Author Topic: SYTE - Sitestar  (Read 137078 times)

Spekulatius

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Re: SYTE - Sitestar
« Reply #460 on: April 14, 2018, 01:34:34 PM »
We only know a fraction of what is going on in any company. As an investor, all we can do is put these scraps of information into context and make an decision whether we like it enough to invest or not. SYTE is not different in that regard than any other company.

Investors have no choice to make a judgement based on the incomplete information. It is Managements job in a public company to communicate as clearly as feasible so that investors can make a somewhat informed decision. I also think that if someone does not like, that the public holds their feet to the fire, they should not run a public company, but stay private. Then they can do whatever they want with their company.
To be a realist, one has to believe in miracles.


Spekulatius

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Re: SYTE - Sitestar
« Reply #461 on: April 14, 2018, 01:49:11 PM »
Let me offer my two cents, as someone in a very similar position to Steve:

In terms of compensation - Our fund owns 42% of PDH...I receive a salary from PDH as CEO and I receive only incentive fees I earn from our fund.  PDH makes up about 15% of the fund. 

Now some people would argue I'm double-dipping, since I receive my fees from the fund and I receive a salary as CEO of PDH.  That would be true if PDH was a passive investment like Bank of America, Macy's or some other stock we own in the fund...where I have no direction over, nor any day to day responsibilities.  And believe me, the day to day duties are extensive...especially in the beginning when we got involved and I was working 14 hour days six days a week for the first 2 years trying to turn it around.  Or it could be perceived as double-dipping if we received a management fee from the fund...but we don't...totally incentive-based.

Also, my CEO salary is on par or less than what anyone else would have gotten for that position...depending on the fluctuating market cap and book value over the years...you could argue either way, and because of that I won't try and debate it.  It will either look cheap or look expensive 5-10 years out.  But I capped it from day one...I will never get a raise!  How many CEO's would do that?

Whether we should or should not have gotten involved with PDH can be debated either way.  But it is what it is, and we are intent on growing it over time and making it into something special.  I have a very direct influence over the success or failure of PDH...not like passive investments in our fund.  It consumes an enormous amount of time, work, energy and even costs you mentally (stress).  So while I'm sure some would like to continue arguing that it is double-dipping, it certainly isn't in our case.  And from what I've seen, Steve's circumstance is very similar.  Cheers!

15 % of the fund is probably not enough overlap to justify this calling double dipping, but this would be different, if the majority of the fund’s assets were invested in PDH. Then those entities start to become more like the same legal entities and can you really habe two jobs within one organization?

Then, there is an issue with the control pyramids when you have circular ownership in related companies, which means that with small amount of capital (which isn’t really your own, if you run a fund) you could control a company, similar to what Mir Big does at BH, or the way the conglomerates used to be run in Italy. Those arrangements tend to yield poor results for minority shareholders.
« Last Edit: April 14, 2018, 01:56:44 PM by Spekulatius »
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NBL0303

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Re: SYTE - Sitestar
« Reply #462 on: April 14, 2018, 01:53:18 PM »
all in the 15-60 minutes that we spend reading an annual report and whatever other research we do (even message board posting).


I've always like you Ragnar - but now I am bitter and envious.  It takes me hours to read through many annual reports, probably due to my inadequate pace of reading - so anyone that can do it in 15 minutes has my eternal envy.

On a slightly more serious note, I appreciate your post and you thinking through the nuances of reporting and evaluating businesses.  In the previous generation of investing it seemed that we could find and buy more companies based on simple low valuation metrics like P/Es and such.  But now nearly every low P/E type company has earned their low P/E.  I have found that most of the value investments that we make now are more in the camp of "this doesn't exactly look cheap based on the raw numbers, but the numbers are missing the point."  The low P/E companies have mostly been considered by all of us value investors and had their market price driven down to a low P/E because that is the accurate value for the business now.  Anyway, in this new-ish reality for value investors, I find that the questions I am asking myself about our investments and the analysis is more complicated and involves more behavioral elements.  This makes your comments Ragnar very resonant.  When any of us CoBFers and other value investors are looking at a company and are asking hard questions - like "do the current operating numbers really reflect the true long-term value of the business?"  And distinguishing between those companies in which the numbers are not currently great but deep qualitative analysis indicates that the current numbers may undervalue the longer-term prospects of the business and those companies in which the current struggling numbers accurately reflects a business having issues which impair its valuation is one of the main tasks I find I'm having to engage in - at least with the market circumstances such as they are now.

Spekulatius

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Re: SYTE - Sitestar
« Reply #463 on: April 14, 2018, 02:05:45 PM »
all in the 15-60 minutes that we spend reading an annual report and whatever other research we do (even message board posting).


I've always like you Ragnar - but now I am bitter and envious.  It takes me hours to read through many annual reports, probably due to my inadequate pace of reading - so anyone that can do it in 15 minutes has my eternal envy.

On a slightly more serious note, I appreciate your post and you thinking through the nuances of reporting and evaluating businesses.  In the previous generation of investing it seemed that we could find and buy more companies based on simple low valuation metrics like P/Es and such.  But now nearly every low P/E type company has earned their low P/E.  I have found that most of the value investments that we make now are more in the camp of "this doesn't exactly look cheap based on the raw numbers, but the numbers are missing the point."  The low P/E companies have mostly been considered by all of us value investors and had their market price driven down to a low P/E because that is the accurate value for the business now.  Anyway, in this new-ish reality for value investors, I find that the questions I am asking myself about our investments and the analysis is more complicated and involves more behavioral elements.  This makes your comments Ragnar very resonant.  When any of us CoBFers and other value investors are looking at a company and are asking hard questions - like "do the current operating numbers really reflect the true long-term value of the business?"  And distinguishing between those companies in which the numbers are not currently great but deep qualitative analysis indicates that the current numbers may undervalue the longer-term prospects of the business and those companies in which the current struggling numbers accurately reflects a business having issues which impair its valuation is one of the main tasks I find I'm having to engage in - at least with the market circumstances such as they are now.

I agree with NBL that it has become more difficult to find truly undervalued businesses and most business that are cheap based on readily available numbers are probably valued correctly. The world has become more “intangibles” in how business is conducted and those intangibles are harder to evaluate than book values, PE ratios and balance sheets. In addition, I believe that the business environment changes faster, probably driven by technology changes, so any valuation projected in the future become uncertain to a larger extend than in the past.
To be a realist, one has to believe in miracles.

ragnarisapirate

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Re: SYTE - Sitestar
« Reply #464 on: April 14, 2018, 04:46:43 PM »
all in the 15-60 minutes that we spend reading an annual report and whatever other research we do (even message board posting).


I've always like you Ragnar - but now I am bitter and envious.  It takes me hours to read through many annual reports, probably due to my inadequate pace of reading - so anyone that can do it in 15 minutes has my eternal envy.

On a slightly more serious note, I appreciate your post and you thinking through the nuances of reporting and evaluating businesses.  In the previous generation of investing it seemed that we could find and buy more companies based on simple low valuation metrics like P/Es and such.  But now nearly every low P/E type company has earned their low P/E.  I have found that most of the value investments that we make now are more in the camp of "this doesn't exactly look cheap based on the raw numbers, but the numbers are missing the point."  The low P/E companies have mostly been considered by all of us value investors and had their market price driven down to a low P/E because that is the accurate value for the business now.  Anyway, in this new-ish reality for value investors, I find that the questions I am asking myself about our investments and the analysis is more complicated and involves more behavioral elements.  This makes your comments Ragnar very resonant.  When any of us CoBFers and other value investors are looking at a company and are asking hard questions - like "do the current operating numbers really reflect the true long-term value of the business?"  And distinguishing between those companies in which the numbers are not currently great but deep qualitative analysis indicates that the current numbers may undervalue the longer-term prospects of the business and those companies in which the current struggling numbers accurately reflects a business having issues which impair its valuation is one of the main tasks I find I'm having to engage in - at least with the market circumstances such as they are now.

Some annual reports don’t even take 15 minutes. ;)

http://www.treeconresources.com/wp-content/uploads/2018/02/09-30-17-Selected-Financial-Information.pdf

stahleyp

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Re: SYTE - Sitestar
« Reply #465 on: April 16, 2018, 10:25:32 AM »
what percentage of Arquitos's assets are in SYTE?
Paul

roark33

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Re: SYTE - Sitestar
« Reply #466 on: May 11, 2018, 02:31:59 PM »
This seems odd.  Syte committed 10m to Alluvial and then withdrew 3m and Kiel, through his LP replaced 3m.  Is Kiel's fund a fund of fund now?  This stuff just stinks of conflict of interests. 



The Company agreed to make capital contributions to Alluvial Fund in the aggregate amount of $10 million to be provided over four equal tranches on January 1, 2017, April 1, 2017, July 1, 2017, and October 1, 2017. As of September 30, 2017, the Company satisfied its obligation to provide $10 million in accordance with the contribution schedule. On January 1, 2018, pursuant to an amendment to the Alluvial Side Letter Agreement, dated December 15, 2017, Willow Oak Asset Management, LLC withdrew $3,000,000 from its $10,000,000 investment in Alluvial Fund, LP in order to partially fund the first close of the Mt Melrose Transaction. Under the terms of the amendment to the Alluvial Side Letter Agreement, to the extent that funds withdrawn by Willow Oak are replaced coincid entally by funds from a third party, Willow Oak is no longer subject to the former “lockup” restrictions, which formerly conditioned any withdrawals upon Willow Oak having a $50,000,000 capital account balance. Arquitos Capital Partners, LP, which is manag ed by our Chief Executive Officer, Steven L. Kiel, simultaneously invested $3,000,000 in Alluvial, to replace the amount withdrawn by Willow Oak. The Arquitos investment into Alluvial counts toward Willow Oak’s seed investment total for purposes of Willow Oak’s agreement with Alluvial.

slkiel

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Re: SYTE - Sitestar
« Reply #467 on: May 11, 2018, 03:07:11 PM »
This seems odd.  Syte committed 10m to Alluvial and then withdrew 3m and Kiel, through his LP replaced 3m.  Is Kiel's fund a fund of fund now?  This stuff just stinks of conflict of interests.

We did it to help Sitestar. Sitestar was in a one year grace period for the 40 Act, so we needed to either withdraw the $3 million (and thus lower the fee share Sitestar earns) or replace it. I volunteered to replace it through Arquitos. The full fee share continues to go to Sitestar. We ended up making the exchange a few months earlier than required to help fund the Mt Melrose acquisition. The Mt Melrose acquisition and the Alluvial exchange will ensure that we will no longer be in violation of the 40 Act going forward

I would be interested to learn why you think this would be a conflict of interest so we can better communicate the reasons for doing this and who benefits. We have crafted the transaction/exchange so it clearly benefits Sitestar and its shareholders (of course it was also reviewed and approved by our audit committee and board). I am always interested in hearing how to make it more clear though if there is some sort of miscommunication.




Broeb22

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Re: SYTE - Sitestar
« Reply #468 on: May 18, 2018, 02:00:59 PM »
Does anyone where the Willow Oak meeting is being held in Phoenix?

Tim Eriksen

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Re: SYTE - Sitestar
« Reply #469 on: May 18, 2018, 02:50:16 PM »
Does anyone where the Willow Oak meeting is being held in Phoenix?

The annual meeting is at  Squire Patton Boggs located at 1 E. Washington Street, Suite 2700, Phoenix, Arizona at 10am Saturday.

Apparently I am told the Willow Oak portion is separate and possibly at a different location. 
« Last Edit: May 18, 2018, 10:41:24 PM by Tim Eriksen »