Turnaround magician and Oracle of HisOwnMind, Biglari Holdings(BH) Chairman and CEO Sardar Biglari continues to struggle with Maxim magazine. The NY Post reports that editor Kate Lanphear is gone, just six months into her attempt to reposition the laddie mag as a luxury magazine. Her tenure has included the previously unthinkable- featuring a man on the cover of the August issue. Newsstand sales of that issue are thought to have been particularly bad.
“Biglari is upset that he is not seeing the return on his investment fast enough, and is forcing change. He wants the old Maxim back so he can meet the girls in the edit,” said an insider.
Despite the dismal failure of the strategy which has led to the second redesign in six months, publisher Kevin Martinez put on a brave face and told WWD
the decline is all part of the plan for the evolution of Maxim. Clutching a leather briefcase that housed a dummy issue of the new Maxim, as if it were the key to solving the demise of print, Martinez talked about the relaunch before unveiling the glossy, oversize December issue, which goes on sale in late November.
“It’s the Wild West out there and whomever is the boldest guy is the sheriff,” Martinez said. “Maxim is the wild card.”
Biglari, who had the audacity to rename the company(formerly Steak ‘n Shake) after himself and then sign an expensive licensing agreement with himself for it despite its dubious value, seized majority control of the company by using the company’s own money to buy and not retire company shares through his own hedge fund. His most recent tender offer, which cemented his control after a bruising proxy fight that he barely won, purchased shares at $420 in July. Those shares close at $372 on Friday, an 11.4% decline. Biglari’s aggressive style has made it difficult for the company to purchase assets, with fierce resistance to every public company acquisition he has attempted since Steak ‘n Shake, with the exception of Western Sizzlin’, which was already under his control.
To Biglari’s credit, he seems to have accumulated a valuable collection of assets, Maxim aside. Most notable is the company’s nearly 20% stake in Cracker Barrel(CBRL), which has appreciated impressively since his purchase. But, the street, wary of Biglari’s antics, have assigned the shares a steep discount to intrinsic value. With Biglari now firmly in control, there is no likely catalyst to reverse this Biglari discount. Investors would be wise to look elsewhere for superior returns.
Disclosure: The author has no position in Biglari Holdings