Biglari Holdings Inc. (BH) stock intrinsic value fair value estimate & owner earnings analysis

Biglari Holdings is a small holding company run by Sardar Biglari. Its businesses are Steak n Shake (company-operated restaurants plus a franchise-partner system of 179 units at the end of 2025), two commercial insurers (First Guard, which sells truck insurance, and Southern Pioneer), oil and gas properties (Abraxas Petroleum in the Permian Basin and Southern Oil offshore in Louisiana state waters), and the Maxim brand licensing business. It also owns limited-partner interests in investment partnerships. Mr. Biglari, who beneficially owns over 50% of the common stock, makes all major investment and capital allocation decisions, and the company says its success depends on him. Values below are per Class B share, the class that trades under BH. A Class A share is entitled to five times a Class B share's economic rights, so multiply by five for Class A. We count shares the way the company does for earnings per share, which leaves out the Biglari Holdings stock owned by the investment partnerships, about 260,586 Class A equivalents in 2025 or roughly 1.30 million Class B equivalents. What we measure. We start from operating cash flow, then remove working-capital swings and capital spending needed just to keep the business running (growth spending is only counted in years revenue rose). The cash flow statement shows no stock-based compensation add-back, so none is deducted. Owner earnings per Class B share were about $10 (2018), $45 (2019), $70 (2020), $110 (2021), $74 (2022), $37 (2023), $19 (2024) and $56 (2025). That series is misleading on its own, because the company reports cash it receives from its investment partnerships as operating cash flow. Those distributions were $180 million in 2021 and $56 million in 2025. Between 2019 and 2025 the partnerships distributed about $559 million while their reported gains and losses added up to a net loss of about $119 million, so the distributions were mostly a return of capital, not recurring income. We therefore value the operating businesses without them, and value what is left in the partnerships separately. Operating owner earnings excluding distributions were about $40 million in 2022, $39 million in 2023, $16 million in 2024 and $17 million in 2025. We use 2022 through 2025 as the window because it covers the current franchise-partner restaurant model, the current oil and gas operations and the current insurance mix. Last year's growth rate is not a fair guide: owner earnings including distributions rose from $26 million to $73 million, but excluding distributions they rose only about 6%. Our base case assumes no growth at all in the first year, because nothing in the filings puts further growth in the bag. A new cost changes the level. On September 30, 2025 Steak n Shake borrowed $225 million for five years at a fixed 8.8%, which is roughly $20 million a year of interest. Only one quarter of it was in 2025 results. Interest expense in the first half of 2026 was $11.2 million. Taking the middle of the 2022-2025 range (about $28 million), and deducting the extra after-tax interest (about $11 million), gives a normal operating level of about $17 million a year. Interest income earned on the borrowed cash overlaps slightly and we did not adjust for it. Base case, about $471 per Class B share (about $614 million in total). Operating earnings of about $17 million a year stay flat. About $5 million of that comes from oil and gas, which we let decline 15% a year, since revenue there fell from $45.1 million in 2023 to $36.9 million in 2024 and $30.2 million in 2025. The rest comes from restaurants and insurance and is kept flat: Steak n Shake same-store sales rose 10.5% in 2025 and insurance premiums earned rose to $70.1 million, but we credit no growth from either. Together this is worth about $215 million. To this we add the cash on hand at the end of 2025 ($268.8 million) and the partnership interests other than Biglari Holdings stock, carried at about $154 million (fair value of $772.6 million less $618.3 million of the company's own stock). We assume the partnership interests are paid out evenly over five years, worth about $130 million today. We do not subtract the loan, because its interest is already deducted from earnings. Bear case, about $116 per share (about $151 million). Earnings fall to the 2024 level after full-year loan interest, about $5 million, and oil and gas declines 25% a year, in line with Abraxas' 2025 revenue decline of 24.8%. Partnership losses repeat the 2024 and 2025 pattern (losses of $41 million and $67 million) for two more years, leaving about $46 million of value. The loan, about $191 million by 2030 plus the $27 million credit line, must be repaid out of cash and those assets. This case ends up worth far less than the cash on the balance sheet suggests. Bull case, about $638 per share (about $832 million). Operating earnings return to the roughly $39.5 million average earned in 2022 and 2023 before the new loan interest, giving about $28 million after it (oil and gas still declining 15% a year), and the partnership interests are worth their full $154 million carrying value. What we left out and why. Restaurant unit growth (173 to 179 franchise-partner units in 2025) and further oil and gas acquisitions are not credited; there is no multi-year record of steady, self-funded additions. Investment-partnership returns beyond their current carrying value are not credited, since they have been negative on net over seven years. Gains from selling oil and gas royalties were not counted as recurring. Maxim's new digital contest business lost $1.4 million after tax in 2025 and is not assumed to become profitable. What would make this wrong. A large part of the value is cash and partnership interests, so the case fails if the cash raised by the loan is spent or lost. Cash fell from $268.8 million at year-end 2025 to $68.4 million at June 30, 2026, and we could not tell from the filings where the roughly $200 million went. If it went into investment partnerships, those carry the same volatility as before. In addition, about 80% of the partnerships' value ($618.3 million of $772.6 million) is Biglari Holdings stock itself, so their value moves with the company's own share price. The upside would be a restaurant and insurance business that holds its 2025 profit level while paying the new interest. The margin-of-safety price is set at a discount of about 60% to the base value, near $190, because the value depends on partnership valuations, an oil business in decline and a new loan.