Redskin212 Posted February 22, 2013 Share Posted February 22, 2013 Biglari gets exposure on CNBC's home page for his ongoing dispute with Cracker Barrel http://www.cnbc.com/id/100484937 Link to comment Share on other sites More sharing options...
wescobrk Posted February 22, 2013 Share Posted February 22, 2013 Biglari gets exposure on CNBC's home page for his ongoing dispute with Cracker Barrel http://www.cnbc.com/id/100484937 The article mentions it has a market cap of 472 million. He references things that happened a week ago but we haven't seen a market cap since nov of 470 million. This guy is off almost 20%. It takes two seconds to verify that. He writes for cnbc? Link to comment Share on other sites More sharing options...
DCG Posted February 22, 2013 Share Posted February 22, 2013 He writes for cnbc? Since when would you expect high-quality reporting from CNBC? Link to comment Share on other sites More sharing options...
wescobrk Posted February 22, 2013 Share Posted February 22, 2013 Touché Link to comment Share on other sites More sharing options...
giofranchi Posted February 27, 2013 Share Posted February 27, 2013 Biglari Holdings Investors Now Getting Core Steak'N Shake Business For Just $125 Million giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynesbiglari-holdings-investors-now-getting-core-steak-n-shake-business-for-just-125-million.pdf Link to comment Share on other sites More sharing options...
Redskin212 Posted February 27, 2013 Share Posted February 27, 2013 Looks like Biglari has found a winner in CBRL. It will be interesting to see how this fight with CBRL's management is finally resolved. Cracker Barrel Old Country Store, Inc. - Shares in the operator of Cracker Barrel restaurants surged nearly 13% today to hit a new all-time high of $75.45 during the first half of the session, after the company posted better-than-expected earnings and revenue and raised earnings guidance for fiscal year 2013. Fresh interest in front month calls on CBRL suggests one or more traders are positioning for shares in the name to extend gains in the near term. Bullish strategists traded more than 180 calls at the Mar. $80 strike against open interest of 16 contracts, buying most of the volume for an average premium of $0.25 apiece in the early going this morning. Call buyers may profit at expiration in two weeks in the event that shares in Cracker Barrel rally 6.0% over today's high of $75.45 to top the average breakeven point at $80.25. Link to comment Share on other sites More sharing options...
siddharth18 Posted February 28, 2013 Share Posted February 28, 2013 So what's Biglari's average purchase price on his 20% stake? UPDATE: Did find from his shareholder letter that his first 17% stake was at avg price of ~$48/share http://i.imgur.com/wk7xpma.png Link to comment Share on other sites More sharing options...
Kuhndan Posted March 7, 2013 Share Posted March 7, 2013 I know this won't be popular with some on this board, put I have a series of eight articles on Biglari Holdings coming out on Seeking Alpha. The first was published today with the remaining articles to follow over the next two weeks. I've been a buyer of BH for the past three years (with minimal profits to show for my efforts to date) but I am convinced that Sardar has something special. The link is below: http://seekingalpha.com/article/1251201-biglari-holdings-sardar-biglari-bet-the-jockey-part-i?source=yahoo Link to comment Share on other sites More sharing options...
bookie71 Posted March 7, 2013 Share Posted March 7, 2013 I wish both you and he all the luck, but I like to sleep at night, instead of wondering what my "partner" is doing to change the rules. Link to comment Share on other sites More sharing options...
Parsad Posted March 7, 2013 Share Posted March 7, 2013 I wish both you and he all the luck, but I like to sleep at night, instead of wondering what my "partner" is doing to change the rules. Yup. He's definitely one to watch and there is a story there to tell, but shareholders will have to watch their back as well and may end up with their own story to tell at some point. He'll be rich, but I choose not to partner with people like that. Mohnish said it best in his interview a little while ago..."Lose money, you lose nothing. Lose health, you lose something. Lose reputation, all is lost." Sardar has lost one aspect of his reputation...that he puts his shareholders ahead of himself...and that will not come back to him. Cheers! Link to comment Share on other sites More sharing options...
siddharth18 Posted March 7, 2013 Share Posted March 7, 2013 Sardar may get no respect from the peanut gallery but he still has a following of a microcosm among those that pride themselves of being value investors. And that's all he needs honestly. If he's measuring himself against himself and his past (and this, I believe, is the most objective way of measuring oneself) he's done quite well. In 2000's he was barely worth a million (from selling his first venture) and fast forward to 2013 and he's worth a multiple of that, has his own springboard and he's not completely off-track from where he wants to be. Granted, he is not as humble as Warren Buffett, I'm sure he thinks that he doesn't need to be. In some ways, he's the antithesis of Buffett in that Biglari choses to be hostile (think proxy fights) where Warren chose to be humble (think keeping same leadership). Sardar has got it all figured out in his head and so far he has made out well personally, even while his stock continues to languish for over 3 years (which is a story unto itself). Link to comment Share on other sites More sharing options...
ragu Posted March 7, 2013 Share Posted March 7, 2013 I know this won't be popular with some on this board, put I have a series of eight articles on Biglari Holdings coming out on Seeking Alpha. The first was published today with the remaining articles to follow over the next two weeks. Kuhndan, I quite enjoyed it and look forward to the rest. [...]but I am convinced that Sardar has something special. Likewise. I have high expectations of Sardar. Paradoxically, I expect that he will surpass them. Best, Ragu Link to comment Share on other sites More sharing options...
giofranchi Posted March 7, 2013 Share Posted March 7, 2013 I know this won't be popular with some on this board, put I have a series of eight articles on Biglari Holdings coming out on Seeking Alpha. The first was published today with the remaining articles to follow over the next two weeks. I've been a buyer of BH for the past three years (with minimal profits to show for my efforts to date) but I am convinced that Sardar has something special. The link is below: http://seekingalpha.com/article/1251201-biglari-holdings-sardar-biglari-bet-the-jockey-part-i?source=yahoo Kuhndan, I agree with most of the criticisms on this board regarding Mr. Biglari. But I like the way he has conceived and structured Biglari Holdings very much. And I have an investment in BH, that I intend to keep, unless it becomes seriously overvalued. It is true that BH stock price has gone sideways for almost three years. But the reason is overvaluation at the beginning of the three years period. BV per share, instead, has continued growing handsomely. Right now overvaluation is not an issue anymore. Actually, I think BH is quite undervalued. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Link to comment Share on other sites More sharing options...
Parsad Posted March 7, 2013 Share Posted March 7, 2013 It's not undervalued, but it is cheaper than a year ago as CBRL has gone up. Growth at SNS has been somewhat flat, but much of the industry has also been the same. With that much captive capital, I would have thought he would have picked more compelling and even cheaper businesses, rather than go after CBRL. Nonetheless, he's got a lot of capital that he can do some damage with. Cheers! Link to comment Share on other sites More sharing options...
giofranchi Posted March 7, 2013 Share Posted March 7, 2013 It's not undervalued, but it is cheaper than a year ago as CBRL has gone up. Growth at SNS has been somewhat flat, but much of the industry has also been the same. With that much captive capital, I would have thought he would have picked more compelling and even cheaper businesses, rather than go after CBRL. Nonetheless, he's got a lot of capital that he can do some damage with. Cheers! Anything that trades at 1.25 x BV per share, and has the ability to grow BV per share at a 15% CAGR for the next 20 years, is undervalued. And those are my assumptions for Biglari Holdings. Although they surely might be wrong (nothing is certain!), I clearly understand how and why BH might succeed in meeting those goals. I don’t invest in businesses, where I don’t understand how and why they might be able to increase BV per share at a 15% CAGR for the next 10 to 20 years. That’s why my circle of competence is so small! :) I don’t like looking for things that are “statistically cheap”, 0.5 x BV per share or something like that, if I don’t understand them very well. Like Mr. E. H. Harriman was used to saying: “I am not interested in ten per cent: I want something that will grow.” And, if BH really succeeds in growing, 1.25 x BV per share will prove to be a true bargain. That being said, I am well aware of Mr. Biglari’s flaws, and BH stays a relatively small position in my firm’s portfolio of businesses. As an aside, I believe Mr. Biglari hasn’t picked “more compelling and even cheaper businesses, rather than go after CBRL”, exactly because he knows his circle of competence very well, and doesn’t stray outside: Our approach to purchasing stocks is to concentrate capital into very few concerns. We focus our attention and capital in an attempt to increase returns yet concomitantly reduce investment risk. Therefore, we limit our appraisals and allocations to businesses we can rationally assess, immersing ourselves in understanding a business rather than attempting to study many shallowly. As a consequence, our range of investments may be narrow, but within it we must be supreme. Analysis that is a mile wide and an inch deep is fool’s gold. We purchase stocks for investment not speculation. Our old-fashioned, long-term investment approach is one that suits us. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Link to comment Share on other sites More sharing options...
wescobrk Posted March 7, 2013 Share Posted March 7, 2013 Are you factoring in the incentive comp on 15% cagr? Shareholders will probably receive closer to 12%. Link to comment Share on other sites More sharing options...
wescobrk Posted March 7, 2013 Share Posted March 7, 2013 Incidentally, Buffett would have received about 3 billion if he had sardar's agreement for, in his words, a subpar year. Granted he had that agreement when he had the hedge fund but a public company with permanent capital is different and the fact that the average roe for a corporation is 10-12% means there is quite a bit of compensation above the 6% hurdle for even an average company. Link to comment Share on other sites More sharing options...
giofranchi Posted March 7, 2013 Share Posted March 7, 2013 Are you factoring in the incentive comp on 15% cagr? Shareholders will probably receive closer to 12%. Increase in BV per share by definition is the increase in equity divided by the number of shares outstanding, after all costs are subtracted. It follows that a 15% CAGR in BV per share is by definition after incentive comp. You might view it as rightly due, or you might judge it much too high, anyway incentive comp is just another cost, right? giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Link to comment Share on other sites More sharing options...
rmitz Posted March 7, 2013 Share Posted March 7, 2013 Sardar may get no respect from the peanut gallery but he still has a following of a microcosm among those that pride themselves of being value investors. And that's all he needs honestly. If he's measuring himself against himself and his past (and this, I believe, is the most objective way of measuring oneself) he's done quite well. In 2000's he was barely worth a million (from selling his first venture) and fast forward to 2013 and he's worth a multiple of that, has his own springboard and he's not completely off-track from where he wants to be. Granted, he is not as humble as Warren Buffett, I'm sure he thinks that he doesn't need to be. In some ways, he's the antithesis of Buffett in that Biglari choses to be hostile (think proxy fights) where Warren chose to be humble (think keeping same leadership). Sardar has got it all figured out in his head and so far he has made out well personally, even while his stock continues to languish for over 3 years (which is a story unto itself). Two things. 1) Buffett was not always Mr. Nice Guy. 2) The best measure of a man is the size of his bank account? I reject that entirely. Link to comment Share on other sites More sharing options...
udravi Posted March 7, 2013 Share Posted March 7, 2013 Incidentally, Buffett would have received about 3 billion if he had sardar's agreement for, in his words, a subpar year. Granted he had that agreement when he had the hedge fund but a public company with permanent capital is different and the fact that the average roe for a corporation is 10-12% means there is quite a bit of compensation above the 6% hurdle for even an average company. I own a few BH shares and have been following this debate. I am by no means an expert, but excessive compensation is a problem at a vast majority of companies. If I understand correctly, Sardar's incentive compensation is limited to 10 million USD. If nothing else he won't get overcompensated if he underperforms. Link to comment Share on other sites More sharing options...
wescobrk Posted March 7, 2013 Share Posted March 7, 2013 I am by no means an expert, but excessive compensation is a problem at a vast majority of companies. If I understand correctly, Sardar's incentive compensation is limited to 10 million USD. If nothing else he won't get overcompensated if he underperforms." That's true but it was originally proposed 5% hurdle and no cap. That 10 million cap isn't inflation adjusted and Sardar has hinted it will be removed. You need to factor in the probability of it being removed because it's a matter of when not if. Link to comment Share on other sites More sharing options...
wescobrk Posted March 7, 2013 Share Posted March 7, 2013 I think he's doing a brilliant job but losing one fourth of gains above the hurdle is a very big adjustment to make for net returns is my only point. Link to comment Share on other sites More sharing options...
WideMoat Posted March 7, 2013 Share Posted March 7, 2013 Leaving aside the compensation scheme, I have been less than impressed by the growth in BV (per share) under Biglari's rule. (Acc. to the BH proxy, this is a "reasonable, albeit conservative proxy for gain in intrinsic value.") At 9/24/08, BV was 284m (with 28.66m shares out, or 1.43m shares split-adjusted). At 9/30/09, BV was 292m. At 9/29/10, BV was 249m. At 9/28/11, BV was 280m. At 9/26/12, BV was 349m (with 1.43m shares out). Given those results, it strikes me as excessively optimistic to expect BH to return 15% per annum on BV (even before incentive comp). In addition, given the size of the CBRL stake, and Biglari's expressed desire to hold for the long term, BH shareholders will effectively need CBRL to grow its market price p.s. (now at 1.84b) at 15% per annum, to get those results. That strikes me as even more optimistic than the first. Link to comment Share on other sites More sharing options...
premfan Posted March 7, 2013 Share Posted March 7, 2013 Are you factoring in the incentive comp on 15% cagr? Shareholders will probably receive closer to 12%. Increase in BV per share by definition is the increase in equity divided by the number of shares outstanding, after all costs are subtracted. It follows that a 15% CAGR in BV per share is by definition after incentive comp. You might view it as rightly due, or you might judge it much too high, anyway incentive comp is just another cost, right? giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Gio, it seems like you are anchored in your assumptions of biglari. As a boardmember and former owner of the company i was here first hand during the incentive fiasco. If you havent already reviewed the archives please do. If biglari holdings increases BV at 15 percent you as a shareholder gains about 10 percent BV and he profits the rest. So to realize shareholder gain of 15 percent BV he would need to average 20 percent BV per year. I have read all the lion fund letters when i requested them from biglari's receptionist and he averaged in the mid teens in return with a much lower capital base. Link to comment Share on other sites More sharing options...
constructive Posted March 7, 2013 Share Posted March 7, 2013 If biglari holdings increases BV at 15 percent you as a shareholder gains about 10 percent BV and he profits the rest. So to realize shareholder gain of 15 percent BV he would need to average 20 percent BV per year. Gross BV Increase Compensation (25% over 6%) Net BV Increase 11.33% 1.33% 10.0% 15.0% 2.25% 12.75% 18.0% 3.0% 15.0% 20.0% 3.5% 16.5% Link to comment Share on other sites More sharing options...
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