Reporter's Notebook

Biglari goes activist against a board opponent

Not much was said after a hedge fund called Groveland Capital quietly nominated six people to the board at Biglari Holdings — giving Sardar Biglari his first potential threat as chairman of the owner of the restaurant chains Steak N Shake and Western Sizzlin.

Instead, Biglari simply went out, bought some stock, and turned activist on two little known companies that just so happen to have significant investments from none other than Groveland Capital.

In November, Groveland quietly nominated a half-dozen people to the Biglari Holdings board, led by its CEO, Nick Swenson. Groveland controls less than 1 percent of Biglari Holdings stock.

Swenson is also the CEO of an aviation services company called Air T. And in November this year he was appointed to the board at a company called Insignia Systems, which sells in-store marketing products for retailers. Swenson was appointed to that board after Groveland and Air T. bought up 10.2 percent of the company’s stock and filed activist documents.

This month, Biglari Capital Corp. — which handles the investing duties for Biglari Holdings — bought up stock in both Air T. and Insignia. It paid $8.74 million for 18.8 percent of Insignia stock, and $8 million for a 14.4 percent stake in Air T.

On Monday, Biglari Capital filed activist documents with both Air T. and Insignia. In other words: Sardar Biglari is going activist against his own activist.

According to the Insignia filing, Biglari believes that company is too small and should put it up for sale, but after using cash to pay shareholders a one-time dividend.

More interesting is the Air T. filing, which is clearly a shot at Swenson and Groveland. Biglari, according to the filing, believes that “management should concentrate on improving the profitability of its operations rather than diversify its limited capital through minority interests in other public companies.”

In each case, Biglari Capital and it’s hedge fund arm, The Lion Fund, bought up stock after Groveland nominated those six board members.

It’s not certain what, if any, impact Biglari’s actions could have on his company’s looming board elections. That proxy has been remarkably quiet over the past six weeks.

But it’s worth noting that after Biglari began buying up stock, Air T. approved a poison pill provision to protect itself from a takeover bid. 

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