There's never a dull moment in this market, not even in the middle of some of the prime summer vacation weeks. Plenty of interesting developments -- and by interesting, I don't necessarily mean good. As markets become just a bit skittish over the developing situation in North Korea -- but remarkably, not as skittish as I would have expected -- some stocks continue to march to their own drummer.
Controversial name Biglari Holdings (BH) -- owner of the Steak 'n Shake and Western Sizzlin' restaurant chains, 19.7% of Cracker Barrel (CBRL) , Maxim Magazine, and other business interests -- has quickly and quietly become mired in its own bear market. Shares are down 30% in the past two months, and 16% since the company released second-quarter earnings on Aug. 4.
The post-earnings-release slide has occurred on average daily volume of just 14,000 shares, which, while relatively miniscule, is still 3x normal average volume. While it was not a great quarter for BH -- with 3.1% same-store sales decline for Steak 'n Shake and Maxim still losing money (although it is much closer to breakeven) -- it's hard to tell what would constitute a great quarter, given the company's convoluted structure and lack of a following by the analyst community.
Management, by the way, likes it that way. Shareholders, not so much. But we've been told so often by CEO Sardar Biglari that if we don't like the way the company is run, we should hit the road, that it's our own fault at this point for sticking around.
One thing is clear -- the company's stake in CBRL alone is worth $717 million (without applying a discount), well in excess of BH's current market cap of $656 million. You could attribute some of the slide in BH to CBRL's own recent pullback, but that was relatively minor, at about 6% since late June.
There's nothing "new" at BH -- that we know of, anyway -- other than the company's late-May announcement of the acquisition of Pacific Specialty Insurance Company for $299.5 million. That deal has not yet closed.
I'd attribute BH's slide to a general lack of interest, or trust, in the name. Selling has been fairly minor, but there's been no interest from buyers. I still believe that the sum of the parts here are worth well in excess of the current price, but due to what I've called the "Biglari discount," I will probably still be saying that all the way to my grave.
On a more positive note, Vonage (VG) is trading at an 11-year high. After reporting better-than-expected second-quarter results last week, and getting a 12.5% boost on Aug. 3, the party continued this week. On Tuesday, it was announced that VG was being added to the S&P SmallCap 600 Index (replacing CoreSite Realty (COR) ). That was good for another 7% bump, as transient as it may be, once the index-related buying has run its course. Still, we'll take it.
