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Yamil Berard
Yamil Berard
Articles (192) 

Leucadia Beefs Up Stake in Chipotle Competitor at Discount

Baby Berkshire buys stock of Taco Cabana parent at roughly $20 a share

March 02, 2018 | About:

Leucadia National (Trades, Portfolio) beefed up its stake in Fiesta Restaurant Group Inc. (NASDAQ:FRGI) as the fast-casual restaurant chain’s stock jumped to $18 a share in early trading on Friday.

By noon, the stock was up almost 9% after losing significant ground year to date. The stock dropped 10% over the last 12 months after trading as high as $58 a share in August 2015.


The trade-add was reflected in Leucadia’s most recent portfolio update as of March 1. The move increases holdings in Fiesta by nearly 25%, bringing total shares to more than 3 million at an average price of just over $20 a share.

Fiesta, which operates popular restaurants like Pollo Tropical and Taco Cabana, is in direct competition with fast-casual giants like Chipotle Mexican Grill Inc. (NYSE:CMG). Chipotle stock was at $318.80 a share, up 1.77%, on Friday.

With Fiesta trading at a discount compared to peers like Chipotle, some gurus have viewed the company as an attractive buy. Pollo Tropical is one of the fastest-growing ethnic food choices over the past 15 years. Taco Cabana appeals to diners looking for freshly prepared and authentic Mexican food. Many of its restaurants are open 24 hours a day.

Fiesta’s primary successes have been in core markets in Florida and Texas, and faces greater challenges as it expands to other regions. It was spun off from Carrols Restaurant Group (TAST) in 2012.

Total shares

The New York-based investment firm and business conglomerate began amassing shares in the first quarter of 2017, buying roughly 1 million shares at an average price of $25.31. It added another 349,000 shares the following quarter, bringing its position to more than 2.47 million shares.

Leucadia added another 599,088 shares, reflected in its portfolio as of Feb. 28, bringing its total holding to 3,075,383 shares, representing about 0.77% of the portfolio. The average price for shares was $20.73 a share. The total estimated gain since the first quarter of 2017 is a loss of 14%, according to GuruFocus.


Leucadia portfolio

A total of 130 stocks make up the $1.3 billion portfolio of the company that is regarded as one of the first Baby Berkshires because it models its investment strategy after Warren Buffett (Trades, Portfolio)’s.

The company, similar to Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B), operates multibillion-dollar companies, like Jefferies and National Beef. It also runs subsidiary businesses in broadband, gold mining, car sales, timber and health care.

Fiesta financial health

The company has a market cap of $488 million with a price-book ratio of 2.10, versus an industry median of 2.89, and a price-sales ratio of 0.72, versus an industry median of 1.10.

Fiesta’s Piotroski-F score is low, in part, because of a mounting debt load and declining gross margins. In the last months of the year, it reported more than $76 million in debt. Its cash flow, at $11 million in 2013, has been eroding.

The Peter Lynch chart suggests the company’s stock is overpriced.


Other gurus who have bought Fiesta shares include First Eagle, Howard Marks (Trades, Portfolio) and Jim Simons (Trades, Portfolio).

Rating: 0.0/5 (0 votes)


Asawhneyy - 1 year ago    Report SPAM

Poor perforemance last 10 years, what is wrong with Handler? No baby Berkshire. They got to work harder.

Are they consulting with Stienberg?

Bad investment.

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