Case study

In September 2011, activist investor Sardar Biglari initiated a proxy contest seeking election to the board
of restaurant company Cracker Barrel. Although Cracker and Barrel was highly successful from 2002
through 2007, the company had subpar performance during the recession and the years following. Biglari,
who owned 10% of Cracker and Barrel, was disappointed with the performance and argued for better
financial reporting and demanded strategic changes. Cracker and Barrel fought back. Proxy advisory
services, ISS and GL, were split. This case explores issues around hedge fund activism. In particular how
activist hedge funds identify targets for activism and how they develop an investment thesis.

Address the following questions:
1. What is your assessment of Cracker Barrels performance over time?
2. Do you agree with Biglaris critique of the companys performance?
3. Do you agree with Biglaris choice of peer companies?
4. How does Cracker Barrels performance compare to your peer group? (Professional tip:
aggregate your peer group companies, perform a ratio analysis of this group, and compare the
relevant ratios to those of Cracker and Barrel. To this end, use the excel file that comes with the
5. Imagine the new CEO hires you as her advisor. What suggestions would you have to improve the
performance of the company?

Case material
Case material can be found attached.

Report Format
The report has
to be:
1. single line spacing
2. font Times New Romans 11
3. margins should be 1 inch
4. length min 3/max 5 pages (exhibits excluded)