Biglari Holdings (BH) is getting smoked once again today. This restaurant chain / wannabe roll-up conglomerate reported very disappointing results on Friday after the market close. BH earned $3.84 versus $1.58 last year and the sole covering analysts’ expectations of $5.97. I have warned that this company is a disaster in the making and have short positions on. The stock has lost just over 1/3 of its value since peaking in early April at $418.
BH was a short pick for my newsletter, The LakeView Restaurant & Food Chain Report several weeks ago. Is it too late to short BH? I believe that this stock could trade into the 100s, especially if the chairman makes another nonsensical offer for stock of another company. The company should earn between $15 and $16 dollars in FY10. What kind of multiple would you want to put on this stock? Does it deserve a multiple like McDonald’s (MCD) or Yum Brands (YUM)? I think not. BH deserves a multiple of 10 to 12 and I am being generous.
At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC was long shares of MCD and short shares of BH--- although positions can change at any time.
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Posted By Scott Rothbort at May 24, 2010
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