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Sardar Biglari has done an admirable job of turning around operations at Steak 'n Shake (SNS), but over the past few months, he's made a few less-than-subtle efforts to imitate his idol Warren Buffett.Back in December, he announced that he would do a 1-for-20 reverse split of the stock to boost the share price over $300 and "dissuade speculators." "We are attempting to eliminate those who erroneously think that it is easier for a $10 stock to go to $20 than a $200 one to go to $400," he wrote in a letter to shareholders.
The New York Post has called him a "wannabe Warren." Last month he made headlines when he announced that he would be changing the name of the company to Biglari Holdings. C.L. King analyst Michael W. Gallo wrote that "While progress over the last couple of quarters has been encouraging, we believe the key determinant of value creation going forward will be the success of Steak 'n Shake in transitioning into a conglomerate-like holding company similar to the Berkshire Hathaway model."
So far, Biglari's effort to shift into a Berkshire Hathaway-like company (BRK.A) has ironically consisted of doing two things Warren Buffett never did: a reverse split and a name change. Why didn't Warren Buffett ever do those things? He was too focused on running the company's operations.
The risk for shareholders is that Biglari appears to be preening a bit -- the reverse split and name-change reek of a victory lap and, if it's true that pride comes before the fall, Steak 'n Shake's future under Biglari might not be as bright as the excellent results he's achieved so far.
So far, Biglari's effort to shift into a Berkshire Hathaway-like company (BRK.A) has ironically consisted of doing two things Warren Buffett never did: a reverse split and a name change. Why didn't Warren Buffett ever do those things? He was too focused on running the company's operations.
The risk for shareholders is that Biglari appears to be preening a bit -- the reverse split and name-change reek of a victory lap and, if it's true that pride comes before the fall, Steak 'n Shake's future under Biglari might not be as bright as the excellent results he's achieved so far.
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Reader Comments (Page 1 of 1)
3-01-2010 @ 11:09AM
Jeff said...
Silly commentary, since it is devoid of any real content. Zac should focus on writings that can actually be supported with facts rather than devoting a few words to a piece that makes him sound bitter.
3-02-2010 @ 3:55PM
ShortBus said...
Funny, how I have never heard Sidar call himself the next Warren Buffet, and yet everyone else does. Then when he does something that is NOT like Warren Buffet, you all cry foul.
ridiculous !!!
Maybe if you asked him, he would like to be thought of as the next Carl Ichan ? IEP anyone ?
3-07-2010 @ 12:25AM
MM said...
This is just ridiculous chatter without any value adding real information. You should stop looking for catchy titles and instead focus on something of value to your readers. No one noticed Warren's abilities until Forbes started listing him. As a shareholder we have faith in Sardar's ability to generate considerable return to his shareholders. If he feels more of an ownership with the name change so be it. We want a passionate CEO. That's what Sardar Biglari is. Hope you look for real content next time.