Earlier in the year I reported about an over-valuation of Western Sizzlin (WEST) relative to its major investment Steak 'n Shake. I predicted dire numbers for '07 and more challenges ahead in Q1 08. I also mentioned that WEST had delayed their 10-k and that it seemed that they had become more and more quiet as the investment losses mounted. Finally I suggested a pair trade to go long SNS and short WEST.

Western Sizzlin - the sizzle is gone, at least in terms of valuation.

Western Sizzlin (WEST) is a holding company engaged in restaurant operation and security investment. Sardar Biglari's Lion Fund took over the ailing company a couple of years back and applied the early Warren Buffet partnership blueprint to it to such an extent that one has to cringe at times: Sardar's annual reports are written using the exact same style and language as the original. Same can also be said about his annual reports for the Lion Fund. I guess that has to be booked under marketing.

On February 21, I reported here on what I believed to be an outstanding special situation in Consolidated Mercantile (CSLMF). Now released, the annual report reveals $3.11 in cash/equivalents/short term investments net of liabilities, plus $0.13 in long term investments and note receivables. My estimated intrinsic value range for the company is $2.75 - $3.72. The stock last traded at $1.60.

Recap

Consolidated Mercantile (CSLMF) is a cash rich Canadian microcap holding company. Recent monetizations of deficitary holdings should put cash/short term investments at $1 per 45c market price and put an end to losses. The company will have no debt. This will become apparent when the company releases their annual report (likely at the end of March).

Background