounts. The portfolio is yielding a measly ~1.2%!! Under current management, the stock is not worth book value even though it's trading close to that. I could see buying UNAM if you thought it was fairly valued to undervalued with the hope that biglari buys it and the valuation as your downside protection. However, I just don't think the downside protection is there. Money invested in this company at BV is probably not going to provide a very good long-term rate of return in my opinion. :-\ Edit: Fixed the quote. Link to comment Share on other sites More sharing options...
wescobrk Posted October 7, 2013 Share Posted October 7, 2013 wescobrk, "A request. Could you please use the quote tags to enclose portions of the message that you are responding to? It'd make your responses much more readable." Ragu, I usually use my phone and I noticed that although the quote tags appeared at the end of someone else's post it didn't included the quotes at the beginning. I'll be sure it isn't truncated in the future. Thanks for pointing it out. My statement about being a big oversight is regarding TLF did multiple rights offerings in the past then as the new comp agreement was passed it didn't allow TLF to participate in rights offerings. My point was that was a big oversight since Sardar knew he would be doing rights offerings with BH as well (or at least he would want to have the option) Link to comment Share on other sites More sharing options...
OracleofCarolina Posted October 17, 2013 Share Posted October 17, 2013 http://files.shareholder.com/downloads/CBRL/2690748385x0x697771/5D849123-9CA0-417B-9CD3-1090832B40EA/2013_Investor_Presentation_Final_16-Oct-2013.pdf pretty interesting take down of Biglari Holdings and corporate governance starting on page 28 Cheers! Link to comment Share on other sites More sharing options...
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