BH - Biglari Holdings: Revaluation On Decent Operational Outcomes And Improved Capital Conditions

2025-09-10 15:26:38 ET

Biglari Holdings ( BH )( BH.A ) has performed well of late, even ahead of the improving capital cost situation that should be a help to holding companies such as itself with significant exposure to privately held assets. The performance of the portfolio operationally has been good as well, though we are a little concerned about macro in the US for the restaurant and oil businesses, and think that a lower cost of capital situation could weigh on insurance investment returns. Beyond that, we also still have concerns about the carry structure at Biglari which is not often replicated in other holding companies, usually simply structured as family controlled holding investment vehicles, though some invest in fund of funds or directly in funds that may take carry particularly in the private space. The carry does mean that less of the benefits of the NAV discount end up with shareholders and that the upside is capped from both changes in the BV and from the fact that the company's investments are held in the GP....

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