Jeffrey Moore

A Reasonable Look at Steak N' Shake CEO's Raise

For all the fuss over a measly 900K (from a now profitable company), I am saying that people should be concerned with a huge government issuing IOUs instead. Our priorities are screwed up.

Obviously, Biglari is not Buffett- the same way that Buffett was not Ben Graham... Simply because 2 people share similar philosophies doesn't mean that they have to be compensated in the same way. As an owner of SNS, I have no problem giving Biglari the money that he deserves!


On Jul 08 10:44 AM UncleLongHair wrote:

> What do California IOU's have to do with overpaying a CEO?
>
> Biglari now makes about 10x what his hero Buffett does -- and that
> is only considering one of his many jobs. Introduces quite a gap
> between "talk the talk" and "walk the walk".

One of Those Market Days That Makes You Scratch Your Head

When I said the bull trap thing, I wasn't really talking about the fundamentals, or the reactions the markets have had... only prices of securities. I want them to go down so that I can buy more of them at a cheaper price (ZINC for example, has more than doubled).


On Apr 03 10:12 AM Conan the Barbarian wrote:

> Let's revise your quote a tad. Let me substitute Gold for raisins.
>
>
> "Some form of a bull trap", it Is Not Some form of a Bull trap if
> you can't define it. Even making the attempt to pigeonhole what has
> occurred in the last month as Some kind of Bull trap is nonsense.
>
>
> There is no loud "clang, clang, clang" tossing the Bear into the
> ditch. The moves have been worldwide. Bad News is being tossed into
> the ditch alongside the Bear. If you don't see the difference, you
> haven't seen multiple Bears being hacked around the world.
>
> CTB

Five Stocks Traders Are Betting Against (With Good Reason)

are you still considering shorting SNS?

Notes from Steak 'n Shake's Investor Day

Yes, a lively, but fun discourse. :-)

I used the 1.5 million as a rosy scenario, since I thought it was the one you were operating with... I don't remember exactly what the locations sell foron average, but even if they sell for 1/2 million (in a fire sale) each, there isn't much downside for the common stock. I remember them selling some smaller (in terms of revenue) stores in the middle of Iowa for roughly 850K/ea. I have trouble wrapping my head around how their property plant and equipment can't be worth at least 1/2 what it is on the books for (which is after a Hell of a lot of depreciation). granted, a chunk of the PP&E is in stuff like fixtures that are not worth anything, but I still think I am being pretty conservative.

Personally, I would have a problem with them saying "location x is making this much money, z this much, and y is loosing this much"-too much info on operations that is not necessary to come up with a value for the company. The company is closing restaurants that are/have been under preforming (which will do a lot for cash flow and earnings), and guest count is no longer eroding as precipitously as before.

Their franchisees do quite well in terms of revenue, and I would imagine run their operations better than the company has historically, so re franchising is being done, and helps to up the overall value of the company.

this shareholder letter might help shed some light on things to come.
yahoo.brand.edgar-onli...

Please understand, that while 'propaganda' may not be numbers, that doesn't mean that it isn't true- after all, under good management, they will be quite profitable! The main part of the upside potential to this company is the capital allocation of Sardar Biglari.

On Jan 13 08:24 PM 123 wrote:

> correction at to #3: I meant to say that the stock is not trading
> below its (best case, for reasons above) "liquidation value", rather
> it's trading about equal to it

Notes from Steak 'n Shake's Investor Day

Well, if they sell all the properties for 240 million, then they can essentially pay off all of their debt, and buy back all of their stock... As you mentioned, this would leave them with a bunch of leased properties, and a good number of franchised units, which are quite profitable for both the company, and the franchisees.

The problems with their operations (and to a greater extent, profitability) are due to the management that was in control when they went from something like 150 units, to the 475+ that they currently have- there is just one hitch... THEY MAKE LESS NOW WITH 475+ UNITS THAN THEY DID WITH 150!!!

Obviously, they were allocating capital terribly-which is now stopping with Biglari and Co. in control of the company... Obviously, eroding same store sales suck, but that is being fixed, as is highlighted in this article. Plus, they are doing a ton of stuff to reduce costs and improve profitability. Their new offerings like 1/2 price shakes from 2-4 PM on weekdays should get store traffic up.

Something to remember is that SNS started in the midst of the Great Depression-and was profitable during their start. In addition, fast food is something that will be popular forever in America (well, as long as we are the fattest nation in the world). It is cheap, and is one of the last things to be trimmed out of the budget (unlike TVs).

Bottom line: provided that there is no out break of Salmonella or something like that, SNS can liquidate above the current stock price, and if it continues to operate, it is intrinsically worth a few times what it is presently trading at.


On Jan 10 12:38 PM 123 wrote:

> Also: (from 10k)
> pg 4
>
> We own the land and buildings of 164 properties and 20 parcels of
> land. The other 260 or whatever are leased.
>
> At the end of fiscal year 2008, we have $25.4 million in assets held
> for sale which includes the 14 improved properties and 20 parcels
> of land which were previously purchased for development.
>
> 14 properties + 20 parcels = 34 unimproved and improved parcels.
> They are held for sale at less than $1M each, about 700K each for
> $25M
>
> Say they sell all 160 properties for (an optimistic, best case scenario
> of) 1.5M each - that is $240M. OK. That's ignoring taxes, selling
> costs, etc. So what's left? A bunch of leased burger restaurants,
> their operating success is pretty much up in the air.
>
> I think that his really has to be a successful operating business
> for this to work out and that's not at all clearly the case right
> now.
>
>
>

Notes from Steak 'n Shake's Investor Day

1) Interest Expense: Management is not lying;actually, it is quite the opposite. FASB standards have specific criteria in regard to how lease accounting must be done, here is a good summation: ez13.com/capexamp.htm

I am guessing that he reason for the rule is that you can enter into leases for property/goods, and make your ROA/ROIC look a lot better than it really is.

2) Property: There is an example of a single property (that was not owned by SNS) being recently sold for $1.6 Million: www.costar.com/News/Ar.... While this is not necessarily a good representation of all of their properties, it certainly shows that the real estate still has significant worth, as is shown by the future cash flows that the property can provide. This is something that the turnaround going on at SNS will on only help.

Management has said that property will selectively be sold, and has been selling properties where the economics of the deal make good sense. With SNS, you are not only investing in their brand and real estate, but also their management's strong record of excellent capital allocation skills.

On Jan 07 09:51 PM 123 wrote:

> 1) If the debt is not interest-bearing, why is there about $13M of
> interest expense the last 4 quarters? That amount capitalized at
> 6% is around $215M. Hmmm....
>
> 2) If the real estate is so valuable, why hasn't it been sold? My
> guess is that prices are lower today than they were 6 months or a
> year ago. But I also don't think prices are likely to go up any
> time in the next couple of years. So that cash flow really will
> not be coming in any time soon.
>
> Anyone can give phony, overly optimistic projections. It seems management
> here is outright lying.

Notes from Steak 'n Shake's Investor Day

This is under the "stock buyback" section (there was actually a "debt header", bu SA took it out for some reason... "Also, there was a great question asked about long term debt on the balance sheet, where it was discussed that the long term debt is related to lease obligations, not debt owed against the company's real estate."

The majority of "debt" that you see on yahoo finance is simply a long term obligation, and not something that is bearing interest.

The company is in a transitional period, and is currently generating significant cash flows-as I talked about in my last write up on them: ragnarisapirate.blogsp...



On Nov 18 02:55 PM missedinv101 wrote:

> "............... which currently, has next to no debt on the books"

>
>
> I see $169Million in debt on yahoo. The company is also losing money
> (22Million in the last 12 months) and so is currently not profitable.

>
>
> Why risk investing in a restaurant chain given the deteriorating
> economy. Surely there are safer sectors to invest in.