Biglari - A Buffett Devotee Riles His Targets (WSJ)

[ragnarisapirate]

I thought his latest letter was very well done. He states a compelling case and is actually starting to build a pretty impressive investment track record. Compared to existing management my guess he is going to win his seat. At that point I'll be interested intaking a look a cbrl.

 

I second that.

 

The beauty here, is that even if he doesn't win the seat, shareholders will still likely get greater share repurchases and fewer store openings. He stated a great case, and from where I sit (with no position in BH or CBRL) it is hard to argue with the guy; regardless of if you don't like him, he raises good points.

 

I would have no issue buying CBRL right now, but would like to see some of my other investments play out first.

[QLEAP]

Speaking of Biglari, he sure knows how to

Say all the right things in his letters, have you read his latest to CBRL shareholdershttp://finance.yahoo.com/news/Sardar-Biglari-Issues-Letter-prnews-1434956308.html?x=0&l=1

 

Fantastic read, very well laid out. It is hard to see how he does not get elected to the Board with this..

[Parsad]

It's a good letter.  They are always good letters.  And I'm sure Sardar will improve performance of the company stores to a degree.  But he did exclude a couple of things from that letter.  In particular, what were his returns on a couple of his longest held positions...Steak'n Shake (now Biglari Holdings) and ITEX? 

 

Of the four holdings he listed...Western, Friendly, Fremont Michigan & Penn Miller...the return on three occurred entirely due to the sale of the business, not any improvement in operations.  What is stopping the current management of Cracker Barrel from doing the same thing?  Especially without bringing aboard a hostile shareholder!  With Western, operations actually did not improve that markedly, but he stopped the bleeding and created a sound balance sheet, while leveraging the takeover of Steak'n Shake by issuing warrants to existing shareholders and raising capital.

 

Cracker Barrel's management hasn't done a good job, but what exactly will Sardar do that will be significantly different for the trade-off that will eventually occur once the Biglari Holdings culture takes hold...for better or worse!  Cheers!

[ragnarisapirate]

Last time I checked, he saved a company along with the jobs of it's thousands of associates...

 

You can same the same about a lot of strongmen initially - they saved their country, jobs etc. Almost always, the strongmen come in because there is discontent. It is the mentality we are talking about.

 

In Biglari case, it is safe to say he saved the existing shareholders at best, SnS would have operated as a going concern in bankruptcy and would have been auctioned off.

 

I think it was Munger who said capitalism without bankruptcy is like religion without hell. Can we say capitalism without ethics is like...

 

True, but, there would have likely been closures in the mean time... Jobs were saved, and, now, are being created every time that a new one opens up. This is especially true if he can hit the 2000 unit mark that he has states as a goal. There is almost no chance that any of that would of happened had Biglari not come in.

[ragnarisapirate]

It's a good letter.  They are always good letters.  And I'm sure Sardar will improve performance of the company stores to a degree.  But he did exclude a couple of things from that letter.  In particular, what were his returns on a couple of his longest held positions...Steak'n Shake (now Biglari Holdings) and ITEX? 

 

Of the four holdings he listed...Western, Friendly, Fremont Michigan & Penn Miller...the return on three occurred entirely due to the sale of the business, not any improvement in operations.  What is stopping the current management of Cracker Barrel from doing the same thing?  Especially without bringing aboard a hostile shareholder!  With Western, operations actually did not improve that markedly, but he stopped the bleeding and created a sound balance sheet, while leveraging the takeover of Steak'n Shake by issuing warrants to existing shareholders and raising capital.

 

Cracker Barrel's management hasn't done a good job, but what exactly will Sardar do that will be significantly different for the trade-off that will eventually occur once the Biglari Holdings culture takes hold...for better or worse!  Cheers!

 

I too noticed that he left that performance out. That said, there is a difference in pointing out the stock price of the company that you operate (which, we generally would criticize managing a company for share price) as opposed to the share price of activist targets. Furthermore, with ITEX, he kind of hit a wall, much like newer activist attempts have. Which really sucks; I can't imagine an executive being more un-friendly to shareholders than Steve White.

 

Managements tend to not put the company's that give them a pay check up for sale without some prodding. But, going on the letter, it doesn't seem he is looking to sell off the company... well, at least until operations and such improve. There are a lot of things that could be done to improve things there.