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@ Tekkadan 🪿
2025-05-18 21:34:55
> Biglari Holdings is a collection of controlled and noncontrolled businesses — a group we seek to build upon with companies possessing excellent economics and exceptional management. Constructing a corporation is much like constructing an edifice: the stronger the foundation, the higher one can build. Our subsidiary businesses operate independently but their combined profits form a solid base from which the corporation can grow.
> Our path to prosperity — the purchase of businesses in their entirety but also, secondarily, the purchase of partial business ownership via the stock market — is based on opportunity. An inherent advantage of a controlled company is that it empowers us to allocate capital. But a selection of marketable common stocks has its own advantages. It provides a wide range of options from which to choose and can sometimes offer quality businesses at uncommonly low prices. We would rather own a fraction of an outstanding business than 100% of a mediocre one. Guided by the North Star of
maximizing per-share intrinsic value, Biglari Holdings enhances capital allocation by channeling resources into any industry, any company, anywhere.
> Our growing collection of operating companies began in 2008, when present management gained control of Steak n Shake and turned it into the profitable base of a new holding company. From that small foundation, Biglari Holdings grew through a series of acquisitions. Over the years, we added Western Sizzlin Corporation, Maxim Inc., First Guard Insurance Company, Southern Oil Company, Southern Pioneer Property & Casualty Insurance Company, and Abraxas Petroleum Corporation, listed
in order of acquisition. In 2024, Biglari Holdings garnered pre-tax operating earnings of $32.6 million from its seven first-line businesses.
> Biglari Holdings is a group of unrelated businesses united by a common purpose. By design, we centralize the control of capital and decentralize managerial operations. Only a decentralized structure will enable our corporation to scale with a modicum of staff at headquarters. It also allows for the
retention of the very people responsible for the success of the acquired companies.
> The conventional thinking of most managers is to reinvest profit where it was earned. A manager of, say, a sand business may take its earned profit, pay some of it to shareholders, and plow the rest back into the sand business. Even if we posit that sand is an attractive business to be in today, one earning high returns on capital, it cannot sustain such returns on incremental capital over the long run. Our scope of activity extends beyond the confines of any particular industry, enabling us to pursue those
possibilities that yield the highest payoff. This rational allocation of capital diverges from that of the single-line business, whose manager’s head may be proverbially stuck in the sand.
> The ideal business is one that earns very high returns on capital and continues to generate high returns on incremental capital. But businesses of this sort are exceedingly rare, and it is even rarer to purchase one at a reasonable valuation. There is a class of businesses that earns satisfactory returns —
and substantial cash — but lacks the opportunity to generate returns of similar magnitude on incremental capital. The architecture of Biglari Holdings makes such businesses appealing because we can reallocate the excess cash they generate to buy other businesses. Therefore, our corporate structure allows us to
replicate the very economics of the ideal business.