Sardar Biglari has done an admirable job of turning around operations at Steak 'n Shake (SNS), but over the past few months, he's made a few less-than-subtle efforts to imitate his idol Warren Buffett.

Back in December, he announced that he would do a 1-for-20 reverse split of the stock to boost the share price over $300 and "dissuade speculators." "We are attempting to eliminate those who erroneously think that it is easier for a $10 stock to go to $20 than a $200 one to go to $400," he wrote in a letter to shareholders.

Not so long ago, the formula for activist investing was simple: Buy a 5% stake and file a 13-D, blasting the company's management for its poor performance and excess compensation. Raise hell until they put the company up for sale and a private equity firm takes advantage of the company's low stock price. Then cash out, having made yourself and your fellow shareholders rich. What if the company headed into the toilet after it was taken private? Not your problem.

Those days are long gone. With the private equity business the quietest it's been in a long time, there are no third parties ready to scoop up bargain-priced stocks after activist shareholders push them to the auction block. Increasingly, activist shareholders are having to stick around for the long-term, pushing for improved corporate governance and better management as a way to increase returns.

Shares of The Steak n Shake Company (NYSE: SNS) are up about 5% today on an analyst report that hedge fund manager turned shareholder activist turned Steak n' Shake CEO Sardar Biglari is "making quick strides" toward a turnaround at the company.

Biglari became chairman of the company back in June after a proxy contest that kicked out a regime that had underperformed for years, and became CEO earlier this month after the board spent a few months looking to bring someone in from the outside.

Biglari certainly qualifies as investor-friendly but he looks like could be overexposed in a role that involves turning around a restaurant chain. He's currently CEO of the much smaller Western Sizzlin Corporation (NASDAQ: WEST) chain, but his prior experience in the restaurant industry is pretty much limited to an investment in Friendly's that culminated in a sale to a private equity firm at a price that, in retrospect, appears to have been too high.

When most companies report bad numbers in a tough economy, they're quick to blame their woes on the macro picture.

This bothers me because it's pretty hypocritical: I have never once seen a company report good numbers in a good economy and tell investors in the press release that 'We're getting bailed out by the economy right now. We haven't made good strategic decisions, but hey, in a market like this, Richard Wagoner could make money! I can't believe how much we get paid for this!'

But when Steak n' Shake (NYSE: SNS) reported a loss of $9.8 million for the third quarter vs. break-even last year, the company's newly-installed CEO Sardar Biglari didn't blame high gas prices and low consumer confidence. Here's his statement from the press release:

In my view, our poor performance is not the result of poor economic conditions. Much of our operating shortfall, I believe, is the result of our own lack of execution. As a company that began in the midst of the Great Depression, we have a deep heritage from one of the great American brands and are fortunate to have attracted committed and passionate employees, benefits that we believe will allow us once again to become a thriving chain.

If the latest personal attacks in the presidential election are too softball for your taste, you may want to take a look at the efforts of Steak n Shake's (NYSE: SNS) entrenched and poorly-performing management to retain their positions in the face of attacks by activist investor Sardar Biglari.

The company has put together a handy dandy Power Point presentation designed to convince investors that they're actually doing a great job -- stock price be darned. I'll summarize it this way: "Brownie, we're doing a heck of a job and, although we never purchase stock and have sold shares frequently in the past, our strategy that has failed miserably will actually start to work soon. If not, we'll just have to survive on our bloated salaries and undeserved bonuses."

Not to be outdone, Biglari responded with an on-point letter, skewering the company's propaganda:

Over the last decade -- an ample period of time to judge long-term performance -- the members of the current board have had their chance to amass value for you. They have failed . . . In quantifiable terms, during the last ten years they have spent approximately $566 million in capital, yet operating profit declined and negative shareholder returns were produced! An examination of the figures reveals that the stock price in 1998 rose as high as $18.75 but now sits at $7.65 for a loss of almost 60%, notwithstanding the time value of money . . ."

Biglari closed by saying that he is "confident of winning" his battle for control of the company, and I'm inclined to agree. No one in their right mind would vote to keep the current board in place given its track record.

Activist investor Sardar Biglari of the Lion Fund, who owns more than 8% of struggling restaurateur Steak n' Shake (NYSE: SNS), has been waging a campaign to gain representation on the company's board and increase shareholder value.

Today, the company decided to try the carrot-and-stick approach to avoiding a proxy fight. First the carrot: the company sent Biglari a letter offering him two seats on the company's board by expanding it in size from nine to 11 members.

The letter also stated: We also want to inform you the Board recently amended the Company's By-laws in several respects. We have filed a current report on Form 8-K with the Securities and Exchange Commission today, Thursday, January 31, 2008, and as a courtesy to you, we have enclosed a copy of that Form 8-K.

The amendment should tell shareholders all they need to know about this management's motivations. The 8-K amended the company's bylaws to require 80% of the company's voting shares to request a shareholder meeting -- before, only 25% we required.

It's clear that the company's management isn't eager to be held accountable for its failures, and this change to the bylaws is a pathetic effort to further insulate entrenched executives and directors.

Mr. Biglari's website, www.enhancesteaknshake.com, contains a ton of information about his views on the company.

Given Western Sizzlin' (OTC BB: WSZL) CEO Sardar Biglari credit for trying. In an effort to win board seats at Steak n' Shake (NASDAQ: SNS), he has taken out a billboard along the highway in Indiana, urging shareholders to vote for him and Philip Cooley, his business partner and fellow board hopeful.

The billboard directors drivers (Investors?) to his cleverly-named www.enhancesteaknshake.com -- Let's hope Biglari doesn't have ideas for an ad campaign for the restaurant chain.

But in a very short time, Biglari has built a strong track record investing in restaurant companies. Most famously, his agitations at Friendly's (which also included a billboard campaign) led to the company's sale to a private equity firm.

The ranks of discontented Applebee's International Inc. (NYSE: APPB) shareholders have been on the rise since the company announced that it would be acquired by IHOP (NYSE: IHP) in July. My first reaction was, If IHOP wants it, should Applebee's sell it? The deal gave Applebee's shareholders a paltry premium and shares of IHOP soared on news of the deal -- further confirmation that this was better news for IHOP shareholders than for Applebee's. In acquisitions, generally it's the opposite.

Then shareholder Sardar Biglari announced his opposition to the deal and Applebee's disclosed that five of its directors including its Chairman, CEO, and CFO opposed the deal.

Now Applebee's has settled a shareholder class-action lawsuit filed by the New Jersey Building Laborers Pension and Annuity Funds alleging that the merger agreement deprived Applebee's shareholders of the benefits they might have gotten if the casual restaurant chain had stayed independent or sold off its company-owned locations to franchisees, the Associated Press said. No money will exchange hands in the settlement. Applebee's has simply agreed to provide shareholders with greater disclosure about IHOP's post-deal plans for Applebee's.

Shares of Applebee's aren't acting as if traders expect the deal to be blocked or the price raised, but if either of those two things happens, shareholders should do quite well. Buying a few shares here looks like an interesting gamble, with a chance for profit if the anti-IHOP deal movement gains steam.

Normally when a company announces a definitive agreement to be acquired, you can tell when it happened just from looking at the stock's chart. That's because takeovers usually happen at substantial premiums to the stock's most recent trading price. In the case of Applebee's International (NASDAQ: APPB), the premium when IHOP Corp. (NYSE: IHP) agreed to acquire the company was so small that it's not noticeable on the stock's chart.

I couldn't believe the Applebee's board would agree to such a deal, and it's refreshing to see that at least a few directors are none too pleased. According to DealBook, "Applebee's disclosed Thursday that five board members, including its chairman, its chief executive, and its chief financial officer, are opposed to the $1.9 billion sale. That wasn't enough to stop the board from approving the deal in July -- nine directors voted in favor -- but it represents an unusual level of internal opposition to a supposedly friendly deal."

I've been skeptical of the deal since it was announced. In July, I wrote that if IHOP's plan to revive the company would work, Applebee's shareholders would miss out on the upside by selling out now. Then investor Sardar Biglari acquired a small stake in the company and expressed his displeasure: "... we believe that if Applebee's undertook the same initiatives as IHOP has in mind, the appreciation IHOP recently gained would, at the very minimum, shift to Applebee's."

Perhaps this disclosure of dissenting directors (including the CEO, chairman, and CFO!) will spark a grass-roots campaign to block the deal, but the stock isn't trading like such a campaign would have much success.

Whenever an activist makes a 13D filing in a company, I'm interested. When an activist goes further and presses for change or board seats via a 13D or 13D/A filing, I become even more interested. And when an activist goes to the next level and creates a website to promote their message and cause, I need to research the idea. One such idea is Friendly's (AMEX:FRN), a company held by value investor Sardar Biglari of the Lion Fund. I highly recommend interested readers visit the activist's website and read all the letters and articles I reference throughout this article before making any investment decisions.

Biglari and his investment funds own about 15% of Friendly's. He is seeking to get himself and Philip Cooley elected onto the company's board. One of Biglari's most interesting letters to shareholders was written on Tuesday (3/6). Throughout the four page letter he highlights his core beliefs regarding Friendly's.

First off, Mr. Biglari took apart the company's argument that he and Mr. Cooley are looking to "control the board" quite easily by pointing out the quite obvious fact that two-sixths does not represent a majority and, therefore, control would not be had with their election. He also went on to point out the fact that Friendly's "in aggregate, has generated negative cash flows...Phil and I will strenuously lobby the board to focus on cash flows to increase the intrinsic value of the company. If we can increase intrinsic value per share, the stock price will eventually follow suit."

Then Biglari discussed the company's capital structure -- mainly the company's debt-heavy balance sheet. The obvious risk of this capital structure is that any small problem with the business could cause the company to return to "near insolvency." Biglari goes on to say that "I believe the company will become bankrupt if it does not attempt to delever the balance sheet." He even pledges that he and Mr. Cooley will "champion a disciplined financial structure to increase shareholder wealth."

Also, Biglari believes the company should shift its strategy by decreasing the number of company-owned and operated units allowing it to "distribute more of its resources to the creation of better products, better quality control, shrewder, more effective marketing practices, more effective franchisee training - all with the objective of becoming a forceful franchiser capable of efficiently enhancing the brand." He also points to the irrefutable fact that returns on capital are higher from franchising than from ownership. He believes that the company could use the money from selling company-owned units to franchisers (re-franchising) to pay off the debt-load.