Author Topic: BH - Biglari Holdings  (Read 1450600 times)

CorpRaider

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giofranchi

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Re: BH - Biglari Holdings
« Reply #651 on: July 26, 2014, 01:01:11 AM »
Do you (or any of those that accuse Sardar of lying) actually know the context of Sardar's statement?

No, I donít. And I donít care either. This whole thing about compensation cannot be really seriousÖ I thought my tone had always been sarcastic enough! ;)

Whatís serious, instead, is the opportunity we have in BH today. Its shares are constantly put under pressure for a reason thatís very clear to me: BH is stuck with the CBRL investment today. That is exactly the kind of reason for undervaluation I like: because I can be sure it is only temporary.

How many times do you find something that not only looks undervalued, but that you also know why it is undervalued, and you have great confidence it is only for a temporary reason too? Not very often, right?! And, when you do, you immediately recognize it as one of the best investment opportunity you have come across in a while.

Thatís what BH around $400 is today!

Gio
« Last Edit: July 26, 2014, 01:05:10 AM by giofranchi »
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wachtwoord

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Re: BH - Biglari Holdings
« Reply #652 on: July 26, 2014, 03:29:16 AM »
Do you (or any of those that accuse Sardar of lying) actually know the context of Sardar's statement?

No, I donít. And I donít care either. This whole thing about compensation cannot be really seriousÖ I thought my tone had always been sarcastic enough! ;)

Whatís serious, instead, is the opportunity we have in BH today. Its shares are constantly put under pressure for a reason thatís very clear to me: BH is stuck with the CBRL investment today. That is exactly the kind of reason for undervaluation I like: because I can be sure it is only temporary.

How many times do you find something that not only looks undervalued, but that you also know why it is undervalued, and you have great confidence it is only for a temporary reason too? Not very often, right?! And, when you do, you immediately recognize it as one of the best investment opportunity you have come across in a while.

Thatís what BH around $400 is today!

Gio

Don't you think it's undervalued because the CEO is considered by the general population to be untrustworthy? If so, I imagine that will stay the same (not important if you don't intent to sell, it only limits your liquidity).
"Beware of he who would deny you access to information, for in his heart he dreams himself your master"

giofranchi

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Re: BH - Biglari Holdings
« Reply #653 on: July 26, 2014, 03:38:26 AM »
Don't you think it's undervalued because the CEO is considered by the general population to be untrustworthy?

No.
At the end of 2013 BH stock price reached $520.
Do you think the market changed opinion about Biglari in 6 months? ???

Gio
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Mikenhe

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Re: BH - Biglari Holdings
« Reply #654 on: July 26, 2014, 03:58:43 AM »
I'm an ex owner of steak and shake, currently sitting on the sidelines. My biggest concern is that SB is going to try and run everything. I prefer the Watsa method of buying businesses that run themselves.

As it happens I'm off to a wood fired grill they own tonight - thought there were a few more of them but it'll be interesting to see the concept first hand.

Sportgamma

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Re: BH - Biglari Holdings
« Reply #655 on: July 26, 2014, 06:26:23 AM »
Don't you think it's undervalued because the CEO is considered by the general population to be untrustworthy?

No.
At the end of 2013 BH stock price reached $520.
Do you think the market changed opinion about Biglari in 6 months? ???

Gio

Previous price is not a reason for something to be undervalued. Right?

giofranchi

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Re: BH - Biglari Holdings
« Reply #656 on: July 26, 2014, 06:37:00 AM »
Previous price is not a reason for something to be undervalued. Right?

What I meant is this: until CBRL stock price began to slightly decline (or at least stopped appreciating fast), and until it became obvious that Biglari is facing a long battle with CBRLís management, the P/B ratio the market was willing to accord to BH was in line with the one of other companies which are expected to grow BVPS at a handsome CAGR for many years to come.

Gio
« Last Edit: July 26, 2014, 06:40:26 AM by giofranchi »
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wachtwoord

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Re: BH - Biglari Holdings
« Reply #657 on: July 26, 2014, 09:40:22 AM »
Don't you think it's undervalued because the CEO is considered by the general population to be untrustworthy?

No.
At the end of 2013 BH stock price reached $520.
Do you think the market changed opinion about Biglari in 6 months? ???

Gio

Well aren't the clear ego-centrical changes (e.g. everything with his name on it) very recent?

For the record I'm not trying to be annoying, I'm just enjoying the discussion as I would not feel comfortable investing with this CEO and I'm curious whether I'm wrong about that :)
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link01

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Re: BH - Biglari Holdings
« Reply #658 on: July 26, 2014, 12:55:30 PM »
Previous price is not a reason for something to be undervalued. Right?

What I meant is this: until CBRL stock price began to slightly decline (or at least stopped appreciating fast), and until it became obvious that Biglari is facing a long battle with CBRLís management, the P/B ratio the market was willing to accord to BH was in line with the one of other companies which are expected to grow BVPS at a handsome CAGR for many years to come.

Gio
gio, I think that's only part of it. besides the cbrl concerns you mention there's also sns: operating earnings declined from 19m to 12m 2012 to 2013, $ ebit from 46.5m to 28.4m.

tho biglari states that he believe sns never the less increased its intrinsic value I don't think there are a lot of investors disposed to take him at his word or give him the benefit of a doubt. however, on this point I do. when he says "We willingly traded near-term profits for higher long-term cash flows. In fact, we could have had record earnings in fiscal 2013. Instead, we chose to reinvest rather achieve a low cost structure, and to grow through franchising. We will continue to allocate capital on the basis of creating significantly greater dollar value per dollar spent." I believe him. he may be in a hurry to get rich but he has strongly held value investing principles & business operating beliefs that I don't think he will compromise, even if it hampers short term performance. "We are subscribing to Sam Waltonís philosophy in which he stated, ďBy cutting your price, you can boost your sales to a point where you earn far more at the cheaper retail price than you would have by selling the item at the higher price.Ē

here's how he traded higher costs now for a stronger franchise & profits down then road:

" Restaurant operating costs increased because of, inter alia, increased staffing in our stores of $4.3 million, higher supply costs of $2.3 million, and higher insurance costs of $1.6 million. Increased training in 2013 resulted in a $2.7 million higher expense, largely tied to franchise openings. In addition, our efforts to franchise the Steak n Shake concept domestically and internationally has steadily increased General and administrative expenses. In fiscal 2013, direct franchising costs represent 24.8% of Steak n Shakeís general and administrative expenses, up from 14.8% in fiscal 2012."

and I estimate direct franchise costs were 9.5m in 201 & 19m in 2013. adding the increase in all these investment related costs up YOY is real money at +20.4m. that more than offsets the -17.2 decrease in YOY ebit mentioned above. BH does indeed look undervalued, tho whether its enough to compensate for the mistrust biglari has engendered will help determine how much more undervalued it can get before the scales are finally tipped the other way.

edit: oh, & if biglari continues with these rights offerings below book value its going to take some adjustments to calc bh's real growth in bvps when attempting to plot his scorecard on that metric. I thought it was interesting that he said he'll continue to make use of rights offerings at least until he's able to push thru a shareholder vote for a dual class of stock, tho I don't remember where I read that at this time







« Last Edit: July 26, 2014, 01:08:58 PM by link01 »

bargainman

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Re: BH - Biglari Holdings
« Reply #659 on: July 26, 2014, 02:57:16 PM »
You are being vague and cryptic here. I'm not sure what you are getting at.

This is not unusual.  I don't think I have seen a single message from Ragu that is not vague and cryptic.