Biglari Holdings Inc (BH): How to Invest in Cracker Barrel Old Country Store, Inc. (CBRL) … the Smart Way

Page 1 of 2

Despite its stock flying at multi-year highs and impressive earnings figures, Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) remains under attack by activist and takeover specialist Sardar Biglari of Biglari Holdings Inc (NYSE:BH). The company has resisted the investor’s efforts every step of the way, recently swallowing a poison pill to prevent his firm from obtaining more than 20% ownership. With the recent earnings release, minority shareholders may not be likely to vote in favor of change– ie. giving Biglari seats on the board. Still, some believe the investor holds solid suggestions for further enhancing shareholder value. With the most recent earnings in mind, and Biglari’s annual meeting on the horizon, is Cracker Barrel a smart pick?

Cracker Barrel (CBRL)

Brief history
Biglari Holdings Inc (NYSE:BH) owns $358 million worth of Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL). That makes up all but $122 million on Biglari Holdings’ market cap. Why such a concentrated portfolio for a holdings company Biglari has a history of doing well with quick-service restaurant chains. The investor owns Steak n Shake, as well as Western Sizzlin’. Both were in deep trouble before Biglari began his activist stake, and since then, both have recovered — and even prospered.

The battle for Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) seems to be a bit different though, as the stock has gained 60% in two years, and more than 23% in the last three months. Using the typical measure of what is a successful investment, Biglari Holdings Inc (NYSE:BH) has already far passed the satisfactory mark for his company’s position in the roadside restaurant chain. So why are the two at such odds?

For one thing, Biglari believed, as recently as the third quarter of last year, that the company was misrepresenting its ROC for stores open less than one year — by a fat margin. While Cracker Barrel boasts more than 16% returns, Biglari thinks its closer to 3%. This would dictate a vast difference on key performance indicators for management. In a letter to shareholders from last October, Biglari writes,

The Board has spent nearly $700 million in capital over the past eight years, while over the same time span operating income has grown by an insufficient $12.4 million. New stores have been opened, but they shroud the decrease in unit profit.

It’s certainly an interesting point, given the stock’s performance in recent years, and shareholders’ adversity to Biglari Holdings Inc (NYSE:BH)’s quest.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!