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BH Stock Movement


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Yeah this is curious.  Biglari sold the GP of the Lion Fund (Biglari Capital) to BH, but evidently he still controls the Lion Fund, I guess in his capacity at BH.  So he retains control of the fund even though he sold control of it for $4 million.  Nice trick.


Then three funds all controlled by BH (Lion Fund, Mustang Fund, Western Acquisitions) are all buying stock in BH.  Why?  This does not constitute BH buying back shares, instead those shares are held in third party investment funds.  Clients of those funds are still paying fees to the fund managers on any gains in these shares, which would increase BH's book value, and Biglari gets his cut of that.  So clients are paying 2 layers of fees.


Then from the perspective of these funds, is a new investment in BH really the best use of their capital?  There are no other stocks on the market worth buying?


Is this just an elaborate way to increase Biglari's compensation using third party money?  I don't really get it.

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Correct me if I am wrong, but my understanding is that Biglari sold the GP in the Lion Fund to BH for a dollar--the GP makes the investments for the fund and earns fees. Separate from this Biglari also had a large part of his net worth in the Fund which was liquidated---thats where the $4mil payment comes from. If I remember correctly, he did this to eliminate any conflict between making investments for the Lion Fund and BH. So, the $4mil is not what he sold the Lion Fund for, its more like a return of capital.



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