frugalchief

Great book. Listened to it on Audible first, then read it. I over commit too much, so it definitely helped put me in check.

Thanks for posting. Great insight.

Good book! +1

+1 ;D

shalab, you asked to comment, so I will do it: I am not interested in this subject at all. As I have said I judge Biglari to be a star at what he does. The only thing I am interested in is that he goes on doing what he does best, taking entrepreneurial decisions, for as long a time as possible. How could I be interested in this subject? If Biglari is forced to leave the company against his will, I will surely be gone too! BH would simply cease to be what I look for. And I will be looking somewhere else. Why should I be interested in what happens to BH afterwards? IMO, investors since 2005 have invested in Western Sizzlin, and since 2008 in Steak n Shake (now BH) because of Biglari. He is the reason, again IMO, that many invested in BH. Until BH becomes a more diversified company with more earnings, more investments, etc., HE is the reason BH has become what it is. Any other CEO would just be managing SNS, and probably not as well as SB has. I really hate to say this.....because I'm all about shareholder's owning the company and management answering to shareholders, but most of us are not buying BH stock b/c of SNS (or now Maxim, First Guard, or CBRL stock holdings)...we are buying because most of us believe SB will create the most value through his management of operating businesses, acquisitions, and other investments. If a plan like this doesn't taste good to you, then there is no purpose in holding the stock. Without SB, BH is just SNS....but without SB....a failing brand. We wouldn't be talking about it.

Thanks all. :D Of course, always see if there are cheaper businesses to buy. But in a stale environment with no cheap ideas, it's better to hold cash then pay premium for a stable business?

Hindsight might be 20/20.... In 2011, Buffett clearly outlined why BRK was willing to buy stock back at 110% of BV. Then subsequently raised it to 120%. Back to hindsight....in 2011 BRK would've paid no more than ~$120,000/ share on the buybacks. While cash was increasing, investments, and acquisitions, (and the hope that one of the best companies in the world would continue to grow) why not pay a premium to buy back more stock? Short-term this might have been not the wisest decision, but again, hindsight, in the time since (past 3 years) the purchase would've made us more money as the price has almost doubled. Which is my question - I, like most of you, will be a net buyer of stock for many many years, wanting prices to languish for these years so I can increase my holdings. Since I'm not looking to cash out my stock around 2-3 decades from now to support my living and giving needs, is it not an OK decision to buy at the premium instead of waiting weeks/ months/ years for the price to fall to an adequate level (110-120% of BV)?? Or do you just stock pile cash and wait until price is within the range of value? We could've sat on our hands the past 3 years waiting for BRK to get to the 120% BV range, all the while the stock price has increased 80% and BV has 40%. I know this isn't the right way of thinking about it. Please correct me. Thx, FC

Is this for real?! Yes.... http://www.sec.gov/Archives/edgar/data/93859/000092189513000091/ex101to8k07428_01112013.htm

Biglari gained control of Western Sizzlin with around 32% back in the day. While it wasn't "majority" it was enough to influence lots of change. While TLF ~15% in BH isn't majority, it's influence and a good amount of eating own cooking - that's practically all of it's assets. How many 100mm companies have increased BV like BH has? Or have the future outlook like BH - running towards opportunity, not reinvesting in same ole' business. As I've mentioned in the BH thread, I prefer Performance Based Compensation (work get paid, don't work don't get paid). That's how I make a living (commission based), so I'm a firm believer in it. People are motivated by making more money. As a shareholder I would be pissed if I was paying my manager some outrageous salary and he didn't do anything (increase value) to deserve it. He would be too content on not doing anything if his salary was $10mm. That would be personal gaining.

While I agree, aren't times different? (I'm too young to even thing about how crazy the 70's must've been, let along 60's & 50's). More investors. More activists. On a good note, there are a lot of 5% + holders of BH stock. Doesn't that take stock to what Biglari has been doing at BH? Wasn't Buffett still relatively little known to the whole investment community for a decade or two? His personal holdings made all the difference regarding control, plus friends and family holdings, and of course it was a smaller company he took over. Of course BRK is so large now it's almost impossible for someone to do something like this.

It's good for another 19, going on 18 years (as long as there isn't a shareholder proposal to dismantle it). As instituted by management, their modus operandi is to have long-term shareholders, who agree with the company's philosophy, objectives, and ultimately, managements ways of thinking and doing. Some call the performance based compensation entrenchment. But, should Biglari continue to effectively work his ideas and build an empire at BH during the next 18 years 50 years (which I also believe he will), how would he entrench himself besides creating (hopefully "tons") of shareholder value? Sure, this trademark is a safety net, but who in their minds would want to activate that trademark agreement...it's company suicide as BH continues to grow revenues to have to pay that out. It would be a nice payday if that happened for him, but is that what he really wants? He will make far more money long-term doing what he's been doing.....by increasing value of BH businesses and investments, his personal holdings, TLF holdings (which he & PC have an interest in), maximizing BCC's fees, increasing BH's intrinsic value, and making a performance fee for creating value. I see everyones points and appreciate the opportunity to look at it from someone else's shoes....but then again, this is all IMHO.... ::)

Hey shalab, Interesting proposition. Why would you want Biglari to give up CEO to be CIO? While I wasn't initially happy about the trademark agreement, I believe it serves his long-term value enhancing plan well. Most investors want results today, but to maximize value can take a while. This allows him to implement and work his plan without disruption from outsiders. Biglari is the reason SNS has become a better brand and why BH is doing what it's doing. I view it similar to the shareholder proposal to have BRK start issuing dividends. Doing so would kill BRK's value enhancing strategy of retaining all earnings and buy operating businesses/ securities. Thx for sharing! FC

I bought this on the iPad and couldn't make it too far....I'm a paper reader, might have to re-buy. Zuckerman is a good storyteller. I love the O&G industry (live in a boom area), and know some exec's of independent companies. They are very high-risk people, gambler types like you said. Too scary for me. They've made big bucks, no doubt, but out of those names mentioned, how many others have financially ruined their lives b/c of these high risk bets and we will never know their names? A large multiple to who has been successful probably. Was reading an article over on ESPN.com this weekend about Jerry Jones....highly leveraged, $50mm in debt at one point, bunch of dry holes, then hit 17 gushers in a row. Eeekk...I cringe just reading about this riskiness, and Jerry could've been a different person than we know today. Thanks for posting, will have to re-read/ finish the book this time! :P Link to ESPN article

It's inspiring to prove the power of compounding over decades.

Thanks for sharing. ;)

Hey Teddy I'll post some stuff over on that thread to keep things categorized. It's an interesting study IMO. http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/bh-biglari-holdings/ FC

Man, that $896k would be worth hundreds of millions if not billions in a few decades! Maybe he will make it up by buying USG...

Hey Teddy I would reference Sardar Biglari (running Biglari Holdings and his private investment partnership, Lion Fund, LP) or Ryan Morris of Meson Capital. Biglari through TLF (the Lion Fund) bought i think around 32% of the shares on a small restaurant chain, Western Sizzlin back in the mid-2000s. He nominated himself to the board, got it, then became CEO after forcing(?) the other members off. He wanted to create value and turn the business around. It's a guess, but TLF only had probably $25mm or so in AUM around that time. Biglari also used Western and TLF to buy shares in Steak n Shake (a much larger company at the time than TLF and Western put together), do the same nomination, got it, then became CEO again. (He only owned about 15% of the shares when all this occurred...but shareholders voted him and Phil Cooley in). Subsequently restructured SNS and renamed it Biglari Holdings. That's a pure play of taking control of a public company. Ryan Morris hasn't necessary "taken control" of companies, but he is on the board of 3 different ones, hoping to influence their business. I believe his AUM are below $100mm too. I hope that kinda answers your question. Biglari played a more activist role, by wanting to create more value for the company he was buying an interest in, and was able to take control to help make the necessary changes, since managements wouldn't listen or try his recommendations. Unlike a passive investment (Buffett back in the day...Solomon CEO, Wesco, Blue Chips) where he nicely(?) assumed the role/control because of his significant investment. I hope it helps!? :-\

Ryan Morris of Meson Capital

You're awesome Max! Thanks for sharing!

Thanks for the advice cobafdek. I'm frugal as it is and try to cut expenses as much as possible, just have to get the wife on board 100%! ;D

Monthly snapshots allow me to visualize if I've stayed on track, and re-analyze and correct if needed. I'm much more focused now that I can compare today's numbers to the last few years results. For me, if I can't visualize my goal, I'll be running around in circles "hoping" it happens. I hate debt too, so watching the mortgage get knocked down is exciting. Seeing that liability number get smaller gets me more energized.

I couldn't agree more. I've been a follower of WEB since college when I discovered what BRK actually was. I've also been a listener and follower of Dave Ramsey since just before college. So I've had these conservative fiscal principles beaten into my head (luckily) before I got out of college. I have friends my age (mid-20's) who I've briefly touch on the subject of getting out of debt and investing their hard earned money. I spoke with one recently who just bought a new car for $30k+, all financed of course (and that's almost their 1 yr salary...no savings, no investments). They are in the mindset that b/c everyone else buys new cars every few years they have to too. What's worse, is they want to always have a car loan b/c they want to drive a nice car. I guess it's a different mindset and way of thinking, but I see those car payments being worth 10's if not 100's of thousands in a few decades....hope it was a nice car! I realize I can't change everyone, value investing is a unique mentality that very few can grasp. Ramsey teaches consistent investing for retirement, and of course living a debt free life. Much of what WEB talks about. Ramsey says save X per month, compound by Y%, for Z years = $$$$$$$$. Apart from the future returns, it's the simple rule of consistently saving and investing to have those results. While I've run calculations on what I should be saving monthly for my retirement, the future is unknown. I'm guided, but not dependent, on the recommended dollar amount I must save each month, but further guided by how I can exceed my expectations/goals later in life (always better to have more and not need it, then need it and not have it). There's no guarantee I could compound my net worth at 20% for the next 50 years, but I'll darn try to! If that goal became reality, I would be happy because I could give 99% of it away and be very content with what's left. Even that 1% would be more then needed. It is definitely a spiritual journey...I'm managing God's money for Him.

Thanks for all the input. I do use Quickbooks for all my accounting, then summarize some key figures after my monthly reconciliation in a Google Spreadsheet. I feel like my life was lost without QB....I'll ponder on some figures monthly to see if I haven't been disciplined in a certain area, so I don't let it get out of control. I'm not eager about watching daily, weekly, or quarterly results...do care more about annual results. B/c of years like 2008, I'll probably look at it more over a 5 year rolling basis. Watching the compounding of BRK over almost 50 years makes me strive to attain at least 20% annualized on net worth...my only competition is the market and increasing our earnings (which is parlayed into savings/ investments) to make that happen.

Hey all, Newbie to the forum, so this topic might have been discussed by now. I've started tracking my family's net worth, assets, liabilities, investments as if I was running My Family, Inc. Does anyone else do this? Curious of anyones insight on what they look at, what an average return would be? Of course the higher the better. I'm just in the beginning of my "real world" life (only 26 yrs. old), so I'm having some good "returns" right now since there isn't a lot of numbers to average out. I've always felt the more I track my personal finances as if it were a business, the better off I would be. I'm watching the pennies, spending wisely, and investing as much as possible to grow net worth. Anything specific ya'll track? Any other suggestions...?