He still believes that there is a great deal of waste at CBRL, including too much spending ($56 million) on billboard advertising, among other things. He also believes that Cracker Barrel patrons are not getting enough value for their money. Biglari did state strongly, however, that the end game with CBRL is not seats on the board, but simply to make money.
Cracker Barrel shareholders have certainly done well, with shares up nearly 50% over the past year. During the same period, BH shares are down 10%. That's quite a disconnect considering that BH, whose market cap is $462 million, owns $386 million worth of CBRL shares. Each share of BH represents ownership of nearly 4 shares of CBRL. While BH's book value has increased significantly over the past years, the share price has not followed; yet anyway.
One of the great aspects of this meeting is that the bulk of it is Q&A from shareholders. One shareholder suggested to Sardar Biglari that he should perhaps take a less aggressive stance when attempting to acquire companies and get seats on the board, a direct reference to the negative press surrounding the Cracker Barrel pursuit. He raised Berkshire Hathaway (BRK.A) as an example of an acquirer that partners with companies, one that companies welcome, and does not scare them away.
I've had the same thought. A little finesse can go a long way. But finesse does not appear to be part of Biglari's makeup. While he handled the suggestion well, and calmly refuted it, I don't get the sense that he'll be changing his ways.As for the many comparisons that BH has had to Berkshire Hathaway, and Biglari himself to Warren Buffet, Biglari said, "If anyone owns BH thinking they have the next Berkshire Hathaway, they need to look elsewhere." Nice quote, but BH shareholders are expecting big things from their controversial and non-traditional CEO. That's why many of us have been there since Biglari took over Steak 'n Shake. We see promise in his abilities as a capital allocator, and have rewarded him well for his efforts. At the time of publication, Heller had was long BH. Follow @jonmhellerCFA This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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