BH - Biglari Holdings

[OracleofCarolina]

It took Ali, 8 rounds to beat Foreman in Zaire. We are only in round 4. A lion doesn't worry about barking chihuahuas.

 

These were some of the thoughts voiced by Biglari at the meeting. I think Larry from Cracker Barrel was present.

[gfp]

Also, if he sells CBRL, the book value will get hit because of taxes and impact his compensation. He will never do it.

 

Why wouldn't book value already reflect deferred taxes as a liability?

[peridotcapital]

 

Also, note that he is doing double dipping - getting paid at both Lion Fund and BH for book value increases.

 

 

Actually, he isn't getting paid twice on the investment profits. The bonus agreement with BH covers only book value increases from operating earnings (the calculation excludes Lion Fund(s) profits to avoid getting paid twice).

[Parsad]

It took Ali, 8 rounds to beat Foreman in Zaire. We are only in round 4. A lion doesn't worry about barking chihuahuas.

 

These were some of the thoughts voiced by Biglari at the meeting. I think Larry from Cracker Barrel was present.

 

Is Sardar planning on losing Biglari Holdings to a Leon Spink's type of company a few years later?  ;D  Maybe Cracker Barrel should acquire Biglari Holdings.

 

I love it when people use great historical winning analogies to explain their defeats, rather than saying we've lost the first four rounds, but are persistent and hope to win eventually. 

 

As if he would prefer to go eight rounds with Cracker Barrel, rather than beat them in the first round!  Cheers!

[OracleofCarolina]

Here are my notes from the BH annual meeting April 2014, St Regis NYC

 

Opening remarks- Biglari showed a slide of the corporate structure and made some remarks about having maximum latitude in capital allocation, looking at cash flow instead of corporate earnings, they are a capital allocation company, no redemption risk which is a big competitive advantage, flexible in their approach, unconventional but logical…and so on

 

First Guard- Immediately knew it was a special company, looked at financials and 2 days later Sardar and Phil flew to Venice Fl to meet Ed Campbell. Ed Campbell is one of the most detailed people Sardar has ever met. Ed is the key to the business, a very special CEO. Sardar knew all the combined ratios for the past couple of years. 2013 -76.4, 2012-79.7, 2011-90.1, 2010- 80.1, 2009-65.4. This company has vitually no float but it is a great way to enter the insurance business and introduce the industry and regulators to Biglari Holdings. Currently insuring 12700 trucks, BH invested $500,000 in new marketing initiatives and needs a combined ratio in the 80’s at worst to make money.

 

International Franchising – signed a deal for 20 units Kuwait(they got the money already), 15 in Pakistan, 50 in Saudi Arabia(1st store should open in a couple of months)

 

Maxim- Feb 14th he was reading about collapsed deal, got financials, then went to Barnes and Noble and bought a copy of Maxim. Made the call and bought the brand. Believes the brand has strong potential and wants to transform the business. This will take at least 2 years and 30 million to make happen. The results will get uglier before they get prettier. Will reposition the magazine by September with better paper quality, uplifting stories, better ethos.  Maxim has a strong brand, in 70 countries, in Russia there is a restaurant and credit card. Sardar stated a prominent group offered to buy a piece of Maxim while he was making the deal and he could have flipped for a quick profit but he declined. 20% of the readers are women, has more subscribers than GQ, Esquire, Rolling Stone but not the ad pages

 

Lion Fund I and II – 500 million under mgmt, they believe the deal is generous to BH shareholders with a “0” management fee and 25% of profits after a 6% hurdle and high watermark.

 

Steak and Shake- Sardar has hired people from outside to restaurant industry to help with the next stage. Hired a Federal Express bar code guy, lady from Advance Auto distribution, JC Penney hr guy, and a Toyota university guy. More licensed SNS sku’s coming, they get 8.6 million in float from SNS gift cards

 

Cracker Barrel- inmates are in charge of the asylum, don’t know why they don’t agree with him, they are like a bunch of Chihuahuas barking, if you are a Lion you don’t bark a lot of arguments, they are spending 5 million to fight him with their cognitive inadequacies and stupidity. This is like the “rumble in the jungle” ’74 Ali-Foreman in Zaire, that went 8 rounds are we are in the 4th round, he would like to make a bid for the whole company but can not. CBRL is an unbelievable brand with outstanding real estate portfolio, it is a Chipotle brand without the Chipotle results. Operationally they are not doing well, COGS is going up, traffic is down. But as long as the stock price goes up, ISS will be on their side. He believes he could reduce their expenses by 30-50 million and increase traffic by 5%. Only way he gets out is if the stock gets way overvalued and forces his hand. Believes CBRl should go international, big potential there.

 

Licensing agreement- put in place to prevent some schmuk from coming in , bureaucrats create problems and chaos, he is not going anywhere but would get a lot of money if forced out, it goes away in 19 years

 

Random Notes – Sardar has improved by looking at so many deals. What could have taken him 5 hours to analyze years ago now takes 5 minutes. He recommended “Creativity Inc” as a recent book. Phil likes any of O’Reilly’s books and Sardar gave him Titan to read.  All in all, I thought a very informative meeting. Sardar is amazing in his ability to rattle off numbers. I have no doubt he is going to make a lot of money, the question is how well will the BH shareholders do.

 

[giofranchi]

Thank you very much, OracleofCarolina! :)

 

Gio

[gg]

OracleofCarolina - was there any indication or hints toward the valuation of First Guard?

[ragu]

Here are my notes from the BH annual meeting April 2014, St Regis NYC

 

Many, many thanks OracleofCarolina!

 

I have no doubt he is going to make a lot of money, the question is how well will the BH shareholders do.

 

Anywhere between merely very good to phenomenal. My bet is on the latter.

 

Best,

Ragu

[APG12]

Here are my notes up to the break. Unfortunately, I had a flight to catch...

BH_2013_AGM.pdf

[Morgan]

Here are my notes up to the break. Unfortunately, I had a flight to catch...

 

Thank you!

[giofranchi]

I have no doubt he is going to make a lot of money, the question is how well will the BH shareholders do.

 

Anywhere between merely very good to phenomenal. My bet is on the latter.

 

Best,

Ragu

 

As I have always said, ragu doesn’t lack conviction in his ideas! ;)

 

Gio

 

[giofranchi]

Here are my notes up to the break. Unfortunately, I had a flight to catch...

 

Thank you!

 

+1

Great job! :)

 

Gio

[ragu]

Here are my notes up to the break. Unfortunately, I had a flight to catch...

 

Unfortunate for those of us interested in this. Next time, please consider taking a red-eye out:) (the meeting is unlikely to be shorter)

 

Seriously fantastic notes! 

 

One question from the section on Maxim: Did you get the sense that there'd be an eventual sale here? Or, does the 100-150 mn number pertain to possible future revenues?

 

Best,

Ragu

[APG12]

Here are my notes up to the break. Unfortunately, I had a flight to catch...

 

Unfortunate for those of us interested in this. Next time, please consider taking a red-eye out:) (the meeting is unlikely to be shorter)

 

Seriously fantastic notes! 

 

One question from the section on Maxim: Did you get the sense that there'd be an eventual sale here? Or, does the 100-150 mn number pertain to possible future revenues?

 

Best,

Ragu

 

Thanks! I will definitely try next time. It didn't sound to me like his end game was a sale. He said BH was already offered more for it than they paid, but they weren't interested in flipping it. The $100-$150mm numbers were really off the cuff. I think his point was only that there is an opportunity to make many multiples of the initial invested capital and that this is a different kind of investment than First Guard.

[dcollon]

Cracker Barrel guides Q3 EPS $1.18-$1.23 vs prior $1.20-$1.30 and FactSet $1.26, raises quarterly dividend

Wednesday, April 30, 2014

 

In conjunction with the 1-May Analyst and Institutional Investor Meeting, the company also reported today its comparable store sales through 28-Apr-14 for the 13-week Q3 ending 2-May-14. ◦April MTD comparable restaurant sales +2.2% with Q3 QTD (0.7%)

 

April MTD comparable retail sales +11.5% with Q3 QTD +0.7%

 

The company believes a continued challenging consumer environment, an increasingly promotional competitive landscape, particularly within the dinner daypart, and an overall reduction in vehicle travel – due both to weather and shortened vacation periods – impacted comparable store traffic, restaurant sales and retail sales during the quarter to date.

 

The company has raised its quarterly dividend to $1.00 from $0.75, payable on 5-Aug-14 to shareholders of record as of 18-Jul-14.

 

[OracleofCarolina]

Biglari mentioned at the meeting that if he was in charge at CBRL, he thought he could easily cut expenses 30-50 million.

 

And today....CBRL announces a "cost-cutting plan" to reduce expenses by at least 50 million by 2017!

[giofranchi]

Biglari mentioned at the meeting that if he was in charge at CBRL, he thought he could easily cut expenses 30-50 million.

 

And today....CBRL announces a "cost-cutting plan" to reduce expenses by at least 50 million by 2017!

 

CBRL’s management will go on copying Mr. Biglari’s ideas… And taking all the merits… Fortunately, we are not here for the glory, but for the money! ;)

 

Gio

 

PS

Bought more BH today :)

 

[petey2720]

In case Sardar reads this site, the attached article reflects the next restaurant chain he should buy.  Privately held Portillo's.  Cash Cow.  Only 38 locations.  If managed properly.....could be huge.

Portillos_For_Sale.pdf

[saltybit]

In case Sardar reads this site, the attached article reflects the next restaurant chain he should buy.  Privately held Portillo's.  Cash Cow.  Only 38 locations.  If managed properly.....could be huge.

 

Wow, can't believe he is selling.... this place is a chicago institution. (makes great italian beef sandwiches)

[OracleofCarolina]

In Cracker Barrel news...what do you folks think of the 1 plate cost cutting idea?

 

 

Genius! Haha

[gg]

In case Sardar reads this site, the attached article reflects the next restaurant chain he should buy.  Privately held Portillo's.  Cash Cow.  Only 38 locations.  If managed properly.....could be huge.

 

Agreed that it's a great brand, and for the right price, could be a great fit in the BH portfolio.

 

Not sure if there is much they could do to improve operations though. I used to live and work near the River North location in the city, and I can't imagine it being managed any better. Definitely one of the most impressive retail establishments I ever frequented. The location is at a real busy intersection, and they probably have 100+ drive throughs during rush hour each day and have several employees standing outside in the car lines to take the orders as soon as cars pulled up to maximize the speed. Inside, it also seems to be an incredibly well-oiled machine--always so many people yet the lines are super quick and the food is pretty solid

[petey2720]

When I said managed properly, I meant:

 

1). Don't change any of the existing operations.

 

2).  Manage their growth into new markets responsibly. 

[bargainman]

When I said managed properly, I meant:

 

1). Don't change any of the existing operations.

 

2).  Manage their growth into new markets responsibly.

 

I think it would be a much better fit for Markel ventures or Fairfax.

[Parsad]

When I said managed properly, I meant:

 

1). Don't change any of the existing operations.

 

2).  Manage their growth into new markets responsibly.

 

I think it would be a much better fit for Markel ventures or Fairfax.

 

+1!!!  Can you imagine...Portillo's by Biglari!  Cheers!

[giofranchi]

I think it would be a much better fit for Markel ventures or Fairfax.

 

Though I would love to see FFH purchase such an outstanding business, why do you say “a much better fit”?

 

Gio