Author Topic: SYTE - Enterprise Diversified  (Read 180525 times)

John Hjorth

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Re: SYTE - Enterprise Diversified
« Reply #650 on: March 17, 2019, 03:00:43 PM »
... Jeffrey Moore is fair game.

ratiman,

Based on ýour prior posts in this topic, and your last, - how should I interpret this from your perspective?
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ratiman

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Re: SYTE - Enterprise Diversified
« Reply #651 on: March 17, 2019, 03:05:20 PM »
That he dumped his crapshacks on shareholders when he was an insider and chairman and had massive conflicts of interest and therefore it is perfectly legitimate to criticize him?

Read the Footnotes

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Re: SYTE - Enterprise Diversified
« Reply #652 on: March 17, 2019, 03:27:16 PM »
That is about the closest I have ever heard to a public company CEO saying "I made a mistake". If you can think of better examples of a CEO publicly taking responsibility, please let me know. I would probably like to keep those managers on a list of people I would like to track and potentially invest with. Better yet, start a new thread of CEO's or investment managers who have publicly taken responsibility for mistakes, so that we can all track them.

I heard about this guy who bought a textile manufacturing company a couple of decades ago. Just doesn't shut up about what a bad investment that was.

Good point. I am already invested in that one. I am also a fan of his partner, the world's greatest proponent of rubbing your nose in it.
« Last Edit: March 17, 2019, 03:31:04 PM by Read the Footnotes »

Spekulatius

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Re: SYTE - Enterprise Diversified
« Reply #653 on: March 17, 2019, 03:35:46 PM »
I have been critical of SYTE here (perhaps cynical), but disclosure and honesty wasn’t the issue. The issues with startup from value investors are two fold:

1) Running a Company is way more than capital allocation. Being a good value investor does not mean that one is good at running a company. Capital allocation is important , but it isn’t the most Important thing. Operational skills, and industry knowledge are the most important thing and far more important than capital allocation.

2) Running a Public Company is expensive. We see this with SYTE and Premier Premier Diversified and even BOMN to some extend. BOMN looks like it has the scale now to pay for this overhead. However, for SYTE and Premier Diversified, the overhead is a killer.

We will see about Jeff keeping the SYTE shares. Maybe he has no choice, because the liquidity is too low, but I rarely have seen any executive of a public company keeping shares after leaving. I suspect he want to dispose of his shares to get liquidity for his other endeavors. I think an exchange of some properties for his shares is a likely outcome, but the board needs to be careful with these arms length transaction, especially since the optics most likely won’t look great.

Crapshacks may be a strong word, but this isn’t high quality real estate that can be run easily. It’s a bunch of low priced properties in a secondary market that need a lot of TLC to keep make and keep them productive. I don’t think that SYTE has the expertise and management bandwidth to deal with this, so they will get disposed, I think.

I agree with “Read the Footnotes” that admitting mistakes is commendable. 90% of the management of public companies will not do this.
« Last Edit: March 17, 2019, 07:00:04 PM by Spekulatius »
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Gregmal

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Re: SYTE - Enterprise Diversified
« Reply #654 on: March 17, 2019, 04:11:01 PM »
Its commendable just the same as Sanjeev's honesty is with PDH. But at the same time, these are terrible investments made by people and supported by investors, who should know better. From the company managements perspective(insert SYTE/PDH/BOMN/whatever in there) its freaking awesome. Its like the week long fantasy camp where for 10 days and $10,000 a few middle age dudes get to go participate in spring training with the Yankees. Living out their dream because they have the resources to make it happen. Fine. Worst case you have a great job; get to be "the man" and get funded for a few years, basically being able to do whatever you want.

These are basically "I wanna be Buffett too" ventures. And like I said, its cool and all, but I think it says a lot about the shareholders "wanting to believe" rather than thinking with their heads. I mean, I look at people who invest in get rich quick schemes, and "the next time thing" story stocks(like OTC marijuana stocks right now) as a certain type of sucker. These type of stocks aren't scams like those are, but they are basically sucker stocks from more sophisticated folks. Buffett is basically a fairytale, or the exception to the rule. People need to stop touting him as the reason why the impossible is possible from mere mortals. Or using his story as an excuse to make bad investments.

Read the Footnotes

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Re: SYTE - Enterprise Diversified
« Reply #655 on: March 17, 2019, 04:17:04 PM »
I agree with “Read the Footnotes” that admitting mistakes is commendable. 90% of the management of public companies will not do this.

Spekulatius, thank you for elevating the conversation by getting in to specifics. I was probably a bit too flippant in my previous comments. Asking what percentage of management would behave this way is a better way of framing the question.

Your 10% number might be correct, but I would guess it's 10% that would do so under pressure.
The number of people who would volunteer to do it the way Steve Kiel did, or Warren Buffett does, or Charlie Munger encourages, is a very small percentage. Not unheard of, but very rare.

Even if you assume SYTE has excellent management, there would still be a question of how much of a difference can that make. Unfortunately, the poor qualities of a business can easily overwhelm the positive qualities of any management team. Also, integrity would be just one of many issues to consider when evaluating management. Unfortunately, it is possible for management to behave with the best of ethical conduct in mind and yet to make many mistakes.

I think lines of inquiry that are not about misconduct are likely to be much more productive if you are trying to do a postmortem of the SYTE over the last couple of years.

If you are a professional investor you are not doing your job if you are not constantly looking for self-dealing managements, frauds, overly promotional managements, or other management risks. Most of the time investors make mistakes by not being concerned enough about these risks. In the case of SYTE, I believe there are many simple explanations that make more sense than self-dealing or anything unethical. If you are having trouble coming up with alternative narratives, I would suggest that you probably have not considered enough alternative explanations, or have not thought through what choices management had at their disposal at each juncture. Hopefully I didn't sound like a dismissive jerk earlier, but this really would be a great exercise for an investor who wants to get better at understanding some of the challenges of understanding a company from the outside. If building those skills is not something you can do, go fish elsewhere. There are other ways to do well in markets where management is not that important.
« Last Edit: March 17, 2019, 04:32:25 PM by Read the Footnotes »

Read the Footnotes

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Re: SYTE - Enterprise Diversified
« Reply #656 on: March 17, 2019, 04:29:42 PM »
These are basically "I wanna be Buffett too" ventures. And like I said, its cool and all, but I think it says a lot about the shareholders "wanting to believe" rather than thinking with their heads. I mean, I look at people who invest in get rich quick schemes, and "the next time thing" story stocks(like OTC marijuana stocks right now) as a certain type of sucker. These type of stocks aren't scams like those are, but they are basically sucker stocks from more sophisticated folks. Buffett is basically a fairytale, or the exception to the rule. People need to stop touting him as the reason why the impossible is possible from mere mortals. Or using his story as an excuse to make bad investments.

I like the cautionary tale you are telling, but I wouldn't have chosen those tickers to support the narrative. Plus, I can think of other cases I am more skeptical of, but I won't name them.

On the other hand even if you had chosen BH (which has had a lot more time to play out than some of these examples), there would be someone out there who would want to disagree.

Gregmal

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Re: SYTE - Enterprise Diversified
« Reply #657 on: March 17, 2019, 04:37:26 PM »
These are basically "I wanna be Buffett too" ventures. And like I said, its cool and all, but I think it says a lot about the shareholders "wanting to believe" rather than thinking with their heads. I mean, I look at people who invest in get rich quick schemes, and "the next time thing" story stocks(like OTC marijuana stocks right now) as a certain type of sucker. These type of stocks aren't scams like those are, but they are basically sucker stocks from more sophisticated folks. Buffett is basically a fairytale, or the exception to the rule. People need to stop touting him as the reason why the impossible is possible from mere mortals. Or using his story as an excuse to make bad investments.

I like the cautionary tale you are telling, but I wouldn't have chosen those tickers to support the narrative. Plus, I can think of other cases I am more skeptical of, but I won't name them.

On the other hand even if you had chosen BH (which has had a lot more time to play out than some of these examples), there would be someone out there who would want to disagree.

I don't know how that one slipped my mind. Although there, I feel its crossed a line and he doesn't even try to hide the ridiculous antics. Whereas here and with PDH, the managers seem honest, but nonetheless still seem to want to run up steep mountains that are covered in ice...and there seems to be plenty of shareholders who say "here take my money" good luck!

Spekulatius

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Re: SYTE - Enterprise Diversified
« Reply #658 on: March 17, 2019, 05:19:07 PM »
These are basically "I wanna be Buffett too" ventures. And like I said, its cool and all, but I think it says a lot about the shareholders "wanting to believe" rather than thinking with their heads. I mean, I look at people who invest in get rich quick schemes, and "the next time thing" story stocks(like OTC marijuana stocks right now) as a certain type of sucker. These type of stocks aren't scams like those are, but they are basically sucker stocks from more sophisticated folks. Buffett is basically a fairytale, or the exception to the rule. People need to stop touting him as the reason why the impossible is possible from mere mortals. Or using his story as an excuse to make bad investments.

As far as your point on if good management making a difference, it’s probably true in most case, but in this case, the management chose the business it want to operate in. So in that sense, they bear more responsibility than a managment that inherits a bad business.
I like the cautionary tale you are telling, but I wouldn't have chosen those tickers to support the narrative. Plus, I can think of other cases I am more skeptical of, but I won't name them.

On the other hand even if you had chosen BH (which has had a lot more time to play out than some of these examples), there would be someone out there who would want to disagree.

Any successful investor/manager will have imitators. That’s just human nature and not bad by itself. The insurance/hedge fund hybrids come to mind like GLRE and TPRE. The idea sounds great, but it looks like the implementation is way harder than people think. Despite that, there are still people out there who claim, that Buffet was only successful because he had “free leverage” with his insurance company. of course it’s true, except that others can’t get free leverage/float that easily and the investment side doesn’t seem to work out either.
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cameronfen

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Re: SYTE - Enterprise Diversified
« Reply #659 on: March 17, 2019, 06:48:27 PM »
I think the lesson in SYTE is that it's harder to run a business than investors think it is.  It's not just financial engineering and pouncing on an industry roll up oportunity.  That's the easy part.  Actually running a business like the HVAC business is difficult.