Sardar Biglari

[winston]

Age: 36

Chairman and CEO of Biglari Holdings Inc (BH)

Biglari Holdings’ stock previously had the name of Steak ‘n Shake. Sardar Biglari gained control of Steak ‘n Shake in 2008 as it was bleeding cash flow and turned it into a cash flow generating machine.

Biglari shies away from the press, but is open to spend five hours with investors during the annual meetings. From what I could find, Kevin Roose has done a great job of piecing together his background on DealBook with his article, “Taking a Page From Buffett for His Own Path.”

While at Trinity University in San Antonio, Biglari and a friend started an internet service provider called INTX Networking and sold it in 1999. He also received investing experience when he was given the opportunity to help manage a small piece of the school’s endowment fund.

After graduation, he started a hedge fund and soon gained control of the restaurant chain Western Sizzlin. His former professor at Trinity, Philip Cooley, joined his venture and is the Vice Chairman of Biglari Holdings.

Today Biglari Holdings is primarily in the restaurant industry with Steak ‘n Shake, but is working to further diversify its holdings. The marketable securities of Biglari are held in the hedge fund he started, The Lion Fund.

The Lion Fund is managed by Biglari Capital Corp. Sardar Biglari is the sole shareholder in Biglari Capital Corp. The past performance of the fund has not been disclosed, but there are a few articles that claim that it has largely outperformed the S&P 500.

His investing style is a mix between Warren Buffett (Trades, Portfolio) and Carl Icahn (Trades,Portfolio). He is a value investor and strategically allocates capital within the businesses of his holding company. In Icahn fashion, he is known to buy stakes in a company to gain control of its board. That is how he gained control of Steak ‘n Shake.

He is not always successful, though. He was rejected in his attempt to buy Fremont Michigan InsuraCorp in 2010-2011, and Cracker Barrel shareholders denied him a seat on their board. He currently has control over 19.9 percent of Cracker Barrel’s (CBRL) shares.

His acquisitions of First Guard Insurance Company and Maxim Inc have gone smoothly this year. First Guard is a direct underwriter of commercial trucking insurance selling physical damage and non-trucking liability insurance to truckers. The amounts of the deals were not disclosed, but it is estimated that the deal for Maxim Magazine was for about $30 million.

Biglari Holdings has a market cap of $720.25 million, making it a small cap stock. It is trading at a P/B ratio of 1.32, in line with the average investment holding company. Sardar Biglari’s incentive compensation is based on book value. He gets paid 25 percent of the increase in book value above a 6 percent hurdle rate with a maximum payout of $10 million. Those kinds of numbers give him plenty of incentive to increase the book value.

Also Mr. Biglari is required to use at least 30 percent of his compensation to buy Bilgari Holdings stock according to the compensation plan, giving him more of a reason to increase shareholder returns. For the year 2013, book value per share increased 39 percent.

Currently there are three gurus that are holding Biglari stock, Chuck Royce, Mario Gabelli, andJim Simons. Gabelli is the largest holder with 100,024 shares.

Source: GuruFocus