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‘Schmucks’ May Unseat Self-Proclaimed Warren Buffet Of Activism

It's Sardar Biglari vs. shareholders or as he likes to call them, "Schmucks."
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Sardar Biglari fancies himself the next Warren Buffett. There are, however, some notable differences. For one, Biglari is an activist, a strategy that hasn’t exactly received the endorsement of the Oracle. Also, rather than trading in folksy sexually-suggestive metaphors and anecdotes, Biglari prefers to build his cult of personality a little less subtly, with statements like, “Biglari Holdings is a jockey stock. You are choosing the jockey; I am choosing the horses,” and by charging his portfolio companies large sums for the privilege of using the Biglari name. He’s also referred to shareholders as “schmucks,” which, to the best of our knowledge, Buffett has never done within earshot of a Buffettstock attendee. And, once again to the best of knowledge, no one has ever questioned how much Buffett pays himself, and certainly hasn’t sued him over it.

Then there is the small matter of a vote today to decide whether Biglari should still be running Biglari holdings, something else that has never happened at a Berkshire Hathaway general meeting.

Groveland Capital LLC has taken a 0.2% stake in Biglari Holdings Inc. and is asking at a shareholders’ meeting Thursday in New York to oust the entire board, including Mr. Biglari, 37, who is chairman and chief executive….

Groveland, a $25 million hedge-fund firm in Minneapolis, has a laundry list of complaints about Mr. Biglari’s performance and wants him out of the nearly $900 million company he has tried to model on Mr. Buffett’s Berkshire Hathaway Inc. Groveland, founded in 2009 by former distressed-debt trader Nick Swenson, 46, complains about Steak ‘n Shake’s performance, Mr. Biglari’s compensation and his recent purchase of men’s magazine Maxim.

In response, Biglari has added a new motivation to the fun and profit most people seek in activism: revenge. Not content to merely counter Swenson’s allegations with ad hominem attacks, Biglari has added a couple of activist targets of his own.

In December, he built up a 14% stake in Air T Inc., a cargo airline whose board Mr. Swenson chairs, and 19% of Insignia Systems Inc., a retail-marketing company that counts Mr. Swenson among its directors.

This time, Mr. Biglari took a page from Mr. Swenson’s playbook.

“He implements governance practices far worse than those he previously criticized,” Mr. Biglari said.

Activist Investor in Food Fight With Steak ‘n Shake Owner [WSJ]


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