Author Topic: SYTE - Enterprise Diversified  (Read 217330 times)

JayGatsby

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Re: SYTE - Enterprise Diversified
« Reply #770 on: July 10, 2019, 01:55:45 AM »
Quote
• Enterprise Diversified retains a 35% ownership stake and plans to deconsolidate financial results as of June 30, 2019
• Enterprise Diversified overall reported debt as of March 31, 2019, is expected to decrease from $8.1 million to $1.2 million
• Overall real estate monthly debt service is expected to decrease from approximately $58,700 to approximately $6,400
• Public financial reporting results are being determined and will be provided in the company’s quarterly report as of June
30, 2019

I guess it remains to be seen in the next Q if there are any parent level guarantees / contingent liabilities? Not sure why the word "reported" is in there.

From press release:
Quote
As consideration for the transaction, Woodmont paid the Company $100,000 and agreed to assume full responsibility for the management and operation of Mt Melrose and its real estate portfolio. The Company has retained a 35% membership interest in Mt Melrose, with Woodmont now owning the other 65% membership interest.

Weird deal. Unclear how the debt is treated. Maybe I'm missing something or reading too much between the lines late at night.


Sportgamma

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Re: SYTE - Enterprise Diversified
« Reply #771 on: July 10, 2019, 05:34:53 AM »
I respect the Enterprise Diversified crew and I do not want to pile on at all. But I am blown away again, or my astonishment is just renewed, regarding the Mt. Melrose numbers. Mt. Melrose generated $165k in the second quarter, but had $250k-ish of COGS and expenses. And this does not even include write downs and whatever the $100k is in the "Other Expenses" (which I'm guessing are write-downs?).

These numbers seem to be so far off of what they were expecting (or maybe just what I personally was expecting for them as a non-shareholder cheering for the success of the company because of the people involved). With a real estate business like this - how are the operating expenses nearly doubling the revenues?

These are earnest questions, by the way. I would love to hear what others thoughts are on how a real estate business like this could put up these operating numbers. Again, I am really not trying to pile on - I think these are smart people involved in this - but I really would like to learn from this and understand these numbers/dynamics with the Mt. Melrose part of the story.

Mt Melrose vacancy rates are (or at least have been in the recent past) extremely high. I first mentioned this last November.

Thank you - I did not realize the high vacancy rate. As you pointed out before Foreign Tuffett, I believe, that Lexington's real estate market hasn't tumbled or anything - so unexpectedly high vacancy rates could be signaling a significant underlying problem.

I think jeff usually buys stuff that needs work to get the cash flow going--I kind of assumed he wanted to get a big business going so bought a lot of stuff that needed development, hired a bunch of guys to do the work, and then it was just too much cost to get through the redevelopment phase for the parent, and now it is costing an arm and a leg, since the buying was based on what it would be after redevelopment, not where it was at purchase.
I think everyone is being awfully unfair to Jeff here, especially management. Steven Kiel's letter of 12/11/17 says that the parent committed its next $10 million of capital to Mt. Melrose. It seems clear that Jeff was acting based on the commitments that had been made to him, and then the commitments changed. He was removed from the business, it appears, and it is not a surprise that performance suffered without him.

I would agree with you there.

"I am excited to announce that we have reached an agreement with our chairman, Jeff Moore, to have him join Sitestar as an operator. We are reorganizing Jeff’s existing business, Mt Melrose, into a wholly owned subsidiary of Sitestar. Jeff will become the president and continue to manage the business as he has done previously. Sitestar will add significant working capital to the business and provide Jeff with the freedom to allocate that capital. As part of this transaction, we are acquiring Mt Melrose’s current real estate portfolio in Lexington, Kentucky.

I have long admired Jeff. He is the reason that I originally got involved in Sitestar as a passive investor, and he is the reason why, when it became necessary to get actively involved, I was willing to do so. I suspect I am not the only investor who trusted in him. We have been richly rewarded.
 

To Sitestar’s detriment, we had never previously contemplated having Jeff in an operational role. I am happily surprised for this opportunity. It originated several months ago when Jeff made a public comment on Twitter that he was seeing significant opportunities to expand and that his bottleneck was capital. I knew Mt Melrose was doing well and quickly growing, but I was not aware of just how well. I reached out to him to see if Sitestar could be helpful as a funding partner. After weeks of discussion, it became clear how well Mt Melrose would fit inside of Sitestar. It truly is complementary to our other businesses.

Mt Melrose is at an inflection point. It owns 122 residential properties and has the potential, with Sitestar’s help, of becoming the dominant property owner in Lexington, Kentucky. Jeff’s strategy is to find undervalued properties, repair and upgrade them, rent them out to tenants, and own them indefinitely. This is a similar strategy that attracted us to Sitestar in the first place. 

Mt Melrose’s current portfolio is exceptional. Jeff is an excellent, passionate, operator. He uses debt appropriately. And, Lexington is the ideal location to take advantage of rising rents and rising property values.
"

https://www.sec.gov/Archives/edgar/data/1096934/000156459017024810/syte-ex992_9.htm

Sunrider

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Re: SYTE - Enterprise Diversified
« Reply #772 on: July 10, 2019, 08:53:02 AM »
Absolutely agreed. Although I only spoke with Jeff once many years ago, I definitely have more trust in him and respect for his behaviour through the whole Sitestar Saga than for "It's not my fault, let me try some other idea, Kiel".

ratiman

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Re: SYTE - Enterprise Diversified
« Reply #773 on: July 11, 2019, 04:03:07 AM »
I'm not going to comment on this because I'm pseudonymous, not an expert in corporate governance, and it's none of my business. I just want you all to know that I have reached new levels of maturity and will not be launching an all-out flame war that would see me getting doxxed and banned from the site. This is probably best for everybody.

Jurgis

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Re: SYTE - Enterprise Diversified
« Reply #774 on: July 11, 2019, 06:16:35 AM »
I'm not going to comment on this because I'm pseudonymous, not an expert in corporate governance, and it's none of my business. I just want you all to know that I have reached new levels of maturity and will not be launching an all-out flame war that would see me getting doxxed and banned from the site. This is probably best for everybody.

LOL.

./bow

./support

 8)
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writser

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Re: SYTE - Enterprise Diversified
« Reply #775 on: July 11, 2019, 06:23:08 AM »
Meh. So boring and mature. This forum needs more riots.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

Foreign Tuffett

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Re: SYTE - Enterprise Diversified
« Reply #776 on: August 12, 2019, 04:18:52 PM »
Q2 results out. Get your abacuses out folks, we have more significant accounting changes.

https://www.accesswire.com/555630/Enterprise-Diversified-Inc-Announces-Second-Quarter-2019-Financial-Results

Best of luck to these guys, this last year has been a hard row to hoe for the company.

roark33

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Re: SYTE - Enterprise Diversified
« Reply #777 on: August 19, 2019, 01:19:08 PM »
At a certain point, this company will be valued less than the company's investment in Alluvial, which I believe was $10m, at which point another activist will need to come along and kick Kiel out? 

DTEJD1997

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Re: SYTE - Enterprise Diversified
« Reply #778 on: August 19, 2019, 02:35:06 PM »
At a certain point, this company will be valued less than the company's investment in Alluvial, which I believe was $10m, at which point another activist will need to come along and kick Kiel out?

An interesting observation...but what amount of debt does the company have?  Yahoo! has it listed as about $8mm?

As for Alluvial, I believe that most of their positions are thinly traded to downright illiquid.  If they had to unwind their positions relatively quickly...they would probably have to take a mark down.  I am also going to guess that if there is a market correction, some of their positions might be getting hit hard?

How much are the royalties on the home services truly worth?  Hard to say...but I would think lower rather than higher.

The interweb division may through off some decent money in the upcoming 12 months...but what will it be worth 1 year or so from now?

Then the remaining asset is Mt. Melrose.  Not surprised if they take another hit there.

SYTE hit a 52 week low today.  I would not be surprised if we see that repeat multiple times in the upcoming 12 months.


Spekulatius

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Re: SYTE - Enterprise Diversified
« Reply #779 on: August 19, 2019, 02:53:55 PM »
At a certain point, this company will be valued less than the company's investment in Alluvial, which I believe was $10m, at which point another activist will need to come along and kick Kiel out?

An interesting observation...but what amount of debt does the company have?  Yahoo! has it listed as about $8mm?

As for Alluvial, I believe that most of their positions are thinly traded to downright illiquid.  If they had to unwind their positions relatively quickly...they would probably have to take a mark down.  I am also going to guess that if there is a market correction, some of their positions might be getting hit hard?

How much are the royalties on the home services truly worth?  Hard to say...but I would think lower rather than higher.

The interweb division may through off some decent money in the upcoming 12 months...but what will it be worth 1 year or so from now?

Then the remaining asset is Mt. Melrose.  Not surprised if they take another hit there.

SYTE hit a 52 week low today.  I would not be surprised if we see that repeat multiple times in the upcoming 12 months.

The presentation lists the debt at ~$1.07M. Most of the debt was attached to Mt. Melrose and is now gone after they de-consolidated it. It’s unlikely an attic ist has a chance to get control since Steven Kiel owns so many shares (684k shares, directly and indirectly via his fund.
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