Bigliari annual meeting notes

[shalab]

I came across this in silicon investor:

 

http://www.siliconinvestor.com/readmsg.aspx?msgid=28818227

 

[Guest]

"Cracker Barrel shareholders have certainly done well, with shares up nearly 50% over the past year. During the same period, BH shares are down 10%. That's quite a disconnect considering that BH, whose market cap is $462 million, owns $386 million worth of CBRL shares. Each share of BH represents ownership of nearly 4 shares of CBRL. While BH's book value has increased significantly over the past years, the share price has not followed; yet anyway. "

 

I'm seeing BH's market cap at $543 million.  Do they really own that much CBRL?

[rmitz]

Cracker Barrel shareholders have certainly done well, with shares up nearly 50% over the past year. During the same period, BH shares are down 10%. That's quite a disconnect considering that BH, whose market cap is $462 million, owns $386 million worth of CBRL shares. Each share of BH represents ownership of nearly 4 shares of CBRL. While BH's book value has increased significantly over the past years, the share price has not followed; yet anyway.

 

I'm seeing BH's market cap at $543 million.  Do they really own that much CBRL?

 

I would like to say that Biglari is starting to reap what he has sown (a lack of trust).  But it's probably just the usual market randomness.

[dcollon]

BH own's roughly 4.7mm shrs of CBRL. 

 

 

[Guest]

BH own's roughly 4.7mm shrs of CBRL.

 

thanks dc. So, CBRL alone is worth about $376 million and BH has a market cap of $544 million (from what I can tell, the notes are mistaken at $462 million). So, is BH worth $168 million excluding CBRL. The guy seems super shady...and I hate dealing with shady people, but I'm a bit intrigued.

[Vish_ram]

How did you get this market cap? I see 10-Q showing that they've 1,227,928 outstanding. That comes to 466MM (yahoo shows the same). But Morningstar shows 543MM.

 

If it is 466, then BH valuations are certainly interesting.

 

 

Cracker Barrel shareholders have certainly done well, with shares up nearly 50% over the past year. During the same period, BH shares are down 10%. That's quite a disconnect considering that BH, whose market cap is $462 million, owns $386 million worth of CBRL shares. Each share of BH represents ownership of nearly 4 shares of CBRL. While BH's book value has increased significantly over the past years, the share price has not followed; yet anyway.

 

I'm seeing BH's market cap at $543 million.  Do they really own that much CBRL?

[Guest]

Vish,

 

I just looked it up on Morningstar. It's also $540 million on Google Finance.

[wescobrk]

How did you get this market cap? I see 10-Q showing that they've 1,227,928 outstanding. That comes to 466MM (yahoo shows the same). But Morningstar shows 543MM"

 

Are you sure you are reading biglari holdings?

The most recent q clearly states 1.43 million shares. Go to sec filings.

[wescobrk]

Jonathan Heller is very lazy. All of his research apparently is to check yahoo finance.

That guy is so lazy he can't take 2 seconds to check the sec filing.

[compoundinglife]

Value Line screenshot attached. They report 1.23M SO and a MC of 465.47M.

[Guest]

http://www.sec.gov/Archives/edgar/data/93859/000092189513000168/form10q07428_12192012.htm

 

"Common stock – $0.50 stated value, 2,500,000 shares authorized – 1,511,174 shares issued at December 19, 2012 and September 26, 2012, 1,227,973 and 1,227,928 shares outstanding (net of treasury stock), respectively"

 

 

[wescobrk]

Well, no offense but I don't understand why there is so much confusion on this.

This is like looking up the stock price. If people want to make adjustments in their analysis is one thing but figuring out the market cap is almost the most basic thing out there.

 

Anyone can literally pull this up in two seconds. It's a public document. I don't understand how this can be screwed up!

[wescobrk]

As of January 23, 2013 1,433,716 shares of the registrant’s Common Stock, $.50 stated value, were outstanding.

 

This is at the top of the q filing

[wescobrk]

Biglari even outs in the 2010 letter to use 1.43 because GAAP doesn't make any sense

[Guest]

I think the confusion lies in what's reported via Morningtar, Google and the 10q vs what's on Yahoo Finance, Value Line and the original link. It looks like the later are pulling the numbers from Sept from what I can tell.

[GrizzlyRock]

Guys - share count is super confusing due to BH owning and consolidating (per GAAP) a hedge fund which owns a significant chunk of the shares.  See attached or my full write-up in the BH thread. 

 

If you make the argument that Sardar can chose not to sell the BH shares if LPs leave the Lion Fund then you can make an argument for 1,227,973 shares outstanding.  I choose the use the 1,333,990 for conservatism.

Biglari_Holdings_Share_Count.pdf

[giofranchi]

Guys - share count is super confusing due to BH owning and consolidating (per GAAP) a hedge fund which owns a significant chunk of the shares.  See attached or my full write-up in the BH thread. 

 

If you make the argument that Sardar can chose not to sell the BH shares if LPs leave the Lion Fund then you can make an argument for 1,227,973 shares outstanding.  I choose the use the 1,333,990 for conservatism.

 

GrizzlyRock,

I think wescobrk is right. Shares held by BH shareholders plus the Lion Fund are 1,433,716. Why do you choose, instead, to use 1,333,990?

Thank you,

 

giofranchi

[GrizzlyRock]

As shown in the share count chart I attached above, the 1,433,716 is before you back out shares owned by the Lion Fund. BH common shareholders own $50.7 million of the $104 million fund and subtracting their proportion of BH share which are owned by the Lion Fund leads to the share count of 1,333,990.

[giofranchi]

As shown in the share count chart I attached above, the 1,433,716 is before you back out shares owned by the Lion Fund. BH common shareholders own $50.7 million of the $104 million fund and subtracting their proportion of BH share which are owned by the Lion Fund leads to the share count of 1,333,990.

 

Ah! Now I understand. Thank you!

 

giofranchi

[OracleofCarolina]

I attended some of the annual meeting in NYC as I was there visiting a friend. I missed the beginning and left early . Anyway, Biglari wants to make alot of money and he reminded the folks there of this many times. He rattled off lots of numbers from memory including chapter and page numbers of Security Analysis. Here are a couple of things I wrote down

1. They are not inclined to refranchise SNS stores

2. Not interested in stock buybacks at this time,BH is in embryonic stage, too many other ideas at this point

3. ITEX and CCA are the two negative stocks out of 9 13-d's , CCA has been an expensive education but no intention to sale

4. Lion Fund , 100 million AUM, 75% is BH shares, has a 5% hurdle rate , Lion Fund has a better tax structure than BH and they are not going to close down, there could be regulatory issues if they did not have Lion Fund

5. Sardar is sick and tired of people whining about Obamacare, they will manage around, actually lowering prices May 1st

6. In-n-Out is kicking their butt in Dallas

7. SNS is opening a unit in Dubai mall

8. In it for the long haul with Cracker Barrel, rope a dope strategy

9. Cooley says they bid on several well known brands but did not win, would not disclose names

9. Sardar guarantees they will own an insurance company within 2 years, has passed on 25 deals

10. They will spend 15k-20k per store for cameras to help manage from headquarters

 

Oh yeah, they are out to MAKE MONEY!

 

Cheers,

 

Jason

 

 

[Guest]

I attended some of the annual meeting in NYC as I was there visiting a friend. I missed the beginning and left early . Anyway, Biglari wants to make alot of money and he reminded the folks there of this many times. He rattled off lots of numbers from memory including chapter and page numbers of Security Analysis. Here are a couple of things I wrote down

1. They are not inclined to refranchise SNS stores

2. Not interested in stock buybacks at this time,BH is in embryonic stage, too many other ideas at this point

3. ITEX and CCA are the two negative stocks out of 9 13-d's , CCA has been an expensive education but no intention to sale

4. Lion Fund , 100 million AUM, 75% is BH shares, has a 5% hurdle rate , Lion Fund has a better tax structure than BH and they are not going to close down, there could be regulatory issues if they did not have Lion Fund

5. Sardar is sick and tired of people whining about Obamacare, they will manage around, actually lowering prices May 1st

6. In-n-Out is kicking their butt in Dallas

7. SNS is opening a unit in Dubai mall

8. In it for the long haul with Cracker Barrel, rope a dope strategy

9. Cooley says they bid on several well known brands but did not win, would not disclose names

9. Sardar guarantees they will own an insurance company within 2 years, has passed on 25 deals

10. They will spend 15k-20k per store for cameras to help manage from headquarters

 

Oh yeah, they are out to MAKE MONEY!

 

Cheers,

 

Jason

 

Thanks for the notes, Jason. Though, I don't trust anyone who talks about making money. Just seems like a salesman to me. :P

 

Kyle, thanks for your notes about the share count, too.

 

[giofranchi]

I attended some of the annual meeting in NYC as I was there visiting a friend. I missed the beginning and left early . Anyway, Biglari wants to make alot of money and he reminded the folks there of this many times. He rattled off lots of numbers from memory including chapter and page numbers of Security Analysis. Here are a couple of things I wrote down

1. They are not inclined to refranchise SNS stores

2. Not interested in stock buybacks at this time,BH is in embryonic stage, too many other ideas at this point

3. ITEX and CCA are the two negative stocks out of 9 13-d's , CCA has been an expensive education but no intention to sale

4. Lion Fund , 100 million AUM, 75% is BH shares, has a 5% hurdle rate , Lion Fund has a better tax structure than BH and they are not going to close down, there could be regulatory issues if they did not have Lion Fund

5. Sardar is sick and tired of people whining about Obamacare, they will manage around, actually lowering prices May 1st

6. In-n-Out is kicking their butt in Dallas

7. SNS is opening a unit in Dubai mall

8. In it for the long haul with Cracker Barrel, rope a dope strategy

9. Cooley says they bid on several well known brands but did not win, would not disclose names

9. Sardar guarantees they will own an insurance company within 2 years, has passed on 25 deals

10. They will spend 15k-20k per store for cameras to help manage from headquarters

 

Oh yeah, they are out to MAKE MONEY!

 

Cheers,

 

Jason

 

Thank you! Very interesting. Imo, especially point n.9 (the second one! ;D) is good news! :)

 

giofranchi

[wescobrk]

As shown in the share count chart I attached above, the 1,433,716 is before you back out shares owned by the Lion Fund. BH common shareholders own $50.7 million of the $104 million fund and subtracting their proportion of BH share which are owned by the Lion Fund leads to the share count of 1,333,990.

 

 

That makes sense or you can use 1.43 and back it out like Sardar argued.

 

I still think market cap is an unadjusted number and I would still start with 1.43 then use analysis why it should be adjusted.

 

This still doesn't explain why Jonathan heller is using 1.2 million shares. Wtf?

[wescobrk]

Sardar bought the shares to make money (and others would argue to gain votes) not to retire the shares.

Maybe hellar's next article will argue the market cap is 20 million because he is adjusting for cracker barrel too.

[ragu]

Parsad,

 

IMO, the thread title with the childish name-calling needs to be fixed. I think it's classless enough for name-calling to appear in individual posts, but a thread title?

 

I bring it to your attention because I know that a post making what was,quite frankly, a disgraceful analogy about investing alongside Sardar was removed from these boards (voluntarily or otherwise).

 

 

I choose the use the 1,333,990 for conservatism.

 

GrizzlyRock,

 

I am sure you know this already, but Sardar suggests that you include the shares held by BH in any analysis and make the corresponding adjustments to GAAP accounting.

 

Best,

Ragu