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Food Fight: Biglari Makes Another Run at Cracker Barrel

As a Biglari Holdings shareholder, I've been impressed with Sardar Biglari's ability to fix Steak n Shake and with his intelligence, but that has not yet translated into substantial rewards for shareholders. Biglari Holdings shares are up just 14 % in the past year, and 40% over the past two years, but that includes Cracker Barrel's stellar run over the same periods.

Keep in mind that Biglari Holdings owns $472 million worth of Cracker Barrel, and yet its own market cap is just $585 million, excluding Biglari Holdings shares owned by company-controlled entities, and so I would have expected better performance from the stock. But the stock is not well known, trades for more than $440 a share, and has limited volume. BH Chart BH data by YCharts

Biglari's latest attempt to get on Cracker Barrel's board should make for some interesting press, but there's a lot more happening at Biglari Holding's these days. The company just commenced a rights offering, which will give shareholders one right for each share owned. For every five rights, shareholders can purchase an additional share of Biglari Holdings for $265, about 40% below the current share price.

The offering could raise up to $75 million for the company. It's unclear how the proceeds will be used, though it won't be used to buy more Cracker Barrel, that's for sure.

Stay tuned, this story is likely to get even more interesting.

At the time of publication, the author was long Biglari Holdings.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.
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