This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Cracker Barrel Fight: Biglari Holdings Ups the Ante

Cracker Barrel, not surprisingly had an adverse reaction to Biglari's proposal, primarily because of the additional debt. As Biglari points out in his letter, though, the board did offer to buy out the Biglari holdings stake twice in the past year, which would have cost the company about $300 million, and would also have increased debt. After one of the offers, Biglari turned the tables, suggesting that instead of buying out Biglari Holdings stake, the $300 million should instead be paid as a $13 special dividend to all shareholders.

While Biglari makes an interesting point to the board, stating that if they are willing to go into debt to repurchase Biglari Holding's, they should also be willing to incur debt to return capital to all shareholders. One thing is clear, Biglari is a pain in the backside to Cracker Barrel's management and board, and they just want him to go away. That however, is unlikely, at this point anyway.

Cracker Barrel's annual shareholder meeting will be held on Nov. 13, and both the company, and advisory firms such as ISS and Glass Lewis have recommended that shareholders vote against Biglari Holdings director nominees, and a non-binding proposal concerning whether to pay the $20 special dividend.

What may be most interesting about this situation is the fact that Cracker Barrel shareholders, besides Biglari Holdings, may see little need for change. After all, the stock is up more than 150% in the past year, and it's difficult for the beneficiaries of to see this as a troubled company. Ironically, Biglari Holdings may be responsible for some of that run-up, as it increased its position.

At the time of publication the author is long BH.

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.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BH $371.72 0.49%
CBRL $128.99 -1.53%
AAPL $117.81 -0.19%
FB $105.45 0.04%
GOOG $750.26 0.28%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs