NEW YORK ( TheStreet) -- The Holy Grail for investors is to identify the next Berkshire Hathaway (BRK-A), which was originally a failing textile company in the 1960's, that Warren Buffett and company have turned into gold.The truth is, there will probably never be another Berkshire Hathaway, or Warren Buffett for that matter, although that does not stop many of us from trying to identify potential candidates.
In the latest flap, Biglari Holdings accused Cracker Barrel of misrepresenting the professional experience of incoming chairman James Bradford. Cracker Barrel later admitted that the claim that Bradford had been the CEO of a NYSE-listed company was a misunderstanding. In any event, this will come to a head at Cracker Barrel's annual meeting on Nov. 15. Another move that Biglari Holdings is in the process of making will also draw some Berkshire Hathaway comparisons. On Nov. 2, the company is holding a special meeting, in order to vote on the issuance of a new share class; Berkshire of course, has two share classes. With the current Biglari Holdings shares trading in the $371 range, and lacking liquidity, the company wants to issue Class B shares, which will have one fifth the economic value of Class A shares, but just 1/100th of the voting rights. To create a pool of B shares, Class A shareholders would receive 10 Class B shares for each Class A share. The stated purpose of the move is for use in acquisitions. But it should also increase the company's trading liquidity, and make the stock more appealing to smaller investors; unwilling to shell out $370 or more for Class A shares. Of course, in owning Class B shares, it must be remembered that voting rights are all but sacrificed. In truth, it has not been a good year to own Biglari Holdings. Shares are flat for the year, while Cracker Barrel is up 36%, a fact that Cracker Barrel has not been shy to share with stockholders as it attempts to fend off Biglari's pursuit. There is another way to look at it though. With its $455 million market cap, Biglari Holdings owns about $275 million worth of Cracker Barrel, not to mention Steak 'n Shake, Western Sizzlin restaurants, $46 million in cash, and some other investments. This is becoming a "sum of the parts story," and one that I'll continue to be part of. BH data by YCharts
Sardar Biglari is not Warren Buffett. Biglari Holdings is not an early incarnation of Berkshire Hathaway. In fairness, any comparisons in that regard have come from others. I've never heard Biglari compare himself to Buffett or Biglari Holdings to Berkshire Hathaway. Biglari has made some good moves in his still young career, but has a long way to go. He's smart, he's aggressive and he rubs some people the wrong way. It's too early to tell whether he'll end up being one of the great capital allocators, but who knows? In closing, I am a fan of Cracker Barrel; I've owned shares in the past, but now own them indirectly through Biglari Holdings, the cheapest way, I believe, to get exposure. It's been one of the most original restaurant brands, and in my view, the company has performed quite well. It has a unique culture, and that may be one of the issues that Biglari can't wrap his head around. Can improvements be made? Always. Nonetheless, Cracker Barrel remains my favorite chain restaurant, much to my family's chagrin. At the time of publication the author was long BH. Follow @JonMHellerCFA This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.