Who else out there is doing Steak N Shake style takeover?

[Guest HarryLong]

Question to the board, who else out there is doing Steak N Shake style takeovers?

[Myth465]

I believe Dash tried it with Dennys but lost.

[Parsad]

I believe Dash lost primarily due to his previous relationship with Steak'n Shake, which was used to dissuade shareholder opinion by the existing board.  Thus, doing Biglari-style takeovers may not be as desireable as we may perceive.  Cheers! 

[ragnarisapirate]

I believe Dash lost primarily due to his previous relationship with Steak'n Shake, which was used to dissuade shareholder opinion by the existing board.  Thus, doing Biglari-style takeovers may not be as desireable as we may perceive.  Cheers! 

 

As I recall, he lost only by a handful of votes. As you point out was probably due to being buddies with Biglari and Co/not laying out an appropriate enough plan (anyone remember the CNBC interview?)

 

Doing a Biglari style takeover isn't dead, just so long as you don't know Biglari, I suppose. I too, am curious as to any Biglari style takeovers, since, there was a ton of value unlocked with SNS.

 

I know that CBMX and UWN have some value guys on board, but, I wouldn't call them anything close to 'Biglari-esque takeovers'.

 

[rick_v]

Its very rare to see a biglari style takeover. I don't believe I have ever seen someone with such a small percentage of a company come in so quickly and take full control whilst changing the name of the company to his own.... That has actually never been done. Icahn has a company named after him but he owns about 92% and its an LP. But what Biglari has done is basically unheard of and even more proof that a large reason he was successful was due to his ability to exude a buffet like image which was gobbled up by the investors. Its almost like an affinity fraud... and I apologise if I am going overboard here. Just some things are blatantly sad when it comes to Biglari, IE: the website...

 

Great Board btw look forward to contribute!

[Parsad]

Ironically, one guy who did it completely right is John Linnartz and the guys from Farnam Street with OI Corp.  John sold 51% of Mustang Capital to Western Sizzlin, and at the time he was accumulating a large position in OICO.  Today the company is humming along with good management, John and Farnam's proxy acting as Co-Chairmen, and they've got a good team of executives running the company as well as on the board of directors.  No bad blood, no notorious reputation...just did it right and for the good of his partners and OICO's shareholders.  Cheers!

[rick_v]

I think another amazing group of investors are Pico Holdings, John Hart. These guys are value investors as well and have built a great business. They have an incredible asset base which includes one of the largest land holdings in Nevada and water reserves and water pipelines. They also have  a ton of cash. Check them out! Good reputation and no self promotion, which I think is very important.

[Ballinvarosig Investors]

Tim McElvaine is Chairman and 31.5% shareholder of Rainkmaker Entertainment.

[Parsad]

Tim's had some experience and success with Sun-Rype and Humpty Dumpty snack foods.  He doesn't do Biglari-type takeovers, but will sometimes work with the management of the companies he invests in.  In this respect, that's what he is doing with Rainmaker as well. 

 

They've got their work cut out for them, but with Tim and Jeff Stacey on the board, and Francis holding quite a large chunk as well, they could not have a better group of shareholders helping support the business.  I truly hope things work out there!  Great bunch of guys.  Cheers! 

[Guest]

I think another amazing group of investors are Pico Holdings, John Hart. These guys are value investors as well and have built a great business. They have an incredible asset base which includes one of the largest land holdings in Nevada and water reserves and water pipelines. They also have  a ton of cash. Check them out! Good reputation and no self promotion, which I think is very important.

 

I don't know much about this company, and I'm sure you know quite a bit more than I do. But, why do you say that? According to Morningstar, the company has underperformed the S&P 500 and it's industry over the past 15 years. Also, it looks like Hart has virtually no stake in the company. Any insight is appreciated. Thanks!

[rick_v]

Relating to Pico I am not even a shareholder but I was just pointing out that they have done a great job taking a company and growing it through value investing techniques. I have attached a bloomberg graph showing the equity return in the last decade it comes out to about 11% annualized even though the stock is about 50% down from its peak so I am not sure what you saw on MorningStar but last I checked the S&P did not achieve 11% annualized over the last 10 years.

 

Regarding insider ownership, they have done a terrible job at controling dilution which has led to the current situation where management owns about 7% of the company when taking into account their ESOP. But again this is their ownership not owned through some fund over which they preside (ie: biglari). What they have done is grown their permanent base of capital nicely to about $537m and still have a beautiful balance sheet. I believe they issued a bit too many shares but if you sit down and do some analysis about Nevada Land Holdings you will find its one of those assets that almost rarely can be owned by private enterprises. Do some digging there, you will enjoy it :) Its like they own a good chunk of the state of Nevada. Then they have their water assets. Read the 10K you won't be let down.

 

Again, when pointing them out I was simply trying to demonstrate a group of investors who have taken elements of the buffet approach without any self marketing and build a pretty great holdings co utilizing value investment themes and applying them in unconventional ways... (buying water reserves, land holdings, acquifers) they even had a nice exit once to a european company I can't remember right now.

 

Not sure if you ever heard of Danaher (DHR) but that is also run by a group of brothers, the Rales, who have generated about 20% annualized for over 20 years. I added a bberg graph there as well for your pleasure. Its funny actually there is a buffet book I think by Lowenstein that mentions the Rales brothers as some hot shot playboys in the 80's. Little did the writer know these guys are actually bonafide billionaires and have compounded beautifully.

 

Another relatively unknown group are the Desmaris family from Montreal, their Power Corp has achieved 20%+ annualized as well.

 

Enjoy!

[Guest]

Relating to Pico I am not even a shareholder but I was just pointing out that they have done a great job taking a company and growing it through value investing techniques. I have attached a bloomberg graph showing the equity return in the last decade it comes out to about 11% annualized even though the stock is about 50% down from its peak so I am not sure what you saw on MorningStar but last I checked the S&P did not achieve 11% annualized over the last 10 years.

 

Regarding insider ownership, they have done a terrible job at controling dilution which has led to the current situation where management owns about 7% of the company when taking into account their ESOP. But again this is their ownership not owned through some fund over which they preside (ie: biglari). What they have done is grown their permanent base of capital nicely to about $537m and still have a beautiful balance sheet. I believe they issued a bit too many shares but if you sit down and do some analysis about Nevada Land Holdings you will find its one of those assets that almost rarely can be owned by private enterprises. Do some digging there, you will enjoy it :) Its like they own a good chunk of the state of Nevada. Then they have their water assets. Read the 10K you won't be let down.

 

Again, when pointing them out I was simply trying to demonstrate a group of investors who have taken elements of the buffet approach without any self marketing and build a pretty great holdings co utilizing value investment themes and applying them in unconventional ways... (buying water reserves, land holdings, acquifers) they even had a nice exit once to a european company I can't remember right now.

 

Not sure if you ever heard of Danaher (DHR) but that is also run by a group of brothers, the Rales, who have generated about 20% annualized for over 20 years. I added a bberg graph there as well for your pleasure. Its funny actually there is a buffet book I think by Lowenstein that mentions the Rales brothers as some hot shot playboys in the 80's. Little did the writer know these guys are actually bonafide billionaires and have compounded beautifully.

 

Another relatively unknown group are the Desmaris family from Montreal, their Power Corp has achieved 20%+ annualized as well.

 

Enjoy!

 

 

Rick, thanks so much for posting that. It was very helpful. I'm gonna look further into it. I remember reading an article, I belive in  Barron's about a fund manager talking about PICO. As for the morningstar data, I pulled it from here. Their market cap has increased greatly over the past decade from about $150 million to over $700 million. However, the total return to shareholders over that time has been 8.14% (very good, considering the market) and for 15 years at 2.62% (underperformed index and peers) annually.  It looks like the reason for the increase in market cap while minimizing gains to owners was due to the dilution you referred to. Is that why you don't own any of it?

 

http://performance.morningstar.com/stock/performance-return.action?t=PICO&region=USA&culture=en-US

[Josh4580]

http://finance.yahoo.com/news/ITT-To-Enhance-Its-Global-bw-760386274.html?x=0&.v=1

 

[Parsad]

Congratulations to John!  Great news for Mustang.  Cheers!