Author Topic: BH - Biglari Holdings  (Read 1293006 times)

thepupil

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Re: BH - Biglari Holdings
« Reply #1520 on: March 24, 2015, 06:30:57 AM »
Tombgrt - do you consider Todd & Todd's performance fee at berskshire theft of shareholder money?

10% over 3 yr rolling S&P is a little different than 25% over 6%.  Biglari can have a banner year and take a large % of shareholder capital (as he did the past few years). Also, Todd and Ted are managing a pure investment portfolio.

Taking a percentage of investment gains is different than taking a % of the change in book value of a business. The S&P has an ROE of like 15%. Making an ROE that exceeds 6% is nothing special and doesn't deserve a fat incentive fee on permanent capital. Outperforming the S&P over 3 yr rolling periods with multiple billions is special and very likely deserves 10% of the out-performance.

Biglari and Groveland: Scylla and Charybdis.


BTShine

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Re: BH - Biglari Holdings
« Reply #1521 on: March 24, 2015, 06:48:19 AM »
Biglari's comp structure is identical to the one Buffett used when he ran his partnerships.  It's not ridiculous.  Also, I don't believe Todd and Ted took the Berkshire job for the compensation.

Also!  The comp structure changed when Todd and Ted were hired!  "Buffett used to do this work for free, now we have to pay these guys!?!?  WTF!?"   I'm being sarcastic...but you get the point.  No situation is identical.  Biglari's comp doesn't seem egregious considering his stellar returns last year.
« Last Edit: March 24, 2015, 06:50:29 AM by BTShine »

giofranchi

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Re: BH - Biglari Holdings
« Reply #1522 on: March 24, 2015, 06:57:25 AM »
10% over 3 yr rolling S&P is a little different than 25% over 6%.

Then let’s hope GMO and others are dead wrong about the S&P500 future returns! ;)

Biglari can have a banner year and take a large % of shareholder capital (as he did the past few years).

Except that Biglari’s performance has been extremely solid and consistent for 15 years now! As I have said, he might not deserve a rich compensation in the future, if investment results deteriorate (for instance, one exceptional year followed by three mediocre or poor years, like you seem to suggest…), but he surely deserves it now! Simply because he achieves better results than the rest and gets paid less.

Outperforming the S&P over 3 yr rolling periods with multiple billions is special and very likely deserves 10% of the out-performance.

Except that I don’t care how much capital is under management. All I care about are results.

Biglari and Groveland: Scylla and Charybdis.

I completely disagree.

Gio
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gfp

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Re: BH - Biglari Holdings
« Reply #1523 on: March 24, 2015, 07:05:14 AM »
Update in yesterday's filing -

http://www.sec.gov/Archives/edgar/data/93859/000092189515000697/defa14a07428007_03232015.htm

Quote
Steak 'n' Shake reports 4.8% comp for Q4 • 7:07 PM

Clark Schultz, SA News Editor
Steak 'n' Shake reports same-store sales increased 4.8% in Q4.
Customer traffic was up 2.7% during the period.
The chain now has 24 straight quarters of positive same-store sales growth for one of the more impressive streaks in the restaurant sector.
Steak 'n' Shake is owned by Biglari Holdings (NYSE:BH).


Gio

giofranchi

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Re: BH - Biglari Holdings
« Reply #1524 on: March 24, 2015, 07:14:56 AM »
Update in yesterday's filing -

http://www.sec.gov/Archives/edgar/data/93859/000092189515000697/defa14a07428007_03232015.htm

Thank you!

Is there another restaurant chain with 25 consecutive quarters of increased same store sales in the US?

Gio
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thepupil

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Re: BH - Biglari Holdings
« Reply #1525 on: March 24, 2015, 07:31:07 AM »
10% over 3 yr rolling S&P is a little different than 25% over 6%.

Then let’s hope GMO and others are dead wrong about the S&P500 future returns! ;)

Biglari can have a banner year and take a large % of shareholder capital (as he did the past few years).

Except that Biglari’s performance has been extremely solid and consistent for 15 years now! As I have said, he might not deserve a rich compensation in the future, if investment results deteriorate (for instance, one exceptional year followed by three mediocre or poor years, like you seem to suggest…), but he surely deserves it now! Simply because he achieves better results than the rest and gets paid less.

Outperforming the S&P over 3 yr rolling periods with multiple billions is special and very likely deserves 10% of the out-performance.

Except that I don’t care how much capital is under management. All I care about are results.

Biglari and Groveland: Scylla and Charybdis.

I completely disagree.

Gio

I'm just providing reasons that BH's structure and T&T's are not comparable; perhaps a better way of putting it is if you do compare them, one comes out as far more friendly.

T&T's benchmark is more relevant and rigorous (since they manage a portfolio of S&P 500 constituents), their percentage take is more appropriate for permanent non-redeemable capital (10% vs 25%), and it is earned over multiple years (which reduces the asymmetry and optionality of one year results paying the manager a heap of money).

BH may be a great investment despite the high fees on permanent capital. I've almost bought the thing several times, but the discount hasn't quite gotten big enough for me to embrace it. NBL's great analysis has me thinking the discount is bigger than my cursory analysis suggested so I may buy it, but it will be despite what I think of Sardar not because of it.

Somewhat off topic Gio, given your love of FIH, PSH, and BH and the like, have you ever calculated the weighted average fees as a % of your capital that you are paying in all these locked up fee heavy permanent capital vehicles?


giofranchi

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Re: BH - Biglari Holdings
« Reply #1526 on: March 24, 2015, 07:54:34 AM »
Somewhat off topic Gio, given your love of FIH, PSH, and BH and the like, have you ever calculated the weighted average fees as a % of your capital that you are paying in all these locked up fee heavy permanent capital vehicles?

Well, if I understand what they are doing, and I am sure I could never replicate it by myself, I usually ask myself: am I paying the right amount, or am I overpaying? In my business I examine offers every day, and I answer that question as follows: if the one I like the best technically, also costs less than the average competition… well then that’s enough for me!

Might not be very scientific… But it usually works well and yields satisfactory results in the long run! ;)

Can I replicate what BH, PSH, and FIH do?
1) I have no franchise business (and I like franchise businesses very much!),
2) I could never get activist on any investment of mine (but I understand why great results could be achieved that way!),
3) I could never invest in India (yet India has 1.2 billion people, whit a GDP comparable to that of 35 million people in Canada; a very young population on average, instead of poor demographics in developed countries; a very low level of overall debt, instead of high debts in developed countries; and a pro-business government for the first time in 70 years!).

Gio
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thepupil

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Re: BH - Biglari Holdings
« Reply #1527 on: March 24, 2015, 08:07:44 AM »
Somewhat off topic Gio, given your love of FIH, PSH, and BH and the like, have you ever calculated the weighted average fees as a % of your capital that you are paying in all these locked up fee heavy permanent capital vehicles?

Well, if I understand what they are doing, and I am sure I could never replicate it by myself, I usually ask myself: am I paying the right amount, or am I overpaying? In my business I examine offers every day, and I answer that question as follows: if the one I like the best technically, also costs less than the average competition… well then that’s enough for me!

Might not be very scientific… But it usually works well and yields satisfactory results in the long run! ;)

Can I replicate what BH, PSH, and FIH do?
1) I have no franchise business (and I like franchise businesses very much!),
2) I could never get activist on any investment of mine (but I understand why great results could be achieved that way!),
3) I could never invest in India (yet India has 1.2 billion people, whit a GDP comparable to that of 35 million people in Canada; a very young population on average, instead of poor demographics in developed countries; a very low level of overall debt, instead of high debts in developed countries; and a pro-business government for the first time in 70 years!).

Gio

ok, fair enough. I would just want to quantify how much the gross performance of those on average would have to be to make a certain return if my strategy was investing in a bunch of those types of vehicles. I invest in a few of these types of things and that's the first thing I think about. I am certainly going to pay X in fees, so how much do I need to expect them to make to justify me owning this.

 For example, I pay stupid high shareholder unfriendly fees (something like 1&20 over a low libor based hurdle WITH NO HIGH WATER MARK)  to the managers of Tetragon Financial, but I don't need them to make a big % in order to earn a nice return: it trades for 55% of book and pays a 6% growing dividend.


DanielGMask

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Re: BH - Biglari Holdings
« Reply #1528 on: March 24, 2015, 08:11:32 AM »
I'm amazed of the lenght of this thread. I have missed great companies before and I may be repeating that omission again with this one, but I don't like what I see and I certainly don't agree with the compensation agreement even though there are several people rationalizing why it's ok. Anyway, everybody should read this magnificent exposition: http://boards.fool.com/this-was-posted-on-sumzero-today-and-i-remember-29101767.aspx?sort=threaded
You should follow me on twitter @ManSalceda

giofranchi

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Re: BH - Biglari Holdings
« Reply #1529 on: March 24, 2015, 08:13:50 AM »
Also what I do is to pay more attention to net results than overall results. Companies like GLRE, TPRE, and PSH are very transparent about net results.

Gio
Portfolio: AAPL, AMZN, BABA, BOSS, BRK.B, FB, FFH, FIH.U, FINX, FWONA, GOOG, IBB, JPM, LBRDA, MKL, NKE, QQQ, SFTBF, SMH, TCEHY, V, XBI, XT