2012 Biglari Holdings Letter

[OracleofCarolina]

http://www.biglariholdings.com/letters/2012.pdf

 

Cheers!

[giofranchi]

Thank you, Oracle! :)

 

giofranchi

[gfp]

please god let this man into a writing class, a dale carnegie course, humility training, something...  Even Buffett uses Carol Loomis and he's an excellent writer naturally.  If this guy is going to write letters for a living he has got to learn that he sounds like an idiot.

[zarley]

please god let this man into a writing class, a dale carnegie course, humility training, something...  Even Buffett uses Carol Loomis and he's an excellent writer naturally.  If this guy is going to write letters for a living he has got to learn that he sounds like an idiot.

 

Amen.  I didn't get much past the first paragraph.  He's trying way too hard to sound smart.  That almost never works.

 

 

[Hielko]

Totally agree. If you want to sound smart you should explain something complicated and make it look easy. Not the other way around.

[augustabound]

please god let this man into a writing class, a dale carnegie course, humility training, something...  Even Buffett uses Carol Loomis and he's an excellent writer naturally.  If this guy is going to write letters for a living he has got to learn that he sounds like an idiot.

 

Amen.  I didn't get much past the first paragraph.  He's trying way too hard to sound smart.  That almost never works.

 

Same here. Granted, I only read it out of curiosity from globalfinancepartners post. 

The whole tone of the letter screamed, look at how smart I am and how much money I've made out of nothing in college..............I mean, how much money he's made for his "partners".  ;)

 

We all knew that kid in high school English class who used big words to sound smart for the teacher.  He was a jackass that nobody liked.

But ended up rich.  :P

[manualofideas]

Who knew?  George Bush was "the decider," and Sardar Biglari is "the sole capital deployer."  Good luck!

[nkp007]

I know it's easy to criticize him and his tone comes off as an overeager and pirated Warren Buffett...

 

BUT

 

I believe every person has something that they can teach you. If you read through is whole letter, he actually (once you decipher through his awkward sentence structure) is making some good headway in creating a moat around SNS. He also explains some investing / accounting concepts pretty well.

 

I don't think I'll ever invest in his company, but let's face it...he's a smart value guy. And he controls a cash generating business that most of us can only dream of having.

 

[giofranchi]

If this guy is going to write letters for a living he has got to learn that he sounds like an idiot.

 

Sincerely, I wish I were so much of an idiot as Mr. Biglari is!! ;D

Last year he increased investments 50%, BV per share 25%, investments grew from $6.9 million in 2008 to $378.6 million in 2012, SNS customer traffic is continuing to improve (albeit at a slower pace), and operating earnings per store are continuing to increase handsomely, the pursuing of the SNS franchising is also bearing fruits, with the first 40 international restaurants to open next year throughout the United Arab Emirates.

No, to me he doesn’t sound like an idiot at all… Instead, he most certainly sounds like a bragging, arrogant, and overconfident entrepreneur… But here, of course, we must once again remember the difference between investors and entrepreneurs: the most successful investors tend to be intellectuals, very deep thinkers, while the most successful entrepreneurs tend to be… well, bragging, arrogant, and overconfident! Their bragging, arrogance, and overconfidence stems directly from all the energy and unrelenting persistence they put in each effort of theirs, and, consequently, from all the outstanding goals they achieve. The problem is that most entrepreneurs are fooled into thinking that energy and unrelenting persistence are all that really matters… So, they overlook culture, and most often remain ignorant and unsophisticated…

Now, say what you want about Mr. Biglari, but I think nobody can label him as “ignorant” or “unsophisticated”. Instead, put together knowledge with energy and unrelenting persistence, and what you get is a hell of a businessman!

 

That being said, I must admit that my judgment of Mr. Biglari might not be entirely rational… Mr. Biglari has created the “platform” that best resembles what I am also trying to do with my own firm. And, maybe, sometimes I unconsciously think: “If he fails, operating on a much larger scale and being in a much safer position than me, why should I succeed instead?”. That is an irrational thought, I know. But no one is entirely rational all the times, right? :-[

 

giofranchi

[gfp]

gio - I understand your points.  I was primarily commenting on his writing, which I think comes off much worse to people who speak English as their first language.  Despite his definition of entrepreneur, it looks like the only business he started was an ISP that had absolutely nothing to do with Biglari Holdings.  I don't count investment partnerships as entrepreneurship, but some may disagree.

 

I don't think he is a bad investor.  I was happy when he filed on PMIC some time back.

[premfan]

If this guy is going to write letters for a living he has got to learn that he sounds like an idiot.

 

Sincerely, I wish I were so much of an idiot as Mr. Biglari is!! ;D

Last year he increased investments 50%, BV per share 25%, investments grew from $6.9 million in 2008 to $378.6 million in 2012, SNS customer traffic is continuing to improve (albeit at a slower pace), and operating earnings per store are continuing to increase handsomely, the pursuing of the SNS franchising is also bearing fruits, with the first 40 international restaurants to open next year throughout the United Arab Emirates.

No, to me he doesn’t sound like an idiot at all… Instead, he most certainly sounds like a bragging, arrogant, and overconfident entrepreneur… But here, of course, we must once again remember the difference between investors and entrepreneurs: the most successful investors tend to be intellectuals, very deep thinkers, while the most successful entrepreneurs tend to be… well, bragging, arrogant, and overconfident! Their bragging, arrogance, and overconfidence stems directly from all the energy and unrelenting persistence they put in each effort of theirs, and, consequently, from all the outstanding goals they achieve. The problem is that most entrepreneurs are fooled into thinking that energy and unrelenting persistence are all that really matters… So, they overlook culture, and most often remain ignorant and unsophisticated…

Now, say what you want about Mr. Biglari, but I think nobody can label him as “ignorant” or “unsophisticated”. Instead, put together knowledge with energy and unrelenting persistence, and what you get is a hell of a businessman!

 

That being said, I must admit that my judgment of Mr. Biglari might not be entirely rational… Mr. Biglari has created the “platform” that best resembles what I am also trying to do with my own firm. And, maybe, sometimes I unconsciously think: “If he fails, operating on a much larger scale and being in a much safer position than me, why should I succeed instead?”. That is an irrational thought, I know. But no one is entirely rational all the times, right? :-[

 

giofranchi

 

 

I agree biglari is a GREAT businessman. Hes outstanding in optimization. In other words creating  value in areas that didnt exist before. I still wouldnt invest in this " platform" cause his sole intention is to maximize use own wealth. Didnt buffet just say in a new article if money was his main influence he would have kept the 2/20 structure of his fund and not go into brk. People are usually influenced by one main thing money, status, or etc. Partnering up with people that value creating value ( optimization) is much superior than partnering with people that are influenced by money. This might sound the same money and optimization but its a HUGE distinction. Saying all that for the right price i would invest in a control company of biglari cause hes great at optimization of companies. Ackman is great too.

[wescobrk]

It looks like he'll get the 10 million cap for incentive even though after tax earnings were about 20 million so he effectively earned half of what the shareholders earned, is that right? If there wasnt a cap of ten million, I think he would have earned closer to 15 million but shareholders earned 20, or about 75% of what shareholders netted. Granted this is somewhat misleading because he has a huge amount of unrealized gains for shareholders, but I think those numbers are correct.

 

I wonder what his chances of getting control of UNAM insurance company given the board controls over 53% of the stock.

[bmichaud]

This was nauseating. I get it - we all admire and seek to invest like Buffett....but does he really need to virtually clone the principles of Buffett's letters? Preference for buying whole businesses, look-through earnings, separating the business into investments and operating earnings, writing to his "partners"....

[ragnarisapirate]

I'm kind of surprised that no one is talking about management compensation and how the consolidation of the income statement for various holdings (which thanks to a poison pill at CBRL, is presently a non-issue) could effect the accounting at BH, and ultimately the managerial compensation...

 

The repercussions are quite interesting if a 20% position effects things as I would imagine they would- after all, if it hits the income statement, shouldn't it have something on the balance sheet? I am curious as to where the company's portion of earnings would hit the balance sheet. Intangible assets?

[giofranchi]

gio - I understand your points.  I was primarily commenting on his writing, which I think comes off much worse to people who speak English as their first language. 

 

Well, I cannot argue with that! … On the contrary, I fear I sound like an idiot, when I try to share my thoughts in English with you! :(

Although all my reading nowadays actually is in English, it will never be my mother language…

 

Despite his definition of entrepreneur, it looks like the only business he started was an ISP that had absolutely nothing to do with Biglari Holdings. 

 

I don’t really think an entrepreneur should necessarily be the founder of a company. Look no further than Mr. Henry Singleton, as an example from the recent past, or Mr. John Malone, as an example of today. They both acquired the great majority of their companies, but also implemented the right strategies to make those companies more profitable, and to make them grow. Many a time they were also directly involved in supervising the daily operations of those companies. They understood which changes were desirable, and had the strength and the perseverance to carry them out.

As far as I know, they both should be reckoned examples of great entrepreneurs.

 

giofranchi

[cayale]

I'll reserve further comment on the investability of this issue, or even the earnestness of the letter.  In tone, however, it almost seems like the author is paraphrasing some Cliff's Notes original or using a template and replacing whatever words he can with  thesaurus synonyms.  It's weird.

[zarley]

Ravi (aka Rationalwalk) on the TMF BRK board linked to this little post about BH: 

 

http://www.inelegantinvestor.com/2012/12/14/jockey-biglari-and-his-recalcitrant-horse-a-late-scratch-special-meeting-postponed-again-at-last-minute/

 

Bilgari Holdings(BH) Chairman and CEO Sardar Biglari has, on multiple occasions, let us all know that Biglari Holdings is a ‘jockey stock’ and that he is the ‘jockey’.  It seems though, that the horse’s owners continue to resist his orders.  Biglari first tried to classify the stock in February 2011, but was unsuccessful in that attempt.  More recently, Biglari proposed a modified plan on October 5, scheduling a special meeting for November 2.

 

On November 2, the day of the meeting, Biglari abruptly delayed it until December 14. Most recently last night at 9:15, hours before the scheduled meeting, the company announced that the meeting would be delayed once again with no new date proposed.

 

....

 

In a nutshell: 

It’s becoming increasingly clear that Biglari’s inability to work well with others, his narcissism, his dishonesty, and his limitless greed will outweigh his intelligence and operational skills.

 

No matter how smart the guy is, or how good an investor he is, or how rich he'll very likely make himself with BH, I'm pretty sure I wouldn't want to be his 'partner' in much of anything.

[ubuy2wron]

Its interesting about this fellow. I remember reading about him on this site, I did a little DD and downloaded an annual report. I read a few pages and saw his picture and decided to give him a pass, it was the picture that gave me the creeps. This was before his royal highness and been outed here by the way. Sometimes you can judge a book by its cover I guess.