Given this history, we were surprised to see that in a filing this past Friday after the market closed, Biglari Holdings announced that William L. Johnson has been elected to its Board. Johnson was the Vice Chairman of the Fremont Board that so vigorously resisted Biglari’s overtures.

Biglari recently failed in a proxy fight for Board representation at Cracker Barrel(CBRL). The company’s incumbent management painted him as a hostile slash and burn executive.  Is Biglari attempting to soften his image by co-opting a former rival?

Disclosure: The author holds shares in BH

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Biglari Adds Old Rival To Biglari Holdings Board is a post from Inelegant Investor - Something of Value. All Rights Reserved.

A Kodak "Digital Capture Device"

moves that might have helped it avert this fate had failed CEO Antonio Perez undertaken them sooner. The company announced today that “it plans to phase out its dedicated capture devices business“.  Perhaps part of its failure lies in its insistence on using  obtuse language to describe its actions and products. Dedicated capture devices business?  Does McDonald’s speak of its “Animal derived protein-based human consumables business”?  Even the Postal Service doesn’t talk about cutting “physical object routing and transmittal personnel”.

With bankruptcy rumors swirling late last year, Kodak’s defenders were talking about imagined strength in Kodak’s digital camera business. With the company killing this business and saving $100 million per year by doing so, we now see that many of the rosy claims made about Kodak were not grounded in reality. One wonders why the company is continuing its struggling consumer printer business.

Long ago, the company split into a chemicals business and an imaging business. Its brand was once synonymous with photographs, though the cameras were often made by others. The company needs to return to these roots and pursue an asset-lite “Kodak-inside” business model, licensing its brand, intellectual property, and components for inclusion in others products.

Disclosure: The author holds no position in any stock mentioned

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• Kodak To Stop Making Cameras (huffingtonpost.com)
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Bankrupt Kodak Finally Starts Killing Hopeless Businesses, Retains Doublespeak is a post from Inelegant Investor - Something of Value. All Rights Reserved.

Yet, the index consists of a mere 30 stocks, not particularly representative of the market, and is price-weighted- a nonsensical choice inferior to market-capitalization-weighted indexes such as the S&P 500, which, with 500 stocks is much more representative of the market as a whole.

The fine folks at Bespoke Investment Group often have fascinating insights.  They recently published a fascinating article, showing what would have happened if Apple(AAPL) had been added to the index in June 2009 rather than Cisco(CSCO).  This one single swap would have left the index 14% higher today, at an all time high. The fact that the selection of a single stock can lead to such a wide divergence in the index over such a short period of time should give anyone pause before paying any heed to this index.

The numbers, from Bespoke:

Even though AAPL was not chosen to replace GM, it is always fun to see what might have been.  To that end, we have recalculated the performance of the DJIA to reflect how it would have done if AAPL was added to the DJIA instead of CSCO.  The chart below shows the current DJIA (blue line) compared to the ‘Apple’ DJIA (red line).  Currently, the DJIA is trading at a level of roughly 12,865, which is about 12.1% off its all-time high of 14,198.10 from October 2007.  If AAPL was in the DJIA, though, the index would not only be significantly higher (14%), but it would also be trading at an all-time high of 14,636.  Granted, you cannot go back and change the past, but we wonder if investor sentiment would be more positive if the DJIA was trading at record highs?

Disclosure: The author holds no position in any stock mentioned

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On The Irrelevance Of The Dow Jones Industrial Average is a post from Inelegant Investor - Something of Value. All Rights Reserved.

Disclosure: The author holds no position in any stock mentioned.

Sears Sells Inventory And Customer Lists From Kmart’s Pharmacies To Be Closed To Walgreens is a post from Inelegant Investor - Something of Value. All Rights Reserved.

some of the small cities and towns where Sears has announced closings that are desperate to keep their stores.

Now, at least four of the places affected — Jackson, Miss., Cleveland, Tenn., New Smyrna Beach, Fla., and Harper Woods, Mich. — are fighting the company’s decision. Local governments, afraid of the economic impact of the closures, are appealing to Sears Holdings with petitions, rallies and even tax incentives, so far to no avail.

“We would like for a major store to remain in the Jackson area,” pleaded Mary Garner on the online petition started by Jackson Mayor Harvey Johnson Jr. “Please do not desert us.” The petition had 3,251 signatures as of Wednesday afternoon.

We’d be surprised if the company changes its decision. The stores being closed have long histories of being unprofitable, and it’s unlikely that community response can be strong enough or sustained enough to reverse that, particularly given the level of investment Sears would have to put into the stores. The company said as much in an email to the Huffington Post

“We appreciate the community support and in fact have seen an increase in traffic to these stores since the petitions have started,” Tom Aiello, a Sears spokesperson, wrote in an email. “Unfortunately these stores have lost money for several years and Sears Holdings, as a company, cannot continue to support underperforming stores.”

There was a time when having a Sears put a town on the map.  That time is long past, and the sooner these cities and towns move their focus from the past to things that can drive their future prosperity, the faster they will be able to make meaningful progress with their economic development.

Disclosure: The author holds no position in any stock mentioned

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When Sears Is All You Have- Small Towns Plead In Vain For Sears To Stay is a post from Inelegant Investor - Something of Value. All Rights Reserved.

The headline’s implication is that as a result of the iPad 3, Amazon(AMZN) reduced a previously scheduled Kindle Fire order by 50%. Let’s see the content of BusinessInsider’s actual post:

Amazon sliced its Kindle Fire orders in half for the Q1 2012 to 3 million units, according to DigiTimes, citing supply chain sources.

The cut is likely due in part to the end of the holiday shopping season and the upcoming iPad 3, which is expected to launch in February or March.

DigiTimes reports that Amazon ordered 6 million Kindle Fires in Q4 2011.

However, the sources stated that the decline in orders for Kindle Fire tablet PCs is in line with market expectations during the off-peak season and the impact on Kindle Fire’s touch panel suppliers, including TPK Holdings and Wintek, would not be significant.

CORRECTION: Initially we said the Kindle Fire cuts were because of the impending iPad3 launch in February or March. That is not what the DigiTimes reports says. It’s likely Amazon was planning these cuts all along. We apologize for the error.

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• Kindle Fire Unseats iPad as No. 1 Tablet at Best Buy (mashable.com)

BusinessInsider To Amazon: Drop Dead! Hurls Ungrounded Speculation As Fact is a post from Inelegant Investor - Something of Value. All Rights Reserved.

official late last night and filed a voluntary Chapter 11 business reorganization.  Citigroup will provide $950 million in debtor-in-possession financing. As we had stated, the company’s liabilities were to great, its ability to monetize intellectual and real property too slow, and its digital and other new operations not developing quickly enough to avoid this outcome.

We continue to believe that Kodak will emerge from the bankruptcy as a strong, but smaller company, having shed the liabilities that strangled it, having disposed of non-core assets, and having retained those parts of the company with the best prospects. It is important to note that current shareholders will not participate in this and that their shares are worth zero.  Inevitably in a bankruptcy, a robust market continues in the company’s shares despite the fact that there are very few cases when shares of bankrupt companies retain value(one recent example would be SYMS(SYMSQ)). This will not be an exception to the rule. Those who own Kodak ought to sell and salvage what they can, those who don’t should not buy. Our sympathy is with Kodak employees, vendors and partners during this difficult time.  We hope that the company’s reorganization and eventual emergence in 2013 will remove the clouds of uncertainty and create new growth and new opportunities.

Disclosure: The author owns shares in SYMSQ

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Kodak Shares Worthless As Firm Finally Files Chapter 11 is a post from Inelegant Investor - Something of Value. All Rights Reserved.

a rights plan which was voted down by shareholders at the annual meeting in December.  Free to acquire more Cracker Barrel stock, it was reported last week that Biglari had upped his stake to 11.8%. Now, a new 13D/A has been filed showing he has continued to buy this week, reaching 13.3% of the company, even as the price went up.  It’s not clear how much more Biglari will acquire, but one thing is clear- he’s not done fighting.  Biglari’s track record in unlocking value at Steak N Shake Fremont Michigan Insuracorp, and Penn Miller is impressive.  He is underwater on his CCA Industries(CAW) stake, but was successful in gaining a Board seat. Hopefully, Biglari’s persistence with Cracker Barrel will pay off for his shareholders.

Disclosure: The author owns shares in BH and CAW

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Biglari Takes Another Crack At Cracker Barrel is a post from Inelegant Investor - Something of Value. All Rights Reserved.

Lampert is not willing to part with shares of Sears. The WSJ reports, based on public filings, that Lampert purchased 4.46 million shares of Sears from the fund, and spent another $12 million purchasing shares on the open market.  In our opinion this is a positive sign.  That Lampert did not inject cash into the company by purchasing new shares, or by purchasing new securities senior to common equity, or by purchasing outstanding distressed debt, sends a strong message that he does not believe the company is at risk of bankruptcy or that it faces a liquidity crunch.

UPDATE: Redemptions were paid in AutoZone(AZO) shares, not AutoNation which ESL also owns a large stake in.
Disclosure: The author owns shares of SHLD

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Eddie Lampert Doesn’t Fear Sears Bankruptcy, Personally Purchases $150 Million Worth Of Sears Stock is a post from Inelegant Investor - Something of Value. All Rights Reserved.

Under the new structure, Kodak has reduced its number of segments from three to two – the Commercial Segment and the Consumer Segment – which will both report into a newly created Chief Operating Office. The Chief Operating Office will be led by Philip Faraci, who will continue to serve as Kodak’s President and Chief Operating Officer and by Laura Quatela, who was recently named, alongside Faraci, as President and Chief Operating Officer of Kodak. Faraci will focus on the Commercial Segment and the company’s sales and regional operations, and Quatela will focus on the Consumer Segment and certain corporate functions. Both individuals will report to Antonio M. Perez, Chairman and Chief Executive Officer, as will the positions of Chief Financial Officer, Chief Technical Officer, Chief Marketing Officer and General Counsel.

“As we complete Kodak’s transformation to a digital company, our future markets will be very different from our past, and we need to organize ourselves in keeping with that evolution,” Perez said. “This new structure simplifies the organization, focuses it more precisely on our consumer and commercial customers, and puts the right people in place to capitalize fully on the tremendous technological capabilities of Kodak. These business structure changes also allow us to allocate resources more productively, continue to significantly reduce administrative costs, and improve efficiency. We are confident that these changes will support our efforts to make the most of our opportunities.”

This led to a significant jump in the stock price, but it is unclear why.  The company has rearranged furniture, but ultimately not addressed the key problem which is that the company needs cash now. While this change may lead to cost savings and/or increased profitability, it certainly won’t do so in time to help the company with its current dire situation.

After the bell on Tuesday, the company released a second announcement.  In it, the company announced that it had filed patent infringement lawsuits against Apple(AAPL) and HTC.  The claims were similar to previous claims the company has made regarding infringement by phone and tablet devices of a series of ridiculously broad patents.  Interestingly, Kodak did not file any claims against Google(GOOG) or Motorola(MMI).  Kodak has been in discussions with all of these firms for sometime and been attempting to sell its patent portfolio.  This is a desperate, last-ditch attempt to force a settlement or purchase, but it is unlikely to result in any cash quickly enough to avoid bankruptcy. Despite this, shares were up 35% on Wednesday.

Mr. Market is in a manic mood and his bid this company up significantly in the last two days, but the common stock is still worth what it was before Tuesday’s open- nothing.

Disclosure: The author holds no position in any stock mentioned

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Don’t Be Fooled By Eastman Kodak’s Dead Cat Bounce is a post from Inelegant Investor - Something of Value. All Rights Reserved.