Is Biglari Holdings’ Investment Potential Being Overlooked?

Photo of author
Written By Kevin MacDonald

Biglari Holdings (NYSE: BH) (NYSE: BH.A) operates as a holding company with diverse businesses across various industries, including restaurants (Steak n Shake and Western Sizzlin), insurance (First Guard Insurance and Southern Pioneer Property & Casualty), oil and gas (Southern Oil Company and Abraxas Petroleum), and media & licensing (Maxim).

The company’s largest segment is its restaurant operations, with Steak n Shake being the primary business.

The company also has significant investments in two affiliated investment partnerships run by Biglari Capital, The Lion Fund L.P. and The Lion Fund II L.P, which hold stakes in companies like Cracker Barrel Old Country Store, Inc. (CBRL), Ferrari N.V. (RACE), and Jack in the Box Inc. (JACK).

Governance Issues and Compensation Concerns

Credits: DepositPhotos

Sardar Biglari, the CEO, controls over 70% of the voting power of Biglari Holdings. His compensation structure raises concerns due to its atypical nature for a public company. Sardar’s annual cash compensation is $900k, which might seem modest compared to other CEOs. However, his incentive fee structure for Biglari Capital is problematic.

Sardar, through Biglari Capital, earns a 25% incentive allocation on profits generated above a 6% hurdle rate. This structure is more typical of hedge funds and private equity funds, not public companies.

Furthermore, Biglari enjoys a similar incentive fee structure for Biglari Holdings, earning 25% of the increase in BH’s book value versus the previous high-water mark, subject to a 6% hurdle. This compensation is primarily driven by the performance of the Lion Funds and the increase in BH’s book value, which can differ significantly from the share price performance of BH.

As a result, Biglari’s compensation can be high relative to the company’s financial performance.

For instance, in FY 2023, Biglari earned approximately $8.2 million in total cash compensation, which was about 16% of the company’s free cash flow (FCF) for the period. In comparison, the CEO of Yum! Brands (YUM) earned around $6 million, which was only 0.5% of YUM’s FCF for the same period.

Operational Performance and Financial Results

In Q1 2024, Biglari Holdings reported total revenues of $89.5 million, a year-over-year decrease of 0.8%, and net earnings of $22.6 million, a 65.5% decline from the previous year. The drop in earnings was primarily due to lower gains from the company’s investment partnerships. Excluding these gains, operating earnings from BH’s businesses were $4.1 million in Q1 2024, down from $6.6 million in Q1 2023.

The restaurant operations continue to face challenges, with Steak n Shake same-store sales up 9.9% in Q1, but profits declining due to higher costs. Other segments, including insurance and oil and gas, also saw declines in earnings.

Capital Allocation and Buybacks

Another significant issue is the method of share buybacks. Unlike other companies that retire repurchased shares, Biglari Holdings acquires its own stock through the hedge funds and does not retire the stock. Biglari votes the shares like any other shareholder.

These funds control more than half of Biglari Holdings’ shares, giving Sardar Biglari voting control over the company.

Valuation and Market Sentiment

Biglari Holdings trades at a discount to book value (currently 0.9x P/B), reflecting market skepticism regarding management. While this multiple may appear low, it is considered warranted given the governance issues and capital allocation track record.

Risks to the Thesis

Credits: DepositPhotos
  1. Operational Improvements: Significant improvement in restaurant operations, particularly at Steak n Shake, could boost cash flows and investor sentiment.
  2. Investment Partnership Gains: Significant gains in the funds managed by Biglari Capital could flow through to earnings, potentially driving the stock higher.
  3. Valuation Uplift: Market sentiment could shift positively if governance concerns are addressed, enhancing the perceived value of BH’s assets.


Despite owning some attractive assets and trading at a discount to book value, concerns around governance and capital allocation outweigh any potential upside. The company’s governance practices and compensation structure present significant risks that could continue to weigh on shareholder returns.


You should read and understand this disclaimer in its entirety before joining or viewing the website or email/blog list of (the “Publisher”). The information (collectively the “Advertisement”) disseminated by email, text or other method by the Publisher including this publication is a paid commercial advertisement and should not be relied upon for making an investment decision or any other purpose. The Publisher is engaged in the business of marketing and advertising the securities of publicly traded companies in exchange for compensation. The track record, gains, upside, and/or losses mentioned in the Advertisement, if any, should not be considered as true or accurate or be the basis for an investment. The Publisher does not verify the accuracy or completeness of any information included in the Advertisement. While the Publisher does not charge for the SMS service, standard carrier message and data rates may apply. To unsubscribe from receiving promotional text messages to your phone sent via an autodialer, using your phone reply to the sender’s phone number with the word STOP or HELP for help.

The Advertisement is not a solicitation or recommendation to buy securities of the advertised company. An offer to buy or sell securities can be made only by a disclosure document that complies with applicable securities laws and only in the states or other jurisdictions in which the security is eligible for sale. The Advertisement is not a disclosure document. The Advertisement is only a favorable snapshot of unverified information about the advertised company. An investor considering purchasing the securities, should always do so only with the assistance of his legal, tax and investment advisors. Investors should review with his or her investment advisor, tax advisor or attorney, if and to the extent available, any information concerning a potential investment at the web sites of the U.S. Securities and Exchange Commission (the "SEC") at; the Financial Industry Regulatory Authority (the "FINRA") at, and relevant State Securities Administrator website and the OTC Markets website at The Publisher cautions investors to read the SEC advisory to investors concerning Internet Stock Fraud at, as well as related information published by the FINRA on how to invest carefully. Investors are responsible for verifying all information in the Advertisement. As an advertiser, we do not verify any information we publish. The Advertisement should not be considered true or complete.

The Publisher does not offer investment advice or analysis, and the Publisher further urges you to consult your own independent tax, business, financial and investment advisors concerning any investment you make in securities particularly those quoted on the OTC Markets. Investing in securities is highly speculative and carries an extremely high degree of risk. You could lose your entire investment if you invest in any company mentioned in the Advertisement. You acknowledge that we are not an investment advisory service, a broker-dealer or an investment adviser and we are not qualified to act as such. You acknowledge that you will consult with your own independent, tax, financial and/or legal advisers regarding any decisions as to any company mentioned here. We have not determined if the Advertisement is accurate, correct or truthful. The Advertisement is compiled from publicly available information, which include, but are not limited to, no cost online research, magazines, newspapers, reports filed with the SEC or information furnished by way of press releases. Because all information relied upon by us in preparing an advertisement about an issuer comes from a public source, it is not reliable, and you should not assume it is accurate or complete.

By your subscription to our profiles, the viewing of this profile and/or use of our website, you have agreed and acknowledged the terms of our full disclaimer and privacy policy which can be viewed at the following link: and

By accepting the Advertisement, you agree and acknowledge that any hyperlinks to the website of (1) a client company, (2) the party issuing or preparing the information for the company, or (3) other information contained in the Advertisement is provided only for your reference and convenience. The advertiser is not responsible for the accuracy or reliability of these external sites, nor is it responsible for the content, opinions, products or other materials on external sites or information sources. If you use, act upon or make decisions in reliance on information contained in any disseminated report/release or any hyperlink, you do so at your own risk and agree to hold us, our officers, directors, shareholders, affiliates and agents harmless. You acknowledge that you are not relying on the Publisher, and we are not liable for, any actions taken by you based on any information contained in any disseminated email or hyperlink.