Anyone have an idea of the free cash flow generated from the SNS stores on a YOY basis? In other words, is it increasing or decreasing?
Not including franchised stores in this model.
Still seems to me that you have a stock with 1) selfish management but 2) cheap on a FCF basis.
To me, you need to discount the first point to benefit from the second.
I actually sold all my shares a few years ago when it dropped to $14/share (pre split) and bought back in around $5. I still hold it, though not a large portion. I've just been following the story since Biglari came onto the scene, and I find it comical some of the things he does and says. He may be a smart when it comes to finance and stock trading, but he's a buffoon when it comes to operations. He reminds me of a snake oil salesman. For anyone to buy into the possibility of Steak n Shake opening even 25% of the claimed goal of 1,500 franchises in a few years, it just seems crazy to me. I stay away from getting too involved in stock's anymore, it's very time consuming and I tend to obsess over it, I let my financial advisor take car of it for me. The only investments I involve myself with are classic cars. They're a lot of fun to own and drive, and they're easy to make money on. My current daily driver is a 33 year old european classic, lot's of fun and certainly not the norm. And, it still gets 30 mpg.
I am not a defender of Biglari or a bear on this stock.
Mgccrx, let's reframe the conversation. What would the price of BH need to be for you to be a buyer? And why?
Clearly it is worth more than zero. I have stated here thought I would take a full position at $300 and would nibble under $350.
What else are your top investment ideas/holdings?
I have not mis-stated anything.
The sns debt rose to 81 million from less than 20 last year.
None of the debt was used to improve the operation or expand the footprint of the sns business.In fact most of the money was spent as a 50 million dollar investment in the other part of the business.
The line about sitting and letting others do the work and sitting back and collecting royalties says quite a bit about the way you think.The problem with that approach is that franchisees are looking to be partners in a business,seeing money taken out of the business and put elsewhere could send up a red flag for potential franchisees.
In addition there were only 3 franchisee outlets opened all last year so it does appear that they are not attracting many people that want to be in business with them.
It is funny that people are trying to say my assessment of the company was wrong and then agreeing with me.
All that I said was they they are putting more assets in the investment part of the business, including moving FCF from SNS to LION fund.
First you say that I am wrong and then go on to say, what is wrong with treating sns as a cash cow.
I guess I'm part of my own conversation, but what would you pay for a business generating a flat 50 million per year.
Step 2. What do you consider the real assets at BH in excess of liabilities that are not necessary to maintain current ops.
Add the two steps and in my opinion you have an estimate of the fair value of bh. Take some discount for Biglari being an ah-le and compare to the market cap
You are misstating facts.
He did some spruce ups as soon as he got control.
So its not like he is totally neglecting them.
And he invested heavily in franchising which is where the best bang for the buck comes...risk adjusted of course.
The only thing that is happening here is he is not doing like many firms do and grow just to be growing. And many of those firms close stores every 4-6 years and then start growing again. Rinse & repeat and all that "growth" just burns up money.
A little company growth would be good to keep employees motivated and provide opportunities. But blindly growing just to be growing without considering the cost is stupid.
Why NOT let others invest & grow SNS and BH just sit back & collect royalties ?
I agree with you up until your sears comment.
Also, keep in mind this is how Brk started. But Biglari is no Buffett, either in investing acument or shareholder friendliness.
Sears has no assets outside of its business. It is on the verge of going under IMO. With BH, as you pointed out, the assets outside the business are growing. If SNS goes under, you still may be left with tons of assets and investments.