Author Topic: BH - Biglari Holdings  (Read 1174099 times)

BTShine

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Re: BH - Biglari Holdings
« Reply #1540 on: March 24, 2015, 10:31:00 AM »
Smart to spend money on a partnership that's close to Letterman's heart.  Brings the SnS brand top of his mind.  Maybe he will be more likely to work it into his comments on his late night show.


Txvestor

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Re: BH - Biglari Holdings
« Reply #1541 on: March 24, 2015, 11:41:39 AM »
Just curious about the Lion Fund's annual returns. Anybody know what the Lion Fund did in 2009?

In the 2007 AR of the Lion Fund you can find Biglari’s investment performance since inception. Then on the recently published letter by the independent directors of BH you can find Biglari’s investment performance since 2009. That leaves 2008 out. But, given the large amount of the Lion Fund’s capital invested in S n S, I guess BH’s stock price in 2008 could be a good estimate (-12.1%).

Of course, those are out of this world numbers!

I repeat: given his 15 years track record, Biglari deserves dual-class shares that put him in full control of BH, and deserves to be paid what he is asking.

Things might change in the future… I hope they won’t! ;)

Cheers,

Gio

2008 performance for Lion fund was -28.1%.


If Sardar's returns, fees, and character are stellar, then capital will beat a path to his door.
He is certainly entitled to set his hedge fund fees like anyone else. As always people will pay for performance. If he is really that good, then he would/should have no problems attracting capital on his terms.
Where this all goes horribly wrong is when he goes against the will of the majority of his BH shareholders(as demonstrated by the compensation vote), and transfers company funds into his hedge funds for his personal benefit. There are other considerations/decisions that the BH board has taken that can be argued are not in the shareholder's interest eg the licensing agreement.
NBL calls these arrangements a toll. Gio welcomes that as him gaining control, for others they make BH uninvestable and everyone seemingly has an opinion about it. For my part I think SB is an ethically challenged but talented entrepreneur. I have thus invested a lot less than I otherwise would.
However the fact that these actions represent an unwelcomed/unapproved transfer of value and control from CURRENT shareholders to SB has not been convincingly refuted by anyone on this thread.
In all honesty, Groveland have proven themselves unworthy of gaining control of the enterprise for many reasons, and I find this unfortunate, for I think for the right kind of activist with some track record this could represent a real opportunity. I'm hope the margin SB wins by sends a clear message.

frugalchief

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Re: BH - Biglari Holdings
« Reply #1542 on: March 24, 2015, 02:36:53 PM »
There are some gems in TLF '07 & '08 letters ya'll posted today.  Thanks for sharing that.  Anyone have '00 - '06?  Or '09-current?

There were a few things he talked about in those letters that he still practices today, which only helps reconfirm my conviction in him.  Considering he talked about it 8 years ago and during the great recession.

frugalchief

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Re: BH - Biglari Holdings
« Reply #1543 on: March 24, 2015, 06:03:03 PM »
The fun parlor game I've been playing in my own head is to imagine what other press releases Biglari can do over the next two weeks.  For starters, they will very likely discuss the fact that Biglari began buying shares of Cracker Barrel at $40 per share four or so years ago and Cracker Barrel's shares are now trading near $160 per share.  That seems like one of the things coming down the pike.  There are could be more interesting announcements/press releases too.

I've thought the same, especially once the 25th consecutive quarter press release came out.

Speculating, but these would put the nail in the coffin of the proxy IMO:
  • New acquisition of a large (larger than First Guard and Maxim), profitable operating business (one would think he has something in the works...maybe)
  • Disclosure of that confidential stock purchase and unrealized gains on it (not sure on SEC req. for disclosing that)


globalfinancepartners

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Re: BH - Biglari Holdings
« Reply #1544 on: March 24, 2015, 06:05:02 PM »

giofranchi

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Re: BH - Biglari Holdings
« Reply #1545 on: March 25, 2015, 01:12:55 AM »
The Lion Fund 2006 AR.

Cheers,

Gio

PS
If anyone has the ARs from 2000 to 2005, please post them! It would be greatly appreciated! :)
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pdoak

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Re: BH - Biglari Holdings
« Reply #1546 on: March 25, 2015, 02:41:29 AM »
Since the normal franchise units currently opening cost around $1.5 million to $2 million

NBL,

Could you please let me know where you got this number from? Is it your estimate? Could you give a little more color on this?

Thanks

Vinod

Sure - the number is not really an estimate, but more like my best inference from many different sources, of what a franchisee must spent to construct and open a new Steak n Shake franchise unit.  That number is drawn from the franchise disclosure documents and other places.  That may seem like a lot, but it is actually less than many comparable type restaurants (though there are some chains that have a lower cost than that too).  This is also significantly less than what a Steak n Shake unit used to cost, pre-Biglari, apparently, when it was over $2.5 million to open a new unit.

Vinod, NBL

In the 2010 Chairmen's letter, the following is mentioned re franchise unit costs:

Quote
The new layout provides the theater in which we can showcase the production of made-to-order steakburgers and hand- dipped milkshakes to entertain guests. Now, a franchisee can open an efficient, beautiful unit for about $1.5 million. My projection is that revenues emanating from each unit will doubtless surpass the $1.5 million mark, which combined with our current operating margin would yield an attractive return on investment for the franchisee. We shrank the former box size from about 4,200 square feet to nearly 3,200 square feet but kept the same number of seats in the dining area. The former model was simply inefficiently designed. The new prototype is a display of our uncompromising dedication to the pursuit of excellence.

Inflation will have increased that number since 2010 but $1.5m seems to be in the right ball park.

giofranchi

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Re: BH - Biglari Holdings
« Reply #1547 on: March 25, 2015, 04:18:47 AM »
2008 performance for Lion fund was -28.1%.

On the LF 2008 AL we can read:
Quote
Over the last 9 years, The Lion Fund has achieved a rate of return of 13.6% compounded annually.

Think of it: in those 9 years, which witnessed the S&P500 being cut in half twice, Biglari still managed to achieve a CAGR of nearly 14%! Isn’t it amazing?... I mean: it is very hard to imagine a more difficult situation for stock market investors than those 9 years… The only thing that comes to mind truly is a new Great Depression scenario!... Yet, The LF delivered a result that would be extremely good under very favorable circumstances too!

I think such a result is indeed the final proof you shouldn’t worry too much about what the general market does nor about macro! ;)

Just to put that in perspective, Berkshire achieved a CAGR in market value of just 6.2% during the same 9 years… And I don’t know of anyone who did better than The LF.

Could some board member point to a money manager with better results during those 9 years?

Cheers,

Gio
« Last Edit: March 25, 2015, 04:20:59 AM by giofranchi »
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philly value

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Re: BH - Biglari Holdings
« Reply #1548 on: March 25, 2015, 06:19:10 AM »
As difficult as the 2000-2008 timeframe was it was a pretty fruitful time for value investors [particularly the 2000-2007 part, 2008 performance will exclude some]. I don't have access to the numbers but I'd be pretty certain Baupost, for example, did much better than 13%/yr over that timeframe, and their various funds were only down ~10% in 2008 AFAIK. Given his small asset base at the time, I'm not sure that 13.6% over that 9 year period means quite that mutch. Obviously still very good, but not necessarily legendary. 

giofranchi

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Re: BH - Biglari Holdings
« Reply #1549 on: March 25, 2015, 07:21:02 AM »
I don't have access to the numbers but I'd be pretty certain Baupost, for example, did much better than 13%/yr over that timeframe, and their various funds were only down ~10% in 2008 AFAIK.

Maybe... But I don't have their numbers either... Therefore, I don't know... Though "much better" seems a bit excessive to me! ;)

Gio

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