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Annual Meeting - April 8


kapilm
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With the annual meeting this week, perhaps members have questions they would like asked on their behalf by those attending.

 

The SNS/WEST merger tax consequences might be one. I imagine there are others.

 

Would one or both of the confirmed attendees ask questions on our behalf if we could get a few together?

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I would like to know if Steak N Shake (the restaurant side) has the operational talent in place to run the day to day operations.  Or, is Sardar's role still split between operations and managing funds?  Due to the high turnover at Steak and Shake, would this make him inclined to more friendly acquisitions in order to keep the key people in place?  Thus making the company easier to run?  ;D

 

 

 

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What time does the meeting start?  Is it possible for any of the users to post updates here?

 

Wish I could make it today - should be very interesting.

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"IBJ is covering the meeting live in New York City. For up-to-the-minute updates, follow IBJNews on Twitter and check back at IBJ.com."

 

Twitter doesn't work for me at work.

 

Wall Street apparently likes what Steak n Shake CEO Sardar Biglari is saying today ... Shares are soaring to $404, a new 52-week high. $SNS

about 1 hour ago via HootSuite

 

More on Steak n Shake Co.'s pending name change to Biglari Holdings Inc. ... http://ow.ly/1w9ua $SNS

about 2 hours ago via HootSuite

 

No buybacks of Steak n Shake shares, at least for now, Biglari says at annual meeting. "You guys have to stop bidding up the stock." $SNS

about 2 hours ago via HootSuite

 

Steak n Shake gaining traction in franchising effort ... New locations planned for Denver, Las Vegas, Richmond, Va., and Rome, Ga. $SNS

about 2 hours ago via HootSuite

Steak n Shake CEO woos investors in New York City http://ow.ly/1w7OF

about 2 hours ago via HootSuite

 

Steak n Shake Co. shareholders approve name change to Biglari Holdings Inc. Starting tomorrow, will trade under symbol BH. $SNS

about 3 hours ago via HootSuite

Retweeted by you and 2 others

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Board of Steak n Shake Co., soon to be Biglari Holdings Inc., is contemplating merging with Sardar Biglari-controlled Lion Fund. $SNS $BH

26 minutes ago via HootSuite

 

I had suggested several months ago that the Lion Fund either needed to be wound up or only hold SNS stock. Merging works for me. This way Sardar can concentrate on SNS with no chance of a conflict of interest.....if he does this I'll forgive him for the name change!

 

cheers

Zorro  ;D

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Meeting was well attended and almost 100-150 people showed up. Snacks and drinks were available for the attendees. The meeting started at 1 PM and within the first 15-20 mins Sardar went through the various preliminaries. He showed a marketing video of a walkthru of the prototype in 3-D animation. Then he opened the floor to Q&A.

 

Key highlights of the Q&A that I jotted down (somewhat in the order questions were asked) -

 

* Sardar and Phil want to stick with the easy stuff. They are looking for predictable businesses.

* In terms of returns : Franchising < Investment Management < Insurance

* Unit economics : $1.5 MM cost for the prototype. Two kinds of prototype : standalone and in-line (e.g. embedded in mall)

* $0.10 beef price change equates to $2.6 MM impact on cashflow.

* SNS doesn't use any hedge on food prices. Since he doesn't give quarterly forecasts he doesn't want to hedge. He is ok with volatility.

* Focus on maximize cashflow and ROIC at the subsidary level.

* Sardar took a Harvard class where it was mentioned that 'price' is not equal to 'cost + margin'. Companies leave a lot on table. Sardar doesn't believe in it. He wants consistency all through the various stores.

* Other restaurant stocks are overvalued. Insurance stocks are under or fairly valued. 

* Sardar wants to be considered as a hedge fund manager. BH's holding structure mitigates subsidiary risk and gives him the flexibility to allocate capital.

* One of the questioners was worried that Sardar was underpaid by hedge-fund standards.

* Most business are very messy from inside. He thought he knew a lot when we was trying to take over SNS but learnt a lot of new stuff when he became CEO. Doesn't believe in sugarcoating and believes in giving a consistent story when communicating with customers, employees or shareholders.

* All decisions are based from a customer standpoint. Talked about saving $400k in napkin costs.

* Sardar & Phil recommended these books - Distant Force, Made in America, Think Twice, Blink

* Some leaders that Sardar admires - Eddie Lampert, Henry Singleton (ex-CEO of Teledyne), LUK guys

* Regularly attends insurance conferences and other annual meetings. Somebody saw him at SHLD meeting.

* BOD contemplating merging LION fund in BH. He didn't give a straight answer when a questioner asked him who takes priority when he is looking for investments. [ I found him to be the most uncomfortable on these questions. Infact, Phil asked the questioner to stop this line of questioning as the attorney was squirming in his chair. Shout-out to the mid-west guy who pursued the BH/LION conflict of interest line of questioning !]

* Name change was not a big deal and that there was 95% support in-favor of the change. Phil mentioned that here is a vocal minority out there and that they have thick skins to handle the objections.

* Fremont bid is in first innings and they are going to be relentless. Phil mentioned that he wasn't happy that his home state is giving them such a hard time. They have already hired a CEO. Called him CEO-elect. He is travelling and works out of San Antonio office.

* BH is going to take out of circulation almost $900k worth of shares.

* BH is going to raise capital through the hedge fund route.

* BH15 is the ticker for the bonds. Phil didn't expect it be heavily traded.

* Annual meeting location sometime in future will change to San Antonio. They might rotate among venues too.

* 23 acres land purchase took time but Sardar was relentless. Got it at a good price. 11 acres can be developed on it.

* A couple of bids for companies were not accepted as they were too low. Didn't mention names.

* Focusing on low CR and short-tail insurance cos.

* Refused to answer question about Tidal Insurance [i couldn't hear him properly on this one]

* No hobbies like golf etc. Fully focussed on BH. Though the 20-hr work days are behind him.

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great summary, kapilm! many thanx.

 

-what do you mean "BH is trying to raise capital via the hedge fund route"? are you referring to BH or mustang funds & western investments?

 

-any idea how 900k of shares are going to be taken out of circulation?

 

-did sardar mean he doesnt believe in the concept of  'price' is not equal to 'cost + margin' or that he didnt believe in leaving a lot on the table? interesting that he took a harvard class.

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Thanks kapilm,

 

Could you elaborate on this section?  Thanks!

 

-O

 

* BH is going to take out of circulation almost $900k worth of shares.

* BH is going to raise capital through the hedge fund route.

* BH15 is the ticker for the bonds. Phil didn't expect it be heavily traded.

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I attended the meeting.

 

I believe the 900k shares referred to currently reside in the Lion Fund. I believe Sadar said that when Lion is folded into BH, BH would buy these shares and retire them.

 

Regarding the Harvard class, Sadar said the course taught not to leave any money on the table, in other words always maximize profit margins. Sadar believes to have a reasonable profit margin coupled with the lowest cost structure so savings can be passed along to the customer. This will drive increases in market share and ultimately drive your inefficient competitors out of business.

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