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NY Times article on Sardar Biglari


Guest kumar
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http://dealbook.nytimes.com/2012/02/06/taking-a-page-from-buffett-for-his-own-path/?ref=business

 

....“He certainly is a Warren Buffett disciple,” said Zeke Ashton, managing partner of Centaur Capital Partners, which owns shares in Biglari Holdings. “The one thing that’s quite different is that he’s not a guy who’s afraid of picking a fight.”....“Each time, he’s taken a small company and uses it to pick on a big company,” Mr. Ashton said. “The big company doesn’t take him seriously until it’s too late.”....“He’s got a very, very solid understanding of the restaurant business,” said Mitchell A. Kovitz, a principal of the Kovitz Investment Group, which owns about 5 percent of Biglari Holdings stock as well as shares in Berkshire Hathaway. “If he believes that Cracker Barrel is at all similar to what Steak ’n Shake was, he absolutely should try to get in there.”....“He’s my hero,” the elder Mr. Biglari said. “He’s always successful in everything.”

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It's still not clear to me why he hasn't been charged with insider trading.

 

A failure to consider his sale of Biglari Capital to Steak-n-Shake given his position and knowledge of a material insider (and non-public) event, which was likely to, and subsequently did, impact the stock price only because he held those shares through a hedge fund he controlled completely avoids the typical insider trading red flags but the end result is the same: an insider benefiting from material non-public information.

 

A failure to find this type of transaction to be considered "insider trading" dramatically extends the reach of "insiders" and opens the flood gates as insiders can now, easily and cheaply, insulate themselves from insider trading charges simply by holding company shares through a hedge fund they control and selling the fund management co. This creates a totally perverse incentive.

 

I can't believe no one as wsj or nyt has written this up.

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  • 3 weeks later...

It's still not clear to me why he hasn't been charged with insider trading.

 

The following disclosure from a preliminary proxy statement pertaining to the special shareholder meeting to vote on the incentive agreement might help clarify:

 

On April 30, 2010, the Company announced that it had entered into an agreement with Mr. Biglari to purchase his entire interest in BCC for $1.00, exclusive of the adjusted capital balance of BCC through the date. The majority of the proceeds from the adjusted capital balance — net of taxes — Mr. Biglari reinvested in the Lion Fund, thereby increasing his investment as a limited partner. His reinvestment in the Lion Fund came on the same valuation date, April 30, 2010. (emphasis supplied)

 

HTH,

Ragu

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