Thursday, November 20, 2008

Buyback to commence at Western Sizzlin

At the end of the 3rd quarter of 2008, the company had $745,000 of cash and equivalents available. The operating cash flows from restaurant operations(without any adjustments) for the first 9 months of 2008 were at $1.15 million. It will be interesting to see how many shares(out of the authorized 500,000) they do end up buying back. They've also terminated the offer to Jack in the Box shareholders to tender their shares in exchange for shares in Western. I am happy with both of these developments.

Why is this interesting? Two reasons:
1. I am long WEST.
2. Sardar Biglari is the Chairman of Western. 

Who's Sardar Biglari, you ask?
Read this for an excellent primer on Western Sizzlin and how Sardar Biglari got to be its Chairman:

I believe the commencement of the buyback at WEST is a fairly telling indication of Sardar's estimate of its intrinsic value and the discount to that value that today's price represents. More thoughts on Western and its biggest investment(Steak 'N Shake) later.

Disclosure: Long WEST, at prices about 35% higher than today's (shares closed at $7.99 each, before the buyback announcement).

Often wrong but seldom in doubt,

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