Author Topic: BH - Biglari Holdings  (Read 1313683 times)

merkhet

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Re: BH - Biglari Holdings
« Reply #400 on: January 13, 2014, 04:56:35 AM »
If he took control of subsidiaries that deliver free cash flow of $100 million a year, then he has done nothing special.

I don’t think this is truly relevant. When I speak of “business acumen”, I mean both on the operations and in finance / investing. They both are important and complement themselves in the process of building wealth. I myself, just like Mr. Biglari, though on a much smaller scale, focus everyday both on improving the quality of operations and on effective capital allocation decisions.

When Mr. Biglari bought SNS for a pittance, it certainly wasn’t the cash machine it is today. In fact, as he pointed out in line number 1 of the 2013AL, it was a “money losing restaurant chain”. What truly matters is the cost he paid to take control over SNS operations, and his ability to turn that business from an unprofitable one into a cash cow.

Anyone can have his/her opinions on Mr. Biglari’s character features and ethics, but no serious entrepreneur should underestimate or fail to recognize the business achievements he has accomplished from late 2008 until today. :)

Gio

You've missed my point.

You highlighted that cash went from $1 million to $600 million.  And then you said that it was nothing short of amazing.  Without additional context, that's a pointless number.  There needs to be a "why" did cash go from point A to point B.  Therefore, the cash flow properties of his subsidiaries is incredibly relevant.

For instance, if cash went from $1 million to $600 million, but the underlying subsidiaries generate $3 billion of FCF a year and there's no concomitant buildup of equity value, then he has been wasting a lot of money.

Does that make sense? 

I have no opinion on whether Biglari is a good capital allocator or a good businessman.  However, the evidence that you trotted out to assert that he is a good businessman is lacking.  If you had brought out information about operating margins, incremental return on invested capital, etc.  then it would have been a different story.


giofranchi

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Re: BH - Biglari Holdings
« Reply #401 on: January 13, 2014, 05:15:41 AM »
You've missed my point.

You highlighted that cash went from $1 million to $600 million.  And then you said that it was nothing short of amazing.  Without additional context, that's a pointless number.  There needs to be a "why" did cash go from point A to point B.  Therefore, the cash flow properties of his subsidiaries is incredibly relevant.

For instance, if cash went from $1 million to $600 million, but the underlying subsidiaries generate $3 billion of FCF a year and there's no concomitant buildup of equity value, then he has been wasting a lot of money.

Does that make sense? 

I have no opinion on whether Biglari is a good capital allocator or a good businessman.  However, the evidence that you trotted out to assert that he is a good businessman is lacking.  If you had brought out information about operating margins, incremental return on invested capital, etc.  then it would have been a different story.

I think I have understood your point well... And, if you wish to know, the buildup of capital was due for $269.0 million to Investment Gains and for $194.3 million to Operating Businesses.
Yet, both results were achieved thanks to Mr. Biglari’s “business acumen”: the reason Investment Gains were obtained thanks to his business acumen is obvious enough; and the reason also Operating Businesses gains were obtained thanks to his business acumen is that, when he took control of SNS, his operating business was just a “money losing restaurant chain”.
I still think the first 7 lines of his 2013AL are clear enough. ;)

Gio
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gg

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Re: BH - Biglari Holdings
« Reply #402 on: January 13, 2014, 02:05:59 PM »


Im no expert on Biglari Holdings so I apologise if im not making much sense. I looked into it a few years back and decided it wasn't my cup of tea.  You mention the business achievements from 2008 (The depths of the financial crisis) until today (all time market highs).  I did a quick check on Yahoo of BH vs Competitors.
                                      2009       2014
BH (Biglari Holdings)         $101       $480   =  480% increase
DIN (DineEquity)               $8.7       $83     =  950% Increase
DENN (Dennys)                 $1.68     $6.93   =  412% Increase
RRGB (Red Robin)              $12.65   $67     =  529% Increase
RT (Ruby Tuesdays)            $1.2      $5.92   =  493% increase

Stockprice of BH seems to have underperformed most of its competitors over the last 5 years. So how much of the improvement of the business is due to improvement in the industry ?
[/quote]

No idea if it would  make BH look better or worse, but you can't simply compare the stock price in 2009 versus 2014 for each of these companies. You also would need to take into account if there are more/less shares now vs 2009 and if there is more/less debt since then too

wescobrk

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Re: BH - Biglari Holdings
« Reply #403 on: January 15, 2014, 10:29:32 AM »
Gio,
Do you think it's odd he still hasn't sold a share 3 weeks after his intention to do so?
I thought we would have seen a press release with an investment bank he sold his entire stake like ackman did with jcp.
But so far he continues to hold and cbrl continues to slowly decline.

Rabbitisrich

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Re: BH - Biglari Holdings
« Reply #404 on: January 15, 2014, 06:44:54 PM »
If he took control of subsidiaries that deliver free cash flow of $100 million a year, then he has done nothing special.

I don’t think this is truly relevant. When I speak of “business acumen”, I mean both on the operations and in finance / investing. They both are important and complement themselves in the process of building wealth. I myself, just like Mr. Biglari, though on a much smaller scale, focus everyday both on improving the quality of operations and on effective capital allocation decisions.

When Mr. Biglari bought SNS for a pittance, it certainly wasn’t the cash machine it is today. In fact, as he pointed out in line number 1 of the 2013AL, it was a “money losing restaurant chain”. What truly matters is the cost he paid to take control over SNS operations, and his ability to turn that business from an unprofitable one into a cash cow.

Anyone can have his/her opinions on Mr. Biglari’s character features and ethics, but no serious entrepreneur should underestimate or fail to recognize the business achievements he has accomplished from late 2008 until today. :)

Gio

Im no expert on Biglari Holdings so I apologise if im not making much sense. I looked into it a few years back and decided it wasn't my cup of tea.  You mention the business achievements from 2008 (The depths of the financial crisis) until today (all time market highs).  I did a quick check on Yahoo of BH vs Competitors.
                                      2009       2014
BH (Biglari Holdings)         $101       $480   =  480% increase
DIN (DineEquity)               $8.7       $83     =  950% Increase
DENN (Dennys)                 $1.68     $6.93   =  412% Increase
RRGB (Red Robin)              $12.65   $67     =  529% Increase
RT (Ruby Tuesdays)            $1.2      $5.92   =  493% increase

Stockprice of BH seems to have underperformed most of its competitors over the last 5 years. So how much of the improvement of the business is due to improvement in the industry ?

DIN was in a pickle after the purchase of Applebee's in 2007.

OracleofCarolina

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Re: BH - Biglari Holdings
« Reply #405 on: January 16, 2014, 03:38:09 PM »
http://www.sec.gov/Archives/edgar/data/1067294/000092189514000056/prec14c07428021_01162014.htm

Mr. Bigs calls for a special meeting, wonder who he would partner with if he submitted a bid for the whole company??

dcollon

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Re: BH - Biglari Holdings
« Reply #406 on: January 21, 2014, 10:45:22 AM »
Cracker Barrel Issues Statement on Call for Special Meeting
Tuesday, January 21, 2014


Cracker Barrel Old Country Store, Inc. (“Cracker Barrel” or the “Company”) (Nasdaq:CBRL) today issued the following statement in response to the filing by Sardar Biglari, Biglari Capital Corp. and affiliates seeking to call a special meeting of the Company's shareholders:

Sardar Biglari has run proxy contests to elect himself to Cracker Barrel’s Board of Directors at each of the Company's last three annual meetings. He lost all three, by wide and increasing margins. Shortly before the last annual meeting, Mr. Biglari, having missed the Company's deadline for submitting shareholder proposals, threatened to call a special meeting of shareholders right after the annual meeting to vote on a proposal calling on the Company to pay a $20 per share special dividend. To avoid the cost and distraction of a special meeting right after the annual meeting, the Company voluntarily put Mr. Biglari's proposal on the annual meeting ballot. The proposal also lost by a wide margin.

Apparently not satisfied with these losses, a month after the annual meeting Mr. Biglari announced his intent to call a special meeting to vote on yet another proposal, this time calling on the Company to “pursue all potential extraordinary transactions, including the sale of the Company.” This special meeting would impose the same kind of cost and distraction that the Company sought to avoid when it voluntarily put Mr. Biglari's special dividend proposal on the annual meeting ballot. It is hard to avoid the conclusion that Mr. Biglari is now just engaged in harassment of the Company.

The Company recognizes that Mr. Biglari will likely be able to meet the 20% threshold required to call a special meeting as a result of the fact that he controls the vote of 19.9% of the Company's common stock. Accordingly, Cracker Barrel’s Board has determined to call a special meeting voluntarily to avoid the added cost and distraction of Mr. Biglari's solicitation of the Company’s shareholders for the call of a special meeting. The special meeting will be held on April 23, 2014.

Spekulatius

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Re: BH - Biglari Holdings
« Reply #407 on: January 21, 2014, 09:44:08 PM »
http://www.sec.gov/Archives/edgar/data/1067294/000092189514000056/prec14c07428021_01162014.htm

Mr. Bigs calls for a special meeting, wonder who he would partner with if he submitted a bid for the whole company??

CBRL should do a Pac Man defense and submit a bid for BH. They could do stock exchange offer at a decent premium wish a cash component, and still come out ahead. This would unlock more value than Mr. Big pressing for a special dividend at CBRL, imo.
To be a realist, one has to believe in miracles.

MCN

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Re: BH - Biglari Holdings
« Reply #408 on: January 24, 2014, 04:56:41 AM »
Apologies if this has already been discussed on the board but i was wondering what people think about the name licensing deal that Biglari has. At first glance it smacks of greed and a way to hook himself into place but is it perhaps simply to ensure that the company does not continue to use his name if he gets booted out?

Any thoughts?

giofranchi

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Re: BH - Biglari Holdings
« Reply #409 on: January 24, 2014, 05:35:40 AM »
Gio,
Do you think it's odd he still hasn't sold a share 3 weeks after his intention to do so?
I thought we would have seen a press release with an investment bank he sold his entire stake like ackman did with jcp.
But so far he continues to hold and cbrl continues to slowly decline.

wescobrk,
sorry I had missed your post until now… Anyway, I cannot really answer to your question… Let’s only say that I am content to let him work. :)

Gio
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