While the primary business of Western Sizzlin Corporation (stock symbol: [t]WEST[/t]) is franchising and operating restaurants, in recent years it has been restructured into a holding company that is focused on taking equity positions (and possibly control) of public entities that are selling below their intrinsic business values.
The CEO and controlling shareholder of WEST is Sardar Biglari, a self-described value investor in the mold of Warren Buffett and Benjamin Graham. Only 30 years old, Mr. Biglari holds a 35% interest in WEST through The Lion Fund L.P., a private investment partnership. Mr. Biglari is the general partner of The Lion Fund L.P., which is probably best described as a hedge fund. Working in conjunction with The Lion Fund, WEST has taken positions in a several public companies that were perceived to be selling below their intrinsic values. Mr. Biglari has actively worked, not always with a lot of tact, to pressure the management groups of these public companies to unlock the value in their companies.
After an October 2007 rights offering, the company had 2,696,625 shares outstanding. Based on today’s close of $15.55 per share, the company has a market cap of approximately $41.9 million. After the rights offering, the company had cash and marketable securities totaling $19.9 million, equal to $7.37 per share.
Because the company completed a one-for-ten reverse split in August 2006, the stock is not very liquid. As of February 25, 2008, the shares began trading on Nasdaq.
Mr. Biglari’s investment philosophy is laid out in his June 12, 2007 letter to the Western Sizzlin shareholders:
Message 24304645
Steak n Shake Company
WEST and The Lion Fund collectively own a 7.3% position in Steak n Shake. They are looking to replace the majority of the current board of directors with their own slate of directors.
Mr. Biglari presents a damning indictment against the current management group in a letter dated January 23, 2008:
Message 24254545
On December 12, 2007, WEST offered to acquire all of the outstanding shares of ITEX Corporation, a trade and barter company:
Message 24304657
Message 24304660
In April 2007, WEST set up a private equity fund names Western Investments, Inc.:
Message 24338060
WEST SEC filings:
sec.gov |
