Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Why Steak N Shake is hardly the next Berkshire

|Includes:AXP, Biglari Holdings Inc. (BH), BRK.A, FMMH, GHC, KO, L, LUK, MKL, XOM

After reading Sardar Biglari's 2009 letter to shareholders of the Steak N
Shake Company (SNS), i admit i was tempted in buying some shares: the guy seems determined and his candor reminds me of the Oracle of Omaha.
Plenty of articles have been written about the next possible Berkshire (NYSE:BRK.A) and companies like Leucadia (NYSE:LUK), Loews (NYSE:L) and Markel (NYSE:MKL) have been mentioned hundreds of times.
Now a new player has entered the field, and the market's reaction has sent shares of Steak N Shake to a new 52 week high in the past few days.
I was about to click the buy button on my broker's homepage when i recalled two of Buffett's most famous quotes: "Be fearful when others are greedy and be greedy when others are fearful" and "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price"; i paused and thought for a while, then bought $10,000 worth of Exxon Mobil (NYSE:XOM) stock instead, which the market is selling just 12% above its 52 week low.
What has made me change my mind?
First of all, it seems to me that Mr. Biglari is rushing things up in his attempt to become the next Buffett; i understand the enthusiasm and although on the surface he managed to quickly turnaround the Steak N Shake company and Fremont Michigan Insuracorp's (OTC:FMMH) acquisition seems a sound move, we ought to wait some time to better assess the results.
Second, Berkshire's empire was founded on the bold acquisition of distressed shares in companies with a huge economic moat such as American Express (NYSE:AXP) and The Washington Post (WPO); Buffett then bought 10% of Coca Cola (NYSE:KO) and he took control of GEICO in the 1990s. Buffett also had the chance to buy private businesses with favorable long term prospects, such as See's Candies and Clayton Homes, at a time when the US were experiencing significant growth.
I consider Sardar Biglari an honest and well determined manager, but he still must prove he can keep Steak n Shake profitable in such a competitive environment, and Fremont Michigan is no GEICO - insurance and restaurants have become  commodity businesses (they compete primarily on the basis of price) and margins have come down significantly; most of all, America 2010 is quite different from America 1970 and that's the biggest hurdle that Mr. Biglari has to overcome and the reason why i think he will hardly replicate Berkshire's success.
That said, Steak N Shake is a company i consider worth keeping in your watchlist: after all he might not become the next Buffett, but he might still be able to beat the averages.

Disclosure: Long XOM