The continuing comparisons of market performance from during 2008 and now, in 2022, are inevitable. I am not sure they are helpful. They will continue, however, and we should at least get them correct.
Today marks the end of the third quarter, and year-to-date, the S&P 500 is down about 23.6% (not including dividends). Through the end of the third quarter in 2008, the index was down about 20.6%. While there is one day left in the quarter, it would take a 4% move now for the performance of the first three quarters of 2022 to overtake the same period in 2008.
That begs the question as to what happened in the fourth quarter of 2008? I've written about that period often over the years, and will spare you the details about the incredible volatility of the time. The S&P 500 was down 23.6% during that quarter, and ended the year off by about 39%. The obvious question on many investors' minds is whether there will be a repeat in the fourth quarter of 2022. I am not smart enough to answer that question, nor do I have a crystal ball, but I'd like to at least believe that we will not go down the same path, but stay tuned.
What I do know, however, is that I think hell may have frozen over, or it may be the beginning of the apocalypse, given the little-reported news from Cracker Barrel (CBRL) on Wednesday. The company announced it has entered into a "nomination cooperation" agreement that will expand CRBL's board of directors to 11, and appointed a Biglari Holdings (BH) , (BH.A) nominee, Jodi Bilney, to fill that seat.
On the surface this may sound like no big deal, but Biglari Holdings, which owns about 8.8% of CBRL, has tried unsuccessfully for years to get seats on CBRL's board. Past proxy contests by BH have failed miserably-the company has lost five of them-and CEO Sardar Biglari has taken many potshots at the CBRL over the past 11 years. It was a clash of company cultures, and CBRL shareholders wanted little to do with Biglari, which in my view, acted like a bull in a china shop, with no finesse. A little honey and less vinegar, and BH just might have gotten on the board much earlier.
Interestingly, BH's stake in CBRL, which at one point was 20%, has been incredibly profitable for BH over the years both in terms of dividends and capital appreciation. I wish I could say the same for BH shareholders; BH stock has languished over the years. Ironically, while Biglari was railing at CBRL management for poor capital allocation, among other issues, the company's own Steak n Shake brand -- which Biglari had actually turned around in 2009 -- began failing miserably. The company closed a significant potion of its locations, then started a new franchising program in 2019; after four years of minimal of negative operating earnings years, steak n shake had a decent year in 2021.
I can't wait to see how this new "marriage" between CBRL and BH works out.
