Author Topic: BH - Biglari Holdings  (Read 1416063 times)

giofranchi

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Re: BH - Biglari Holdings
« Reply #700 on: July 28, 2014, 05:09:48 AM »
Selling at any price is not. There is a inherent value to any business and selling with for example 99% discount to that is irrational (except if you know of an investment with an even larger discount).

Ok, let’s put it this way: do you believe in staying inside your circle of competence? What’s the price you are willing to pay for something outside your circle of competence? Difficult to say, right? And what if I say that an insurer which achieves CRs around 70%, once left by the “Master” who has achieved such unbelievably low CRs for almost 20 years, suddenly falls outside my circle of competence?

Gio
« Last Edit: July 28, 2014, 05:12:20 AM by giofranchi »
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tombgrt

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Re: BH - Biglari Holdings
« Reply #701 on: July 28, 2014, 06:08:05 AM »
Selling at any price is not. There is a inherent value to any business and selling with for example 99% discount to that is irrational (except if you know of an investment with an even larger discount).

Ok, let’s put it this way: do you believe in staying inside your circle of competence? What’s the price you are willing to pay for something outside your circle of competence? Difficult to say, right? And what if I say that an insurer which achieves CRs around 70%, once left by the “Master” who has achieved such unbelievably low CRs for almost 20 years, suddenly falls outside my circle of competence?

Gio


If your circle of competence is dependent on the manager running the company, you don't have a circle of competence in the first place. Don't kid yourself.
For all I care it's ok not to have a circle of competence, just don't tell yourself you have it solely because you rely on the track record of a CEO and his kind letters to shareholders, that just doesn't cut it.

I do appreciate your endless optimism! (no sarcasm here) I don't think there are a lot of millionaires here who even dare to think of achieving a $1billion net worth (assuming $2million equity in your company that is 100% personally owned compounded at 15% for 45 years). Good luck, you'll need it IMO as it will not be an easy feat.


All may be true, but I have so rarely seen someone so passionate in the defense of a CEO.
Just trying to figure out why. Ultimately this will all sort itself out via SEC fillings and BH events.

This is fast becoming about as useful a thread as the one on Sears or the one on LVLT.

Well, Ragu has definitely put his money where his mouth is (I believe >50% of his portfolio is in BH) and he is in it for the long haul.

My last word on this thread (and not directed at you Myth):

what I find disconcerting is that there are folks on this thread who believed Chad Wasilenkoff was the second coming of Buffett just a year earlier ignoring the excessive compensation, share price destruction yada yada yada. Yet they are out here on this thread pontificating on Sardar/BH with no position in the stock. Why not throw water on your burning house before you help your neighbor?

Besides, BH has fared much much better than FTP. We will just have to wait and see how well he does.

PS: No position in BH and I have mixed feelings about Sardar

If you are talking about me among others, I sold the stock during 2013 at prices multiples of what it is now. It was a huge mistake and lesson ... and ... exactly why I try to warn Gio of the dangers of focussing on management too much. Sooner or later he will get burned if he believes his circle of competence solely comes from believing in management.

I wish there was a very vocal "pretentious asshole" (as some might think of me that way now!  ;)) back then in the FTP thread who called me a fool, maybe I would have realized my mistake sooner. Maybe there was one (some definitely said something) and maybe I was lost anyway, I don't know. I think being an "ass" about things on this forum can have it's advantages. Let me know if you disagree Gio! ;)

txitxo

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Re: BH - Biglari Holdings
« Reply #702 on: July 28, 2014, 06:27:45 AM »
  Come on, guys, lay off Gio. I think that the strategy he is following is quite rational.


So no one is picking on Gio...they just don't like what he is feeding us!  Cheers!   

I agree with the critics of Biglari, as I said in my posting:

   Regarding BH, yes, Biglari is likely to keep generating significant alpha in the future. But his long term track record indicates that most of that overperformance will go to his pocket, and not the shareholders'...

But in this thread I was reading about platitudes, Berlusconi, LRE, etc. I don't think that has anything to do with Biglari.... :)

giofranchi

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Re: BH - Biglari Holdings
« Reply #703 on: July 28, 2014, 06:34:50 AM »
If your circle of competence is dependent on the manager running the company, you don't have a circle of competence in the first place. Don't kid yourself.
For all I care it's ok not to have a circle of competence, just don't tell yourself you have it solely because you rely on the track record of a CEO and his kind letters to shareholders, that just doesn't cut it.

Ok, if you don’t want to talk about “circle of competence”, I will call it "whatever gives me great conviction in a business future prospects". When we are talking about insurance, management is very important imo. Management is very important in a lot of other businesses as well… (Just out of curiosity, Tom, have you ever tried to run a business yourself? When you say management is not important, is it because you have read that somewhere, or because you are running a business that goes on autopilot, without the need of any strategic decision by you?)... But insurance results in particular are very subject to management’s behavior and discipline. 70% CRs are like 20% annual returns in investing: would you invest in The Baupost Group, if Mr. Klarman were to leave it?

The fact I require a great manager (to have great conviction in a business future prospects) doesn’t mean I rely solely on a great manager. I have said many times what I look for, besides a great manager! Otherwise, I would have invested in DELL, in SHLD, and probably in FTP. But I did not. ;)

Gio
« Last Edit: July 28, 2014, 06:41:32 AM by giofranchi »
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giofranchi

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Re: BH - Biglari Holdings
« Reply #704 on: July 28, 2014, 06:51:29 AM »
I do appreciate your endless optimism! (no sarcasm here) I don't think there are a lot of millionaires here who even dare to think of achieving a $1billion net worth (assuming $2million equity in your company that is 100% personally owned compounded at 15% for 45 years). Good luck, you'll need it IMO as it will not be an easy feat.

Ahahahahah!!!! You know how the saying goes: you might have a goal, but what’s truly important is that you should enjoy the travel!

Ops… guess this is just another platitude of mine! ;D ;D

Gio
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tombgrt

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Re: BH - Biglari Holdings
« Reply #705 on: July 28, 2014, 07:04:31 AM »
I know that you look at other things as well Gio, my point is that you can't partly disregard other aspects because management is good. You will now tell me that you don't and that management is simply a requirement but from what I have read I simply do think that you give way too much weight to management and what they say and do. I've learned the hard way that it's the numbers that speak the loudest and help to stay objective and give an objective view (unless there is fraud involved of course! ;)). LRE will be a great case in that regard: Will it slip into mediocrity quickly or will Brindle's talent leave a lasting effect for the foreseeable future?

Also, I have never said management is not important. It is one of many important factors. I do however believe that management is more than it's CEO and that there are things like culture that are equally, if not more, important for the lasting success of a business. We just seem to differ too much in opinion on this subject.

giofranchi

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Re: BH - Biglari Holdings
« Reply #706 on: July 28, 2014, 07:25:39 AM »
Listen, Tom… I really don’t want to sound polemic here… I know you are very young and very smart… Period.

In my first 10 years as a business owner and manager I think I have added much to the overall well-being of my companies… but I have made lots of mistakes too! And ready cash at hand is what has always saved me, when I happened to make a poor choice. Because it has always given me staying power and a chance to do something new. Ready cash at hand has always been possible because both businesses of mine operate in industries not much subject to change, and because their operations require relatively little capital to be maintained. We don’t enjoy great competitive advantages, therefore margins are low, but what little earnings we have are safe, predictable, and can be invested elsewhere in almost their entirety. And that’s what I mean when I say “steady and safe free cash flow”.

Therefore, my experience is simply this: a very good owner/manager can surely make a difference, but even him/her needs a machine that keeps giving him/her new cash. And that machine should function as safely and predictably as possible.

I look at the stock market because I know my own businesses will never enjoy scale. Already, if I didn’t invest in the stock market, I wouldn’t be able to use all the capital at my disposal: my businesses simply don’t need it. I look at the stock market to get the scale my businesses will always lack… But, do you find so perplexing that I search in the stock market for those same characteristics that have served me very well until now in my experience as a business owner/manager?

Of course you might disagree, but I would call this "circle of competence". ;)

Gio
« Last Edit: July 28, 2014, 07:35:38 AM by giofranchi »
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premfan

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Re: BH - Biglari Holdings
« Reply #707 on: July 28, 2014, 08:51:25 AM »
Hello Gio,

You seem like a great businessman and a rational investor.  Hence I don't see why you seek approval and validation in your approach. Continue compounding and living the dream. Forcing people to see the world in your view is a recipe for argument and useless semantics.  If your desire is to be a teacher or future investment guru then results speak louder than words. I would encourage you to build a public track record. This would satisfy your urge to preach your thoughts ( via shareholder letters).

It seems to me the context of the majority of your posts is teaching. You enjoy explaining your investment process. I bet you would write brilliant shareholder letters. Maybe investigate how to get in the public domain. This would build you credibility and a platform to teach to your followers.

premfan
no doubt that whenever gio gets actively involved in a thread it elicits a lot of interest! that's especially true when its a stock he has a position in & conviction in (actually, does gio ever have a stock position he doesn't also have conviction in?). his passion, generosity, & unfailing gentlemanly conduct is contagious. look at how the lre thread has all but dried up & withered since he sold & lost interest, despite the oft brilliant commentary from twa.

I don't get the same impression at all that gio seeks approval or validation or is interested in forcing people to share his world view. I think he just genuinely enjoys & seeks to learn from the debate between different & often diametrically opposed viewpoints.

Quote
Reading makes a full Man, Meditation a profound Man, discourse a clear Man
--Ben Franklin

This is the only reason why I like contributing to the board so much: because I have found out that the process of a) writing about an investment thesis of mine, b) receiving feedbacks from many people around the world, with different cultural and working backgrounds, and c) reasoning about their responses and answering back, is a great way to get “clearness” of mind, and therefore conviction about an investment opportunity.

Besides this, I really don’t care about approval and validation, I don’t care about public fame or a public track-record, I certainly don’t care about forcing the way I see the world on anyone (I even doubt there is a “way” I look at the world…), and of course I couldn’t care less about teaching platitudes to anyone!! ;)

All I care for:
1) To live many joyful moments with the people I love
2) To compound my capital at 15% annual for the next 45 years

PS
I must admit I also find arguing with people who disagree with me… until they finally agree with me… to be much fun!! ;D ;D ;D

Gio

Hello Gio,

My post was just a suggestion for you to leverage your passion for teaching and preaching your investment philosophy. If you do have the returns you state and your business has stable cash flow you already have the platform to go public. This would build you credibility and give you followers to achieve 15 % annual for 45 years. 

There is a hint of superiority in your some of posts when you state you manage business's. Your assumption is that people that dont agree with your positionality must not be business owners. I manage 3 business's.  Two for my family holding company and one i started 3 years.  Many board members i would bet manage business's.  Yet we dont state this constantly to create polarization. Gio, you are not the only person using the "blueprint". 

There is a huge market developing in  "finding the next buffett". I think anyone with a passion for teaching value investing and has a cash machine would be wise to list.  In the end everything reveals itself automatically.  Until then i cant take you seriously. You are just some random guy thats creating polarization by trying to force people to  agree with your positionalities.  And yes Gio you are using force. Anything that creates counter force used force.

giofranchi

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Re: BH - Biglari Holdings
« Reply #708 on: July 28, 2014, 09:18:33 AM »
Hello Gio,

My post was just a suggestion for you to leverage your passion for teaching and preaching your investment philosophy. If you do have the returns you state and your business has stable cash flow you already have the platform to go public. This would build you credibility and give you followers to achieve 15 % annual for 45 years. 

There is a hint of superiority in your some of posts when you state you manage business's. Your assumption is that people that dont agree with your positionality must not be business owners. I manage 3 business's.  Two for my family holding company and one i started 3 years.  Many board members i would bet manage business's.  Yet we dont state this constantly to create polarization. Gio, you are not the only person using the "blueprint". 

There is a huge market developing in  "finding the next buffett". I think anyone with a passion for teaching value investing and has a cash machine would be wise to list.  In the end everything reveals itself automatically.  Until then i cant take you seriously. You are just some random guy thats creating polarization by trying to force people to  agree with your positionalities.  And yes Gio you are using force. Anything that creates counter force used force.

Hi premfan,

Why would I tell you I don’t mind teaching, if it weren’t the truth?

Why would I tell you that my businesses don’t require capital, and therefore there is no reason to take them public, if it weren’t the truth?

If I ask people’s background, whether they are business owners or traders or something else, it is because I want to understand their point of view. And I think points of view are greatly affected by people’s experience. Do you think they are not?

I don’t understand what you mean by “using force”… I thought I was forced into explaining what writser called my “thought process”… I thought I was called the master of platitudes… In other words, I thought mine was just “self-defense”!! ;D ;D ;D

No, seriously, if I have sounded arrogant and forceful, I apologize.

Cheers,

Gio
« Last Edit: July 28, 2014, 09:30:07 AM by giofranchi »
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premfan

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Re: BH - Biglari Holdings
« Reply #709 on: July 28, 2014, 09:43:43 AM »
Hello Gio,

My post was just a suggestion for you to leverage your passion for teaching and preaching your investment philosophy. If you do have the returns you state and your business has stable cash flow you already have the platform to go public. This would build you credibility and give you followers to achieve 15 % annual for 45 years. 

There is a hint of superiority in your some of posts when you state you manage business's. Your assumption is that people that dont agree with your positionality must not be business owners. I manage 3 business's.  Two for my family holding company and one i started 3 years.  Many board members i would bet manage business's.  Yet we dont state this constantly to create polarization. Gio, you are not the only person using the "blueprint". 

There is a huge market developing in  "finding the next buffett". I think anyone with a passion for teaching value investing and has a cash machine would be wise to list.  In the end everything reveals itself automatically.  Until then i cant take you seriously. You are just some random guy thats creating polarization by trying to force people to  agree with your positionalities.  And yes Gio you are using force. Anything that creates counter force used force.

Hi premfan,

Why would I tell you I don’t mind teaching, if it weren’t the truth?

Why would I tell you that my businesses don’t require capital, and therefore there is no reason to take them public, if it weren’t the truth?

If I ask people’s background, whether they are business owners or traders or something else, it is because I want to understand their point of view. And I think points of view are greatly affected by one’s experience. Do you think they are not?

I don’t understand what you mean by “using force”… I thought I was forced into explaining what writser called my “thought process”… I thought I was called the master of platitudes… In other words, I thought mine was just “self-defense”!! ;D ;D ;D
No, seriously, if I have sounded arrogant and forceful, I apologize.

Cheers,

Gio

Hello Gio,

This is my last post on this ( i feel like michael corleone in the godfather movie "just when i thought i was out, they pull me back in").   Ultimately,  the beauty of buffett is the blueprint he has left for us.  We all have the ability to be mini buffetts.  Its going from the "knowing" to the "becoming" paradigm shift.

There comes a point when we all want to "become" instead of "know".  Be willing to experience instead of reading a book and feeling like we "know" about the subject.  What i'm getting at is you seem passionate and most importantly able to invest ( from what you say).  I'm a below average- average investor. I love managing more than investing.  I couldnt market myself as the next brk.  Because my track record is not good enough

Passionate teachers/preachers with a good-great track record have a huge market opportunity to fill a market niche.  Thats why i encourage you to "become" instead of "knowing". Instead of looking for owner/operators become one yourself in the public.  This is my intention only  Gio.   There is a huge untapped niche market out there.