I understand why you are annoyed about the way that Biglari went about splitting up the investment side of the business in order to increase his potential payout. But that doesn't change the fact that he's only paid when he generates value for shareholders.
Biglari is not being paid twice. He's getting up to $10mil bonus on the operations side based on the performance of the operating companies; and then he's getting an unlimited bonus on the investment side based on the returns generated there.
Its easy to look back after the fact and say that BH has not been a good investment the last 3-5 years. But the value of the company has increased substantially, even if the stock has not, which simply means that the stock is a much better deal today.
Sentiment: Strong Buy
Its interesting that all you focus on is the $49mil that Biglari got paid, instead of on the $250mil+ in value he generated for us by buying the CBRL stock.
No need for it. 575k shares is 28% of shares outstanding. I doubt anywhere close to that many shares will tender.
The company is undervalued, so the purchase of these shares is excellent for continuing investors. If Biglari can get a substantial portion tendered, he;ll have defacto control and those of us that want that outcome will be happy, while those who don't like it won't be in a position to do anything and can decide to sell the stock.
Bronx, I'm valuing SNS on a long term cashflow basis, not based on what the most recent 10Q turned out to be. There are several reasons that earnings are down currently, including extra spending on Maxim to turn it around and the SNS franchising initiative. I'm valuing these at $0 long term for simplicity. Not including these expenses, SNS has generated an average of $50mil/year in Cash Flow over the past 5-6 years. 10x cash flow puts it at $500mil.
I personally think that franchising and Maxim will both add to long term value, but I'm not assigning anything to them in this valuation.
At this point, Biglari has set up the compensation package he feels rewards him fairly for his contributions. You and I can debate whether or not its too good of a deal for him, but the bottom line is that he is happy with it, so I don't expect him to make any additional changes that are negative for shareholders.
In hindsight, buying CBRL 3-4 years ago instead of BH was clearly the correct decision. CBRL was undervalued, and BH was a somewhat overvalued.
Today, that situation is reversed. BH is tremendously undervalued because people are over-discounting negatives from Biglari, while CBRL is up 200% even though their earnings haven't improved anywhere close to that amount.
Just as a quick thought for you:
The CBRL stake is worth about $550mil after tax right now.
SNS can be conservatively valued at about $500mil
The company has $200mil in available cash.
Thats $1,25bil in value without even considering the smaller parts, but the stock is selling for under $725mil.
Sentiment: Strong Buy
People looking to sell their stock for a fast buck clearly aren't winners here, but anyone interested in buying is great a great deal right now. The stock is trading at about 50% of the value of the company right now.
Apperantly, at least one analyst thinks AIRT is still a good investment at today's prices:
Biglari did say at the meeting that he invested in the two company's of Nick's that he thought were decent investments. I agree that it was likely done at least somewhat out of spite, but it does seem like perhaps he wasn't lying at the meeting.
Sardar did confirm he's not planning another rights offering this year, but didn't rule them out in the future. Note that once the number of shares issued reaches 2.5mil, he would need shareholder approval in order to increase the amount of shares that can be issued further.
Well you've got me beat, I've only spent 11 of the past 18 months abroad, visiting 25 different countries. I didn't say that I agreed with what Phil Cooley said, I was reporting it. But still, it's funny that you use Louis Vuitton as an example when the whole brand is his name.
As of today, the biglari brand certainly doesn't have a lot of value, if any. What Cooley was saying is that it can develop over time. Right now SNS is one of multiple Biglari Holdings companies. If biglari holdings continues to grow, at some point it is concievable that Biglari will be the well known brand, and the owned companies will benefit from the moniker. I'm not saying it will happen, and I don't think its useful today, but this is a possibility in the future.
Finally, you are missing the point of this stock. We are invested in this stock (or should be) because we think biglari will generate good returns for us in the long term. We aren't looking for someone to buy out the stock for a quick gain, and honestly, I'm happy if the price stays low in relation to value for a long time and I want to continue accumulating the stock over the next many years. The stock could have the biglari discount for many years, which is ideal for an investor wanting to invest with biglari for the long term.
I'm putting the notes together on seeking alpha. Here is the first installment:
Hey guys, in case you missed it, I put up a new article on Biglari's franchising initiatives on SA: