Author Topic: BH - Biglari Holdings  (Read 1360406 times)

Jurgis

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Re: BH - Biglari Holdings
« Reply #1490 on: March 21, 2015, 12:06:09 PM »
Thanks for your deep psychological analysis about my investment style and goals. I did not realize that my presence on this board is offensive to you. I'll attempt to minimize my posts here in the future.

You also have an option to ignore my messages which are not directed at you actually.
"Before you can be rich, you must be poor." - Nef Anyo
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BTShine

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Re: BH - Biglari Holdings
« Reply #1491 on: March 21, 2015, 01:18:00 PM »
Well said NBL

Cheers!


Parsad

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Re: BH - Biglari Holdings
« Reply #1492 on: March 21, 2015, 01:41:39 PM »
NBL, with due respect, I disagree with this sentiment.

I'm sure the incumbents are disappointed they lost the two shares held by the popcorn stock investor population.

Shalab, with respect, you misunderstood the sentiment.  What you suggested is not at all the sentiment I was sharing (this had nothing to do with stewardship or corporate governance) - but rather that the votes of people who are investing, in their own words, for entertainment purposes - are much less significant than anyone, no matter how large or small their share ownership is, who is reasoning through these issues and voting purely as an investor.  I haven't knocked anyone for voting however they want.  But when someone says they own a stock for "entertainment" purposes, I can't help but think of that as poor stewardship.

NBL, I would hope you would include BH's investment in Air T and Insignia as "poor stewardship" as well.  While not "entertainment", both investments were a spectacular waste of capital simply to measure penises.  Cheers!
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Hielko

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Re: BH - Biglari Holdings
« Reply #1493 on: March 21, 2015, 02:39:45 PM »
Those were excellent investments :)  Cheers!
You're serious?

innerscorecard

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Re: BH - Biglari Holdings
« Reply #1494 on: March 21, 2015, 04:18:01 PM »
It's good to have some people against Biglari so the board doesn't become an echo chamber.
Disagreement should be encouraged.

I wonder whether the generalized version of this statement (companies should have boards that are contrarian to management) is actually true, especially in the case of owner-operator companies like Biglari Holdings. I think that at least for Sardar Biglari's vision of the company, the board seems to represent something like a source of collective wisdom, as well as the nexus of a network of people in the industries he mainly swims in. It seems that a board composed of people that are against Biglari is actually very much contrary to the idea of a dynamic investment holding company that makes idiosyncratic decisions based on the decisions of a clever individual brain. Whether or not Biglari's vision for the company (his stated vision - putting aside for now the possible ulterior motive of simply looting the company, which because I cannot read his mind I can't 100% rule out) is good or not is another thing, but I do think it might not make the most sense to use traditional theories of corporate governance to look at it.
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gfp

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Re: BH - Biglari Holdings
« Reply #1495 on: March 21, 2015, 04:33:05 PM »
owner operator?  It's bad enough that Sardar constantly throws around words like founder, founded, entrepreneurial, etc - but I think it is important to remember that he hasn't founded any of the companies and is a paid manager, not a founder or owner operator.  There is a big difference.  It is important to remember who's capital it is.  It is not Sardar's capital.

Why is it in shareholders' best interest to pay hedge fund fees on treasury shares just so Sardar can vote them?  At the very least, there should be no fees paid on company stock owned by the company.  Even the investors on this board who justify this voting arrangement because they want him to have control should be able to agree that it makes no sense to pay him incentive fees on BH shares owned by BH.  It is one of the most egregious corporate governance lapses I've ever seen - and I've been to China...

 

innerscorecard

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Re: BH - Biglari Holdings
« Reply #1496 on: March 21, 2015, 04:57:44 PM »
You were absolutely right to correct my use of that term. I shouldn't have used the term owner-operator, as Biglari neither founded, owns the majority of nor actually controls Biglari Holdings (which is why shareholders are having this vote).

The corporate governance absolutely does not seem intended to protect or maximize shareholders' interests. But I think one of the reasons the argument over Biglari Holdings on this board is so bitterly divisive is because it seems two viewpoints (summarized roughly and without too much nuance below) are especially good at talking past each other:

1.  Some people seem to evaluate Biglari based on his own stated goals of creating something like an owner-operator investment holding company that has idiosyncratic corporate governance and shouldn't be evaluated on the usual standards. Thus, Biglari's treatment of shareholders is not a determinative issue, when compared to the fact that Biglari seems to be along the path of accomplishment that he wanted to do when he began his tenure at the company;

2. Others seem to evaluate Biglari based on common-sense heuristics of how a company should be run so that shareholders aren't taken advantage of. So the extremely high and arbitrarily shifting terms of engagement for Sardar Biglari are obviously rapacious, and mean that being a shareholder is a sucker's bet. Even if Biglari is creating value in a talented way for himself, it doesn't matter for shareholders, because he will have take it for himself in a variety of crafty and obviously unfair ways.

In the uncertainty of the present, both views can co-exist given the same set of facts known outside the mind of Sardar Biglari, but in the long run, they obviously are mutually contradictory ways of analyzing the company. Only one will be shown to be correct in hindsight, based on how this story plays out, and how shareholders end up doing. Interestingly, I actually think one does not have to necessarily believe in the first viewpoint for Biglari Holdings to be a rational investment, based on the price paid based on one's appraisal of the company's value as separated as it could possibly be from judgments of Biglari's character (which, shown by the discussion here, is in fact not easy to do).
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gfp

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Re: BH - Biglari Holdings
« Reply #1497 on: March 21, 2015, 05:13:44 PM »
"Interestingly, I actually think one does not have to necessarily believe in the first viewpoint for Biglari Holdings to be a rational investment, based on the price paid based on one's appraisal of the company's value as separated as it could possibly be from judgments of Biglari's character (which, shown by the discussion here, is in fact not easy to do)."

This is a good point, and is why I have become a shareholder again despite my criticisms.  The recent prices were far too low in a tough environment to find cheap and easy to value companies.  I bought a lot.  I also recently voted for the incumbents.  I was a shareholder of predecessor companies years ago.

I will continue to buy at 415 (which is also the top of the Lion Fund's repurchase range) if it trades there again.  I don't expect to lose money at these prices unless Groveland wins.  I don't think they will or I would not own the stock.

tombgrt

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Re: BH - Biglari Holdings
« Reply #1498 on: March 21, 2015, 06:05:07 PM »
owner operator?  It's bad enough that Sardar constantly throws around words like founder, founded, entrepreneurial, etc - but I think it is important to remember that he hasn't founded any of the companies and is a paid manager, not a founder or owner operator.  There is a big difference. It is important to remember who's capital it is. It is not Sardar's capital.

Hey hey, give it some time! It sure will be eventually!  ;D


Someone should calculate Biglari's CAGR including compensation, theft fees, etc. and make a nice comparison against what shareholders are getting.
 

Why is it in shareholders' best interest to pay hedge fund fees on treasury shares just so Sardar can vote them?  At the very least, there should be no fees paid on company stock owned by the company.  Even the investors on this board who justify this voting arrangement because they want him to have control should be able to agree that it makes no sense to pay him incentive fees on BH shares owned by BH.  It is one of the most egregious corporate governance lapses I've ever seen - and I've been to China...

The very fact that we are on a board called "Corner of Berkshire and Fairfax" (and know what those companies stand for) and that we are discussing these obvious malpractices as if they could ever be acceptable is baffling to me!


Parsad

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Re: BH - Biglari Holdings
« Reply #1499 on: March 21, 2015, 07:19:55 PM »
owner operator?  It's bad enough that Sardar constantly throws around words like founder, founded, entrepreneurial, etc - but I think it is important to remember that he hasn't founded any of the companies and is a paid manager, not a founder or owner operator.  There is a big difference.  It is important to remember who's capital it is.  It is not Sardar's capital.

Why is it in shareholders' best interest to pay hedge fund fees on treasury shares just so Sardar can vote them?  At the very least, there should be no fees paid on company stock owned by the company.  Even the investors on this board who justify this voting arrangement because they want him to have control should be able to agree that it makes no sense to pay him incentive fees on BH shares owned by BH.  It is one of the most egregious corporate governance lapses I've ever seen - and I've been to China...

+1!  It's amazing how obvious the dilemma is, yet very few find it ethically compromised. 

He's simply double-dipping.  He should have a moderate salary at BH, with a reasonable annual bonus decided by the compensation committee and approved by the board.  Then he's welcome to reap his incentive fee at Lion Fund.

He also should not be allowed to vote BH shares controlled by BH assets in the Lion Fund...those shares should simply abstain.  He can vote BH shares owned by the Lion Fund that are not BH assets.

Cheers!
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