Author Topic: BH - Biglari Holdings  (Read 1244317 times)

gfp

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Re: BH - Biglari Holdings
« Reply #2740 on: April 15, 2019, 01:37:45 PM »
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BH received $210M from the sale of CBRL stock (in Lion II), and the unaffiliated non-BH holders comprise 45% of the BH shares (1.39M equivalent B shares).   Last month, Lion II arranged a $160M line of credit in collateralizing their remaining CBRL position.

Lion II had $203M of debt, so the CBRL sales take care of most of that and the taxes due.  With the new Lion II line of credit, plus cash in TLF, BH, and First Guard, there is now plenty of dry powder to initiate a big buyback or tender.   If he decided to offer to take out half of the public float at $175/share, it would cost him $122M (696K shares x $175).   If he went after 2/3 of the non-BH affiliated shares, I believe he would have to offer at least $200/share to shake most of those shares loose, so that would cost him $185M.


You make it sound like there was $160 million new line of credit, when it was actually an existing $200 million loan (collateralized by CBRL shares) that was reduced to $160 million by prepaying and reducing the underlying collateral from 3.6 million CBRL shares to 2.7 million CBRL shares.


JJR

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Re: BH - Biglari Holdings
« Reply #2741 on: April 15, 2019, 02:10:53 PM »
"You make it sound like there was $160 million new line of credit, when it was actually an existing $200 million loan (collateralized by CBRL shares) that was reduced to $160 million by prepaying and reducing the underlying collateral from 3.6 million CBRL shares to 2.7 million CBRL shares."


gfp, I'm aware it was a reduction to an the exiting LOC, but unlike the $200M LOC that was fully tapped, the $160M is dry powder.   I believe the proceeds of the CBRL sale went to repaying the old line, so the $160M is now available.

gfp

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Re: BH - Biglari Holdings
« Reply #2742 on: April 15, 2019, 02:22:25 PM »
Interesting.  My interpretation was that they had directed only $40 million of the after tax CBRL share sales proceeds towards paying off the forward sale loan.

For what its worth, there is a confidential position on the 13F which may or may not be of material size.

JJR

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Re: BH - Biglari Holdings
« Reply #2743 on: April 15, 2019, 02:55:01 PM »
gfp, in the 2018 letter, the CBRL sales proceeds essentially offset the Lion II liability.  They may have the existing $160M LOC fully tapped and have $160M in cash, or they may have paid off the loan and have an untapped credit line. Either way it takes you to the same place and they have plenty of dry powder to do something.

awindenberger

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Re: BH - Biglari Holdings
« Reply #2744 on: April 15, 2019, 07:11:58 PM »
Given the massive undervaluation, I’ve been surprised and frankly disappointed that Biglari hasn’t bought a significant amount of BH shares in 2019. I don’t see why a tender at $175 would be a better outcome versus simply buying a couple thousand a day at current prices.

The fact he hasn’t done it makes me think he’s working on an insurance company purchase.

NBL0303

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Re: BH - Biglari Holdings
« Reply #2745 on: April 16, 2019, 07:48:51 AM »
Given the massive undervaluation, I’ve been surprised and frankly disappointed that Biglari hasn’t bought a significant amount of BH shares in 2019. I don’t see why a tender at $175 would be a better outcome versus simply buying a couple thousand a day at current prices.

The fact he hasn’t done it makes me think he’s working on an insurance company purchase.

The advantage to a tender is that he could likely buy more shares at a cheaper price than simply doing 10b5 open market buybacks. Those buybacks, and the Form 4s that shortly follow, have ordinarily pushed the price up very quickly. So for the same reasons that Teledyne did tenders (they did open market buybacks too, but the vast majority of the shares they repurchased were transited via tenders) - if Sardar wanted to buy a large number of shares as cheaply as possible - the tender is a better option.

If, however, he simply wanted to drive the market price up - then open market purchases would be the course.

awindenberger

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Re: BH - Biglari Holdings
« Reply #2746 on: April 21, 2019, 01:41:59 PM »
For any of you on here that are coming to the BH meeting this week and aren't in the Facebook Group, I'm planning a meet-up for anyone interested for lunch before the annual meeting on Thursday.

Hi Everyone, its time once again to get together for some lunch before the Biglari Holdings annual meeting. Given that the meeting starts at 1pm and we like to start heading over around 12:15 or so, I'm planning to arrive at Urbanspace at 10:45 Thursday morning.

Urbanspace has 16 different restaurants, so there should be something to satisfy every pallet. We'll grab some tables up on the 2nd floor and enjoy each other's company as we all wonder how many decades it will take for Sardar to deliver some value to shareholders.

Tip: Urbanspace has multiple locations around Manhatten, so make sure you are going to the Lexington location. Here's the website:
https://www.urbanspacenyc.com/570-lexington

given2invest

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Re: BH - Biglari Holdings
« Reply #2747 on: April 21, 2019, 04:45:02 PM »
i'm surprised BH even shows up to these events.  lots of chutzpah. 

NBL0303

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Re: BH - Biglari Holdings
« Reply #2748 on: April 24, 2019, 11:31:09 AM »
I heard a great line. If the Berkshire Hathaway Annual Meeting is the Woodstock of Capitalism (as Warren Buffett calls it) then the Biglari Holdings Annual Meeting is the Fyre Festival of Capitalism.

Anyway, if anyone who is skeptical of Sardar Biglari is going to the Biglari Holdings annual meeting and are willing to ask some tough questions – send me a message – someone sent me a great list of tough questions that would be great to get asked. I include the bullet points of some of them below:

-Someone should tell him that people are referring to the Biglari Holdings annual meeting as the Fyre Festival of Capitalism – and the board of directors of Biglari Holdings as the board of directors of Theranos  and comparing Sardar Biglari to Elizabeth Holmes – yet in shareholders letters he has talked about reputation as it relates to acquisitions a number of times – does he not think his terrible reputation will drive potential acquisitions away? If not, then why does he sue people when he perceives them as damaging his reputation – like the investment advisor who leaked a Lion Fund annual letter or a Maxim employee who leaked details of Sardar’s involvement with Maxim? Why those lawsuits if he does not recognize that reputation is important – and if reputation is important – then what about his

-Sardar will never let them answer, but someone should direct a question to the board of directors – the proposed question I saw was something like – if you read John Carreyou’s book Bad Blood about Theranos – the directors there basically gave Elizabeth Holmes whatever she wanted – and it ended up in investors losing everything – if someone looks back on the story of Biglari Holdings – are the directors concerned they will look like the directors of Theranos who have been duped by Sardar Biglari the way those directors were duped by Elizabeth Holmes?


-As of last year’s proxy statement, Sardar and directors owned or controlled 1,133,382 shares. Sardar received 1,241,543 votes as a director last year, but if you subtract out Sardar and Directors votes, then he actually received 108,161 votes – while 652,542 were voted against him just for his board seat – and these were in addition to 116,953 non-votes. So just considering the independent shareholders votes for him and withheld, excluding the non-votes – it was 652,542 against him and 108,161 for him. That means 85.7% of unaffiliated shareholders voted against him. The recapitalization and reorganization votes were almost exactly the same – with 85% of independent shareholders voting against his plan.

So last year almost 90% of shareholders voted against him, does he care about this at all? If every independent shareholder voted against him – would that mean a thing to him? (Obviously the answer is no, but it’d be fun to just publicly ask him this.)

-How is Biglari Café performing? Is Sardar happy with it? Is there any thought of turning Steak n Shakes into Biglari Cafes?

-Shareholders lost 58% of the market value of their Biglari Holdings shares last year yet he increased his compensation by dropping the cap on the incentive agreement on the operating side – and he potentially uncoupled to an extent his future financial life from Biglari Holdings shares by dropping the requirement to purchase shares of Biglari Holdings with any operating bonus he receives. Yet, he did not put out an 8-K announcing these changes – but instead buried them in the Proxy Statement? Why did he not have the courage to announce his compensation changes? The next time he increases his compensation package, will he put out an 8-K announcing them or will be bury them in proxy filings?

-Sardar has caused the company to be fined $850,000 by the Federal Trade Commission and $75,000 by the Securities and Exchange Commission – if the Lion Fund II gets fined by a federal government agency again at some point in the future for some kind of legal issue or securities infraction, who will pay for that, Sardar Biglari or Biglari Holdings?

-What are the $8.4 million annual payments that he receives from Biglari Holdings  for administering the Lion Fund for? He said last year for personnel – but the Lion Fund has either one or zero full-time employees, no proxy fights for years, no obvious legal fees – what the hell is this for?

-Biglari Holdings shares lost 58% of their market value last year, yet no directors bought shares, except a small purchase by Sardar near the end of the year. Why did Sardar not buy more than this nominal amount – does he not have any more liquid capital to do so? And why did Phil nor any other directors buy any shares – do they not believe in the company at these prices or do they just not have any liquid capital to buy any shares?

-Is Sardar worried that the similarities he shares with Carlos Ghosn, who ended up in prison. While the laws are different in Japan, some of the same corporate law principles apply. Does he worry about these similarities – like hiring family members for vaguely defined consulting roles – the way he has hired his brother and father for Steak n Shake consulting roles for hundreds of thousands of dollars a year – or how Carlos Ghosn had the company buy expensive vehicles that the company now argues were for his personal use rather than the company – just the way Sardar has the company buy him a Netjets membership. Or how Carlos Ghosn had Nissan buy him houses in luxurious places – that the officials now contend was just for his personal luxury rather than the benefit of the company – just the way Sardar has the company having an office in Monaco and his personal Biglari Café in the Port of Saint-Tropez – just so Sardar can spend time in these luxurious Mediterranean towns so he can use his Riva yacht?