Author Topic: BH - Biglari Holdings  (Read 1266696 times)

NBL0303

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Re: BH - Biglari Holdings
« Reply #2820 on: May 16, 2019, 05:54:01 AM »

Why would he like to issue stock at “50% discount”? Well to enlarge the pie he can eat from!
Thats why it is caveat emptor.

Indeed. Why would he not bet on himself, his company, their assets and his future investments in such a cheap way - meaning by buying the shares back - if you believe in any of that stuff, the shares would be a good investment - yet, he apparently said at the annual meeting he doesn't want to shrink the company to do that. That says a lot. At least he is honest about that.


DTEJD1997

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Re: BH - Biglari Holdings
« Reply #2821 on: May 16, 2019, 08:36:01 AM »
Hey all:

The S&S that I go to in metro Detroit is one that closed down.

It has been closed down about 1 week.

If it does not re-open very soon, I think the odds get much higher that it will never re-open as a Steak & Shake.

I am going to suggest that it is the same for other closed locations.  The longer they are closed, the higher the odds they never re-open.

TwoCitiesCapital

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Re: BH - Biglari Holdings
« Reply #2822 on: May 16, 2019, 09:38:11 AM »
Hey all:

The S&S that I go to in metro Detroit is one that closed down.

It has been closed down about 1 week.

If it does not re-open very soon, I think the odds get much higher that it will never re-open as a Steak & Shake.

I am going to suggest that it is the same for other closed locations.  The longer they are closed, the higher the odds they never re-open.

Agreed. There's 8 locations in the St Louis area that closed weeks ago to find franchisees. I don't expect most of them to reopen.

given2invest

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Re: BH - Biglari Holdings
« Reply #2823 on: May 16, 2019, 09:59:37 AM »
He won't buyback stock because the stock and capital of the company is effectively "permanent capital" to him and he can eat the fees for decades to come.  He doesn't care about the NAV gap though he'd prefer if it didn't exist. 

It's not different than a BDC where the sponsor doesn't want to buyback stock at a discount.  It shrinks their fee base!

NBL0303

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Re: BH - Biglari Holdings
« Reply #2824 on: May 16, 2019, 10:18:22 AM »
Hey all:

The S&S that I go to in metro Detroit is one that closed down.

It has been closed down about 1 week.

If it does not re-open very soon, I think the odds get much higher that it will never re-open as a Steak & Shake.

I am going to suggest that it is the same for other closed locations.  The longer they are closed, the higher the odds they never re-open.

Agreed. There's 8 locations in the St Louis area that closed weeks ago to find franchisees. I don't expect most of them to reopen.

Steak n Shake is done. None of these are re-opening ever, essentially everyone knows this except Sardar Biglari, Steak n Shake "consultants" his father Ken Biglari, his brother Shawn Biglari, his wife Rosa and his partner Phil Cooley.

There may be a few one-off re-openings as they experiment with format-changes/concept-ideas and franchise partners, but that is it. It is not coming back and I think most people know it, including most franchisees who are deeply concerned in many cases. The only question is how long this funeral takes.

Restaurant chains when they hit these inflection points where they are losing customers this quickly, it is just nearly impossible for them to come back. Profitable restaurant chains can weather a few bad years, and acute crisis that cost them customers for a time, but these business-model-death-spirals - it is just nearly impossible to pull out of. You lose customers; then you lose employees; this generates negative press and feelings in the community; you lose more customers; you have to make difficult cost trade-offs (which Sardar has tried to avoid with food quality - but its coming); this leads to even great employee dissatisfaction and turnover; the increased turnover increases both costs and turmoil and decreases quality of service; this drives more customers away. Now throw on top of all of this the onslaught of terrible national news about all of this - and franchisees are not going to want to open these and more franchises will close.

In the face of all of this, the franchise partner plan may have been a good one as originally conceived, but it will not work. These death spirals are too powerful.

rkbabang

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Re: BH - Biglari Holdings
« Reply #2825 on: May 16, 2019, 11:03:34 AM »

Lol. Couldn’t have happened to a nicer guy. 😜

I actually don't really know if he is a nice guy or not, it is just about his public actions as a CEO to me.

One thing about this and how toxic Sardar's reputation has been for a long time - Sardar really just thinks it doesn't matter. I don't believe that is the case - because they want to be an acquirer and Sardar's reputation will greatly hinder their ability to do acquisitions - I mean who would want to sell their business to him unless he was paying a pretty penny? But in some sense Sardar is right - in the current time there is so much news and information thrown at people, no one will really remember except for us. Now it is a funny store for a few days, but this level of corporate malfeasance should really become infamous like Enron - yet, it is hard for almost anything to be remembered now. An ardent Trump supporter told me this early in his political life a few years ago - she said that the media and the left were coming after him so hard everyday with all manner of complaints, accusations, allegations, etc. that it kind of actually helps him with his core supporters in the sense that no specific allegation/issue against will ever stick because there are so many thrown out daily that it all just kind of blends. With the Sardar situation, yes his reputation is shot, but it barely matters now in a sense because everyone moves on from story to story so fast.

He will never get the attention Enron received because BH is a microcap, soon to be nanocap.  If BH was once a $200B company and he drove it into the ground for his own personal profit they would already be filming a Netflix original movie about it.

Spekulatius

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Re: BH - Biglari Holdings
« Reply #2826 on: May 16, 2019, 11:09:32 AM »
He won't buyback stock because the stock and capital of the company is effectively "permanent capital" to him and he can eat the fees for decades to come.  He doesn't care about the NAV gap though he'd prefer if it didn't exist. 

It's not different than a BDC where the sponsor doesn't want to buyback stock at a discount.  It shrinks their fee base!

There is no point in buying back stock, because he control and “owns” the assets already. It‘s the  ultimate value trap. Except for the possibility of Devine Intervention ( as has been pointed out before), the stock is a zero for all but Mr Big. I honestly wouldn’t be surprised, if he issued more deeply discounted stock, to suck more assets into the orbit of his Biglari black hole.
« Last Edit: May 16, 2019, 11:11:12 AM by Spekulatius »
To be a realist, one has to believe in miracles.

Ballinvarosig Investors

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Re: BH - Biglari Holdings
« Reply #2827 on: Today at 01:22:22 PM »
What a train wreck!

"At a past annual meeting I said, quit bidding our share price up. And everyone laughed.” Then he leaned into the microphone, looked out at shareholders, who lost 58% of the value of their stock in 2018, and said, with delight: “Who’s laughing now?”"
Share price now under $100.

Bigs must be thrilled.

shalab

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Re: BH - Biglari Holdings
« Reply #2828 on: Today at 02:20:27 PM »
Don't think he cares for the average shareholder. The thing he will care about is moving money from BH to his account; the lower stock price makes it easier. If they pay him 10mm per year (and it is carried interest, i.e., transfer of assets), he ends up owning a bigger chunk of the company more quickly. It is that simple. Meanwhile BH will pay for his lifestyle expenses (planes and other) with G&A expenses

What a train wreck!

"At a past annual meeting I said, quit bidding our share price up. And everyone laughed.” Then he leaned into the microphone, looked out at shareholders, who lost 58% of the value of their stock in 2018, and said, with delight: “Who’s laughing now?”"
Share price now under $100.

Bigs must be thrilled.

given2invest

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Re: BH - Biglari Holdings
« Reply #2829 on: Today at 02:45:46 PM »
Don't think he cares for the average shareholder. The thing he will care about is moving money from BH to his account; the lower stock price makes it easier. If they pay him 10mm per year (and it is carried interest, i.e., transfer of assets), he ends up owning a bigger chunk of the company more quickly. It is that simple. Meanwhile BH will pay for his lifestyle expenses (planes and other) with G&A expenses

What a train wreck!

"At a past annual meeting I said, quit bidding our share price up. And everyone laughed.” Then he leaned into the microphone, looked out at shareholders, who lost 58% of the value of their stock in 2018, and said, with delight: “Who’s laughing now?”"
Share price now under $100.

Bigs must be thrilled.

Agree w/ this 100%.  He prob sees the lower share price and licks his lips at ways to make more $ for himself.  One might help all shareholders (buyback), but most will not.   And he doesn't want to buyback stock because it shrinks his permanent capital base. 

There is no price I would buy this stock.