Sardar Biglari Goes Activist on Penn Millers Holding Corp (PMIC)

Sardar Biglari's Lion Fund and Biglari Holdings (BH) recently filed an activist 13D on shares of Penn Millers Holding Corp (PMIC). Due to activity on April 19th, Sardar Biglari revealed a 8.4% ownership stake in the company with 416,598 shares.

While his SEC filing signals activist intent, he did not outline any immediate plans. Sardar Biglari runs publicly traded Biglari Holdings (BH), formerly known as Steak 'n Shake. He has also essentially merged his hedge fund (the Lion Fund) into the company as well.

Berkshire Hathaway-esque Model

Biglari Holdings (BH) initially drew interest from value investors because it seems as though Sardar is trying to mimic Berkshire Hathaway's holding company model. BH has tried repeatedly to buyout insurer Fremont Michigan (FMMH) to acquire an insurance float to invest ala Warren Buffett.

Additionally, Biglari has executed a 1-for-20 reverse split of his BH shares in order to garner a higher stock price. He apparently did this in an effort to ward off short-term holders. He also is implementing a dual share class structure like Berkshire, with new B shares being issued worth one-fifth the value of the A shares and with 1/20th the vote. Shareholders would receive 10 B shares for each share of BH currently owned.

Since Biglari has been unsuccessful in his quest for FMMH, it seems he has focused his attention on Penn Millers (PMIC) now. And while value investors initially liked what Biglari was pursuing, they took issue with his compensation package.

Biglari Holdings (BH) is an investment management and holding company. Its subsidiaries include Biglari Capital, as well as restaurants such as Steak 'n Shake and Western Sizzlin. We've also detailed how Biglari owned some Sonic (SONC) in the past as well.

So while Biglari's pursuit of Fremont Michigan hasn't succeeded, his activist pursuit of Penn Millers could heat up if he truly desires an insurance float.

Per Google Finance, Penn Millers Holding Corp is "a holding company of Penn Millers Insurance Company. It is engaged in providing a variety of property and casualty insurance products designed to meet the insurance needs of certain segments of the agricultural industry and the needs of middle market commercial businesses."

Biglari Holdings Reveals Sonic (SONC) Position

Sardar Biglari's investment firm Biglari Holdings (BH) has disclosed a new position in Sonic Corp (SONC). Per a 13G filed with the SEC, Biglari Holdings now shows a 5.9% stake in the Sonic restaurant chain with 3,623,668 shares due to portfolio activity on July 28th. Biglari has extensive experience in the fast food industry because Biglari Holdings is actually the new holding company name for Steak 'N Shake.

Back on June 28th, 2010 BH also disclosed a 6.0% ownership stake in Red Robin Gourmet Burgers (RRGB) with 941,189 shares. Burgers apparently, are Biglari's specialty. And as a side note, we also highlighted how Patrick McCoarmack's hedge fund Tiger Consumer Management took a stake in Red Robin as well.

Earlier in the year, many pondered whether Steak 'N Shake was the next Berkshire Hathaway. Sardar Biglari has long been an admirer of Warren Buffett's and appears to be trying to follow in his footsteps. In fact, Biglari had taken a similar path as Sears Holdings chairman Eddie Lampert as he gained control of the company and inserted himself at the head of the company. Biglari then essentially merged his hedge fund (The Lion Fund) into Steak 'N Shake and created Biglari Holdings, coincidentally (or not) the same initials as Berkshire Hathaway.

Further evidencing his experience in the fast food business, Steak 'N Shake acquired Western Sizzlin under Biglari's watch. Since then, Biglari has transformed the fast food chain into a Berkshire Hathaway-esque holding company. He has even performed a 1-for-20 reverse stock split in order to garner a higher stock price in an effort to thwart off short-term traders. The comparisons go on and on, but there was one recent maneuver that was distinctly non-Buffettesque. Many notable financial blogs have highlighted Biglari's pay package and have blasted him for it.

While the manager has attempted to buy an insurance company to provide the necessary float to make investments, he has yet to fully succeed. We'll continue to monitor the developments regarding this potential mini-Buffett in the making. He certainly has a long way to go.

For more on the real Warren Buffett, be sure to head to Berkshire Hathaway's portfolio activity, as well as Warren Buffett's recommended reading list.