Author Topic: BH - Biglari Holdings  (Read 1312206 times)

OracleofCarolina

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Re: BH - Biglari Holdings
« Reply #2750 on: April 30, 2019, 08:18:34 AM »
Here are some notes from the meeting last week
no presentation this year, about 80-100 folks in attendence, nice views from the St Regis meeting room on the 22nd floor & good chocolate chip cookies

- Steak N Shake has some issues. Their average drive-thru time is 8 minutes and the industry avg is 4 minutes. The milkshakes are labor intensive and take at least 2 minutes to make. Their labor costs are about 40% , where as the industry average is 30%. The two key components of a turnaround are the new "franchise" partners and new kitchen equipment. The SNS term loan matures in 2021 but they have time.  The cost to update locations is about 100k each, so $40 million. Hope to have 60-80 franchise partners by end of year. 153 locations are owned(land & building), so whats that worth? 160 million?

- 8.4 million to Lion Fund annually is working great for shareholders. The board has total visibility into the numbers and they are pleased.
- looking at deals all the time and pass on 99.9% of them. Would still love to own another insurance company and will keep looking. The FAT Brands loan is an example of how opportunistic they can be.
- Would be disappointed if Maxim did not make $2 million in profit this year
- Discount in stock price is extreme at this time but not inclined to unwind the business to buy back shares, they will take action eventually if it continues in 2-3 years. The stock is down for "technical "reason..i.e....getting dropped from the indices due to dual-class structure
- Apparently Sardar is looking at cashing some partners out at book value(for BH) instead of current market price as they are 85 years old and these are personal relationships. It only affects him so not much to say, this is for the unaffiliated partners in the Lion Fund I.

« Last Edit: May 03, 2019, 09:25:50 AM by OracleofCarolina »


OracleofCarolina

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Re: BH - Biglari Holdings
« Reply #2751 on: May 01, 2019, 03:00:38 PM »
Here are some notes from the meeting last week

- Steak N Shake has some issues. Their average drive-thru time is 8 minutes and the industry avg is 4 minutes. The milkshakes are labor intensive and take at least 2 minutes to make. Their labor costs are about 40% , where as the industry average is 30%. The two key components of a turnaround are the new "franchise" partners and new kitchen equipment. The SNS term loan matures in 2021 but they have time.  The cost to update locations is about 100k each, so $40 million. Hope to have 60-80 franchise partners by end of year. 153 locations are owned(land & building), so whats that worth? 160 million?

- 8.4 million to Lion Fund annually is working great for shareholders. The board has total visibility into the numbers and they are pleased.
- looking at deals all the time and pass on 99.9% of them. Would still love to own another insurance company and will keep looking. The FAT Brands loan is an example of how opportunistic they can be.
- Would be disappointed if Maxim did not make $2 million in profit this year
- Discount in stock price is extreme at this time but not inclined to unwind the business to buy back shares, they will take action eventually if it continues in 2-3 years. The stock is down for "technical "reason..i.e....getting dropped from the indices due to dual-class structure
- Apparently Sardar is looking at cashing some partners out at book value(for BH) instead of current market price as they are 85 years old and these are personal relationships. It only affects him so not much to say, this is for the unaffiliated partners in the Lion Fund I.

NBL0303

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Re: BH - Biglari Holdings
« Reply #2752 on: May 02, 2019, 06:33:43 AM »
Hello all -- Someone sent me a blog post that a blogger made after attending the Biglari Holdings annual meeting. That somewhat describes the Biglari Annual meeting but kind of in a comical fashion. I have no idea who this is - but some of the questions he or she is quoting are questions that I wrote and sent with other people who asked them - while I was tending to a baby :) Anyway, not being at the meeting I don't know all of the specifics but I have been fully briefed by multiple people and have a fairly good feel for what was said at the meeting.

Here is the blogger's post, it is snarky and some of what they recount about the meeting is inaccurate according to people who briefed me, but it is hilarious and well-written despite the inaccuracies:

https://seekingalpha.com/instablog/50239042-valueseeker64/5299346-fyre-festival-capitalism

Some highlights from the meeting as described to me are below. The key points are that Steak n Shake is really struggling, it hasn't gotten any better and its future is very much in doubt. Steak n Shakes are going to continue to close, both company-owned units and freestanding franchise-units but they are doing well in France and on universities - but everywhere else they are struggling. They are not going to buy back shares. Here are other highlights:

-60 Steak n Shake closures so far in 2019, more are coming.

-Sardar was adamant that they are not going to do a share buyback for many years - a minimum of 2-3 years. He says they can earn more money by keeping it in cash and eventually investing it well.

-Steak n Shake lenders were evidently at the meeting and Sardar said something like "they are nervous." Sardar said the Steak n Shake debt is due in 2021 and they have to get Steak n Shake turned around by then. As the blogger wrote, Sardar apparently specifically said that Biglari Holdings will not guarantee the debt. It seems like maybe he was saying this at the lenders - but I'm just getting this from notes - not being there - that may or may not be the case.

-The key to the turnaround, as Sardar sees it, is the process improvements. In that blogger's post - he is almost pejoratively saying Sardar is inventing a milkshake machine - but it is more extensive than that - and it is all aimed at the idea of improving service times - and that is the main element of the turnaround - improving the order processing times so that it improves drive-through times. Sardar literally did say he is inventing and patenting a milkshake making process.

-Maxim could make $2 million this year or next year. He is glad he did the deal. It was not a mistake. Despite spending well over $40 million on it and now only six years later making potentially $2 million - with the potential for losing years at Maxim as Sardar said - yet, despite all that, it was still a good deal.

-Sardar and Phil, as that blogger captures, according to the people who told me about this - repeatedly laughed at or mocked shareholders for voting against them.

-Sardar made fun of one shareholder questioner and told this shareholder that he was displaying pathologies in his question that would lead him to transfer wealth to others in the stock market.

-His compensation is "generous to shareholders." That is an exact quote that that blogger got right.

-Based on piecing together many comments - it seems that the C.T. and SSS losses have continued to trend downward. It may be hard to tell because there were so many Steak n Shake's closed in the first quarter - that it may be hard to tell what is going on for investors for a few quarters - but the declines have continued basically.

-Sardar was asked a lot about his reputation and he said he has a great reputation. What the shareholders think or what people on this website think are not important. What is important is what serious people think and serious people think very highly of him. This is, apparently, an exact quote.

-Sardar said repeatedly the Steak n Shake turnaround will take a long time.

Partner24

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Re: BH - Biglari Holdings
« Reply #2753 on: May 02, 2019, 06:58:32 AM »
OMG. The transcript and comments say it all. At one end of the spectrum of corporate governance, you have BRK, and at the other end of it, you have this.
« Last Edit: May 02, 2019, 07:06:54 AM by Partner24 »

rkbabang

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Re: BH - Biglari Holdings
« Reply #2754 on: May 02, 2019, 07:31:53 AM »
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?”"

writser

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Re: BH - Biglari Holdings
« Reply #2755 on: May 02, 2019, 07:32:21 AM »
Quote
-Another fun/telling moment was when a shareholder was upset because they felt the shares were significantly undervalued and Sardar said something like, “Our shares have been overvalued in the past. 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?”

I don't know whether that was actually said. Nor do I really care. Awesome article :) .
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

stahleyp

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Re: BH - Biglari Holdings
« Reply #2756 on: May 02, 2019, 07:41:42 AM »
Quote
-Another fun/telling moment was when a shareholder was upset because they felt the shares were significantly undervalued and Sardar said something like, “Our shares have been overvalued in the past. 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?”

I don't know whether that was actually said. Nor do I really care. Awesome article :) .

Part of me wants to buy a share just to attend next year. This is wild.
Paul

rkbabang

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Re: BH - Biglari Holdings
« Reply #2757 on: May 02, 2019, 07:43:02 AM »
He's like a Hollywood villain in some bad low budget anti-Wall Street movie.

TwoCitiesCapital

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Re: BH - Biglari Holdings
« Reply #2758 on: May 02, 2019, 08:59:18 AM »
Quote
-Another fun/telling moment was when a shareholder was upset because they felt the shares were significantly undervalued and Sardar said something like, “Our shares have been overvalued in the past. 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?”

I don't know whether that was actually said. Nor do I really care. Awesome article :) .

Part of me wants to buy a share just to attend next year. This is wild.

Lol! Same! My guess is that's the embellished portion of the article, but honestly you can't tell.

OracleofCarolina

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Re: BH - Biglari Holdings
« Reply #2759 on: May 02, 2019, 12:13:57 PM »
maybe the "www.enhancesteaknshake.com" website should be reactivated!!