Biglari Holdings: You Can’t Be Serious!

This week marked the first time in my investing career that I have felt the need to write to the management team of a publicly traded company. Not only that, but I even surprised myself a little bit by actually going ahead and doing it. After reading a corporate press release from Biglari Holdings on Tuesday morning, I was absolutely irate. What could make me so upset that I actually wrote a two page letter and mailed it off to the CEO, despite the fact that collectively my clients and I own about 0.005% of the company’s stock?

Biglari Holdings announced this week that it was planning to reverse split its stock (which was already trading above $450 per share) 1-for-15, which would send the price up to nearly $7,000 per share and reduce the total shares outstanding to less than 100,000. The end result (other than an insanely expensive stock) is that anyone with fewer than 15 shares of the company (again, nearly $7,000 worth) would be forced to accept cash in return for liquidating their investment. That’s right, the company was forcing its smaller shareholders to sell and they had no say in the matter. At least if you own stock in a company that has agreed to a merger you can vote “yes” or “no” to the deal.

To my knowledge, I don’t know of any other company that has ever had the audacity to force its shareholders to sell all of their stock. And since all but two of my clients who are invested in Biglari Holdings own fewer than 15 shares (myself included) I just had to speak up, even though it clearly won’t matter to the company what I think. Still, if there was ever a time that small shareholders should complain to management, I have to think this would be that time.

Rather than post the letter on this blog, I chose to submit it for publication on a larger site (Seeking Alpha) with the hope that other upset shareholders might join me in voicing their discontent. A copy of the letter can be read here: An Open Letter to Sardar Biglari, CEO of Biglari Holdings.