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Biglari & Cracker Barrell


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C'mon people... no one feels like talking about this!?!

 

I'm betting that he will have a board seat in the next year. Kinda makes me want to go long CBRL (maybe buy some calls?) too bad there are not LEAPS... The stock could do well with P/E expansion alone. Lack of reporting or not, they seem to be a cash flow machine...

 

While some of their cap ex isn't wholly allocated to new stores, for a back of the envelope calculation... Take out their cap ex, add in share repurchases, and debt payments, and you are looking at them trading under 6x the previous 4 quarters cash flow. Nice.

 

If you just take out 1/2 of their cap-ex, you are looking at ~8x c/f. Not terrible.

 

Even if you don't like Biglari, it seems that there is money to be made by riding his activism... Actually, I seem to remember Buffett talking about not being activist, but, having no problem with letting other people do it for him? Maybe in the partnership days?

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C'mon people... no one feels like talking about this!?!

 

I'm betting that he will have a board seat in the next year. Kinda makes me want to go long CBRL (maybe buy some calls?) too bad there are not LEAPS... The stock could do well with P/E expansion alone. Lack of reporting or not, they seem to be a cash flow machine...

 

While some of their cap ex isn't wholly allocated to new stores, for a back of the envelope calculation... Take out their cap ex, add in share repurchases, and debt payments, and you are looking at them trading under 6x the previous 4 quarters cash flow. Nice.

 

If you just take out 1/2 of their cap-ex, you are looking at ~8x c/f. Not terrible.

 

Even if you don't like Biglari, it seems that there is money to be made by riding his activism... Actually, I seem to remember Buffett talking about not being activist, but, having no problem with letting other people do it for him? Maybe in the partnership days?

 

BRK itself was essentially an activist move :)  http://www.youtube.com/watch?v=kJKZVP4tX4k

Note to CEO's do not cheat a young and hungry Buffett out of an 1/8 you promised him or you'll get fired!

 

Ron

 

 

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C'mon people... no one feels like talking about this!?!

 

I'm betting that he will have a board seat in the next year. Kinda makes me want to go long CBRL (maybe buy some calls?) too bad there are not LEAPS... The stock could do well with P/E expansion alone. Lack of reporting or not, they seem to be a cash flow machine...

 

While some of their cap ex isn't wholly allocated to new stores, for a back of the envelope calculation... Take out their cap ex, add in share repurchases, and debt payments, and you are looking at them trading under 6x the previous 4 quarters cash flow. Nice.

 

If you just take out 1/2 of their cap-ex, you are looking at ~8x c/f. Not terrible.

 

Even if you don't like Biglari, it seems that there is money to be made by riding his activism... Actually, I seem to remember Buffett talking about not being activist, but, having no problem with letting other people do it for him? Maybe in the partnership days?

 

BRK itself was essentially an activist move :)  http://www.youtube.com/watch?v=kJKZVP4tX4k

Note to CEO's do not cheat a young and hungry Buffett out of an 1/8 you promised him or you'll get fired!

 

Ron

 

true true...

 

One has to wonder what would of happened had he not gone after it. I am betting that he would have made the same mistake, just later on.

 

It is interesting to think how this might have effected things.

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"I'm really curious about the deliberate opaqueness of the retail/restaurant segments."

 

Are you serious???

 

Do you really believe segment accounting will ultimately affect value?

 

Right or wrong, he is simply "creating" a track record of impropriety/incompetence by existing management...laying the groundwork to boot existing management at some point in the future and take control of the company.

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I don't know whether segment disclosure will change anything, but there must be some reason for the presentation. Unique business models are always interesting.

 

I didn't have the same read on the letter to management. He doesn't attack performance so much as he attacks governance. The implication is that he finds it unbelievable that management tracks performance through blended results.

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ahhhh...gotcha?

 

i should have known better than to take you seriously as a value investor after this "strategy" update...but i always give the benefit of the doubt...and nevertheless, i am honestly hoping you do well with these "strategies"

 

 

"Is anyone buying now, or waiting until Jackson Hole? I sold out of FRFHF and 1/3 of my hedges to build up some cash, buy more HHC and WFC, and to open a full position in BRK/B. I still have 7% in cash. Perhaps another opportunity will arise if friday is a disappointment."

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Cracker Barrel's response to Biglari:

http://www.streetinsider.com/Press+Releases/Cracker+Barrel+Responds+to+Letter+from+Biglari+Holdings/6741792.html

 

It's been a few months since I looked at the company, but I don't recall seeing anything particularly unique about their blended margins. Has management communicated any metric that might help to explain the benefit of a blended store vs. more square footage devoted to the restaurant space?

 

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Ragnarisapirate, I read your blog entry about CBRL, and I think that you said something similar in an old CBRL thread. Management may be justified in blending the segments for competitive or communication purposes, but they should also share their logic about why the blended model makes sense. For example, if the retail offerings affect restaurant preferences or vice versa, then we might expect to see more restaurant sales, or EBIT, per square foot compared to a competitor. Or we might see more sales per customer, or correlation between restaurant and retail spend per customer.

 

Just going by the financials, management seems capable and the concept showed good performance through a restaurant downturn, but I empathize with Biglari's larger point that investors are not adequately educated. Perhaps he is wrong to focus on segment delineation, but more information is better.

 

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