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Why the market and Biglari are at odds...
Posted by: Jim Falbe (IP Logged)
Date: April 16, 2010 04:34PM
Here is a classic example of greed on the part of investors. Note that almost every article written about Biglari Holdings gives the stock a rating of Buy (and most of the time, Buy and hold forever). Comparisons between Biglari and Buffett are popping up like weeds, though Buffett's personality is acknowledged to be more pleasant. The market is reflecting this enthusiasm with a price that can't seem to go high enough. Everyday its up, and everyday someone else is chirping that it is worth it.
Yet, Biglari himself is saying the opposite both with his words and actions. At the recent shareholders meeting in New York, Biglari scolded investors for bidding up the stock and announced that BH would never consider repurchasing shares at these prices. More telling though is Biglari's willingness to issue shares in his quest to acquire Fremont Michigan Insurance. When a great capital allocator is willing to throw shares out this earlier in the game to acquire something, that should send a fairly clear message about the current intrinsic value of the stock. Perhaps Biglari thinks Fremont is worth far more than BH, but I doubt it. This means that Biglari is either an idiot, and I don't think he is, or he believes the stock to be at least slightly overvalued.
BH is a great company, and I want to become an owner, but not at these prices.
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