Author Topic: BH - Biglari Holdings  (Read 1416178 times)

peridotcapital

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Re: BH - Biglari Holdings
« Reply #2900 on: July 01, 2020, 08:00:06 AM »
sorry if I soon trite but why are people even talking about Sardar and Biglari anymore.  This company has eroded investor capital very quickly.  The leadership appears arrogant and has a whole bunch of operational issues. 

Can anyone let me know the upside here ?

I will take a shot at this. When I look at BH I ask myself "what parts is Sardar unlikely and/or unable to screw with?" Assuming there are any, are those pieces alone worth owning at a certain price? If so, what is that price? Assume zero value for everything else. Depending on BH's share price, one can start to get quite comfortable at a certain point.

So what is included in this theoretical "safe, possibly investment-worthy" bucket? First it was just the non-controlling CBRL stake. Then he added First Guard. And recently he added another insurance business. I think that's about it right now... the things he is directly involved with are too dangerous (Maxim and Restaurants) and the oil and gas business is so tough, even if he isn't involved.

So... how much are those 3 aforementioned pieces worth? Add in a large haircut for margin of safety. How does that resulting value compare with the current BH equity value of $200M...? It is an interesting exercise depending on where BH is trading...


awindenberger

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Re: BH - Biglari Holdings
« Reply #2901 on: July 01, 2020, 07:20:37 PM »
-Sardar apparently also said there is a good argument that could be made that incentive compensation hurdle rates could be lower.
I love this bit.

  • First he said he wouldn't take a proper salary
  • Then he awarded himself a large salary
  • Then he award himself the bumper incentive plan
  • Then he stuffed the payroll with family stooges

The latest move to re-write the incentive plan is hilarious.

NBL, your notetaker seems to have been pretty lax with his notes on this question.

Sardar was asked: You are set up with the 6% performance fee that doesnít kick until the high water mark. If there was a clone of BH that started today, would you still use that threshold given high equity prices and low interest rates, or would you still think that was the best set up if starting a firm today?

This was my brother's notes from his response:

Hurdle rate is tough. It should cover covered interest rates at least. Hurdle to overcome would cover the risk-free rate, + a % paid. There could be some reasonable arguments to lower hurdle rate if starting over, or take the Charlie Munger route (33%, no hurdle). That said, if I did change it, I wouldnít change it much. I liked the 5% used with the Lion Fund.
I was paid for performance - $500m of returns generated created $83m incentive comp for me. Iím in it for the long-run and wonít make those modifications just because there have been some down years.


So lets unpack this: Sardar was asked a hypothetical question, and he answered it hypothetically, but concluded by noting that he likely wouldn't change it much were he to be starting from scratch. He also noted he had no plans to change anything now.



given2invest

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Re: BH - Biglari Holdings
« Reply #2902 on: July 01, 2020, 08:36:00 PM »
I guess one of Sardar's relatives is a member of this forum.  Or Sardar himself!   Cause it's the only explanation for why anyone would defend this guy.

awindenberger

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Re: BH - Biglari Holdings
« Reply #2903 on: July 03, 2020, 08:50:18 AM »
I guess one of Sardar's relatives is a member of this forum.  Or Sardar himself!   Cause it's the only explanation for why anyone would defend this guy.

Much better to just take everything that is said by someone and twist it to make it sound terrible, isn't it.

If I was actually Sardar I can't imagine why I would spend my time responding on this forum, LOL.

Ballinvarosig Investors

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Re: BH - Biglari Holdings
« Reply #2904 on: July 03, 2020, 02:41:24 PM »
So lets unpack this: Sardar was asked a hypothetical question, and he answered it hypothetically, but concluded by noting that he likely wouldn't change it much were he to be starting from scratch. He also noted he had no plans to change anything now.
The fact he even suggested a further change to the incentive plan is an insult given the way the share price has cratered and if history is anything to go by, it's the first salvo in softening up shareholders to the idea.

Gregmal

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Re: BH - Biglari Holdings
« Reply #2905 on: July 03, 2020, 04:01:57 PM »
I have found that waiting for morally bankrupt people or managers void of ethics, to develop them, is a poor investment strategy. Even if there is tremendous margin of safety, more often then not, they'll find a way to put more of it in their own pockets than yours. In fact, you're lucky if you even get anything.

Spekulatius

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Re: BH - Biglari Holdings
« Reply #2906 on: July 03, 2020, 05:31:43 PM »
I have found that waiting for morally bankrupt people or managers void of ethics, to develop them, is a poor investment strategy. Even if there is tremendous margin of safety, more often then not, they'll find a way to put more of it in their own pockets than yours. In fact, you're lucky if you even get anything.

I agree. Valuation is irrelevant, if an asset is controlled by a crook and there is no way to wrestle control away. Itís as simple as that.
Life is too short for cheap beer and wine.

Orchard

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Re: BH - Biglari Holdings
« Reply #2907 on: July 03, 2020, 06:56:35 PM »
I agree. Valuation is irrelevant, if an asset is controlled by a crook and there is no way to wrestle control away. Itís as simple as that.
Would you invest in this if the market cap was $1?

hillfronter83

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Re: BH - Biglari Holdings
« Reply #2908 on: July 03, 2020, 07:22:38 PM »
I agree. Valuation is irrelevant, if an asset is controlled by a crook and there is no way to wrestle control away. Itís as simple as that.
Would you invest in this if the market cap was $1?

A more realistic scenarios is if BH drops another 90% and itís market cap is $20m. And letís assume oneís net worth is $1m. Will you put half million in this stock? My answer is no.

Cevian

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Re: BH - Biglari Holdings
« Reply #2909 on: July 04, 2020, 03:45:50 AM »
Eventually, there is a realistic chance he will take this private so I don't think anyone can trust getting in even at a low price since one can easily foresee him making a lowball offer.

Biglari wins in every scenario and investors lose in most scenarios I can envision. The only thing that would prevent him from taking this private is his need for sycophants hanging on his every word. I've met the guy. A large part of his ego is the crowd he draws at the AGM. This is just a guess but, in his mind, I think he imagined he'd be filling a stadium full of groupies by now.