Looks aweful. I think they need to get back to the basics. Focus on expanding the SNS brand. Don't get all caught up in CRBL. It is a tough economy and the focus should be on core business efficiencies and expanding the brand. Keep it simple.
Who has time to read that eleven page morass? Jstveco730 has it right - Biglari got all caught up in the CRBL (though it really is CBRL) - what was Biglari thinking? He took $200 million of Steak n Shake cash flow and took on debt at less than 4% and Lion Fund capital and he bought another cheap restaurant. And what kind of earnings does BH have to show for it - NONE - it's Unrealized - what good is that? You can't pay taxes on unrealized gains, as Denn56k points out - earnings down and less tax paid - hey, great work Denn56k - you are a bottom-line guy. Meanwhile Biglari is getting away from those SNS roots - allocating capital instead of stirring side-by-side shakes while serving a heap of those delicious shoe-string fries.
What's worse is that the reason earnings are down is that Biglari maxed out on his hedge-fund style compensation, around $10 million. We, the shareholders, agreed to pay him on increasing the value of the company, not on EARNINGS. What the heck? With him just allocating capital and making $200 million turn into $270 million, we ended up paying him $10 million. But you know what he has to do with 30% of that compensation - he is forced to buy BH shares on the open market and hold it for three years - HAH! - we got him by the short hairs now. So every time he takes low cost of capital and makes 35% returns, we stick it to him big time! And when he goes to the open market and buys those shares, there are Denn56k and Jstveco730 selling it to him - the two financial wizards. Schmuks like you and me, Abcvalueabc, we are buried in 10Qs and trying this fad called value investing and sitting there with Biglari holding shares of a restaurant company that has lost its way. My first lot has a cost basis of $152 - I haven't even sold it so I can pay taxes on it - What good is that??
The only reason you have a current price of $405 versus a cost basis of $152 is BH, SNS was on the verge of bankruptcy when BH got involved. With that kind of gain I would be singing BH's praises versus spending all my energy being negative. If you are unhappy you can always vote with your feet, sell and buy another investment you do like.
Anyone have any constructive thoughts on the long term prospects of BH ?, it would be great to share them.
QUACK.......SB is not an operations guy......SNS is and will continue to struggle.....Someone can come along now and play SB's game saying BH is failing to execute...falling behind competitors and general mismanagement, its palin to see ...look at the numbers....
Net income 2012 - $22 mil......2011 - $35 mil .with $7 mil less tax paid in 2012 than 2011...so if the same tax was paid for both years. 2012 net income would have been $15, this is a better comparison..or a better way to make rosey the 2012 numbers.