Author Topic: SYTE - Enterprise Diversified  (Read 217269 times)

InelegantInvestor

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Re: SYTE - Sitestar
« Reply #100 on: June 22, 2016, 09:03:42 AM »
I get your point - but it does appear that they are working as hard as possible to get the SEC filings correct and out and then have an annual meeting to drastically increase disclosure.  I am willing to give them the benefit of the doubt as they took on a total mess of a company.  It honestly couldn't be any worse than previous management

If they are focused on getting the 10-K out, fine. But, instead, they have chosen to change strategy entirely and have devoted $2MM(from where?) to a new "HVAC fund". Is it proper for a major strategic change like this to be implemented by a management with no mandate from shareholders?

Proper order of operations:
1) Figure out where company stands
2) Tell the owners
3) Decide what to do
4) Do it

Kiel & Moore order of operations
1) Figure out where company stands, kinda
2) Decide what to do
3) Do it
..
..
7) Tell the owners


oddballstocks

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Re: SYTE - Sitestar
« Reply #101 on: June 22, 2016, 09:14:05 AM »
We'll see how this works out.

But I've seen this pattern in other places and I can't say I like it. Activist "good guys" gain control of (usually small) company to fix it/redirect it/improve it. Then there's silence. Then they go into some weirdo tangent deals without explanation or with "hey this is the best thing since sliced bread" sales pitch that doesn't seem very convincing. Then ... Then ... I'd like to say "profit"... but so far I'm not so sure.

I'll do Buffett "criticize in general" this time and won't name any names. Get back in 3-5 years. ;)
Jurgis hits the nail on the head, except I will name names. Now that they are management, Jeff and Steven have begun behaving in exactly the ways they previously railed against. This is a public company, with public shareholders. The lack of disclosure is incredibly troublesome. I would love to hear from other shareholders who agree with me. Please message me here, or leave a feedback at inelegantinvestor.com, where I hope to have posted a more detailed set of concerns in the next few days.

Have you called or emailed Jeff or Steve?

Having a full audit plus compiling a 10-K is a lot of work, especially for a small company.  I've spoken to auditors about these things in the past, the delay isn't surprising.  I'm sure the costs will be outrageous.

Regarding the HVAC fund, it's weird.  But then again as a shareholder you've entrusted management to make decisions on your behalf.  Steve and Jeff are value guys who are accessible, but this isn't a democratic company either.  I've never heard of other companies saying "we're thinking about how to allocated capital, can the shareholders vote on it?"  Usually an exec acts when an opportunity exists.

My guess is based on the situation that shareholders will never be happy or satisfied no matter what the new management does.  Maybe this does well, maybe the HVAC stuff goes bonkers.  Or maybe it idles along like most think it will.  Or maybe it all blows up, who knows.

If I had to make guesses it'd be that those houses the company owned aren't all that great once management came into power.

I guess the alternate reality here is these guys could start to act like a pump and dump company releasing every thought management has.  "Sitestar has decided to investigate investing in houses." "Sitestar has decided to focus on other investments." "Sitestar is close to making a major investment with an unnamed company."  But at $400/pop I'm not sure shareholders want that, or maybe they do?

This name intrigues me, but I'll only invest once the dust settles.
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InelegantInvestor

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Re: SYTE - Sitestar
« Reply #102 on: June 22, 2016, 09:32:27 AM »
We'll see how this works out.

But I've seen this pattern in other places and I can't say I like it. Activist "good guys" gain control of (usually small) company to fix it/redirect it/improve it. Then there's silence. Then they go into some weirdo tangent deals without explanation or with "hey this is the best thing since sliced bread" sales pitch that doesn't seem very convincing. Then ... Then ... I'd like to say "profit"... but so far I'm not so sure.

I'll do Buffett "criticize in general" this time and won't name any names. Get back in 3-5 years. ;)
Jurgis hits the nail on the head, except I will name names. Now that they are management, Jeff and Steven have begun behaving in exactly the ways they previously railed against. This is a public company, with public shareholders. The lack of disclosure is incredibly troublesome. I would love to hear from other shareholders who agree with me. Please message me here, or leave a feedback at inelegantinvestor.com, where I hope to have posted a more detailed set of concerns in the next few days.

Have you called or emailed Jeff or Steve?

Having a full audit plus compiling a 10-K is a lot of work, especially for a small company.  I've spoken to auditors about these things in the past, the delay isn't surprising.  I'm sure the costs will be outrageous.

Regarding the HVAC fund, it's weird.  But then again as a shareholder you've entrusted management to make decisions on your behalf.  Steve and Jeff are value guys who are accessible, but this isn't a democratic company either.  I've never heard of other companies saying "we're thinking about how to allocated capital, can the shareholders vote on it?"  Usually an exec acts when an opportunity exists.

My guess is based on the situation that shareholders will never be happy or satisfied no matter what the new management does.  Maybe this does well, maybe the HVAC stuff goes bonkers.  Or maybe it idles along like most think it will.  Or maybe it all blows up, who knows.

If I had to make guesses it'd be that those houses the company owned aren't all that great once management came into power.

I guess the alternate reality here is these guys could start to act like a pump and dump company releasing every thought management has.  "Sitestar has decided to investigate investing in houses." "Sitestar has decided to focus on other investments." "Sitestar is close to making a major investment with an unnamed company."  But at $400/pop I'm not sure shareholders want that, or maybe they do?

This name intrigues me, but I'll only invest once the dust settles.

I have emailed both Jeff & Steve on multiple occasions. I can assure that if their responses(when they bothered to respond) were any less than totally dismissive, I would not be speaking about this on a public forum. You say they are accessible- it is just flat untrue. Steve made clear in his first communication as CEO that they had no interest in speaking to shareholders outside the meeting(which he promised would happen in the first half of the year).

As a shareholder, I never was given the opportunity to "entrust management to make decisions on my behalf". Steve, Jeff & Jeremy were elected by "written consent", the majority of their votes coming from the previous CEO who they terminated for cause.

I wouldn't expect shareholders to vote on every deal, but they should be sure they have the confidence of shareholders before they take a huge % of the company's capital and invest it in an unproven business. At the very least they should have sought input from shareholders on whether a liquidation or continued operation was preferable.

Again, not asking for one million press releases, but isn't a decision to liquidate the real estate portfolio worthy of being shared with owners?  When you announce that you are investing $2MM in an HVAC fund, shouldn't you say something about the source of funds, when the company previously had nothing remotely like $2MM in cash?

I really wanted to trust this management. But they frankly don't give a crap about their shareholders.

oddballstocks

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Re: SYTE - Sitestar
« Reply #103 on: June 22, 2016, 09:51:12 AM »
We'll see how this works out.

But I've seen this pattern in other places and I can't say I like it. Activist "good guys" gain control of (usually small) company to fix it/redirect it/improve it. Then there's silence. Then they go into some weirdo tangent deals without explanation or with "hey this is the best thing since sliced bread" sales pitch that doesn't seem very convincing. Then ... Then ... I'd like to say "profit"... but so far I'm not so sure.

I'll do Buffett "criticize in general" this time and won't name any names. Get back in 3-5 years. ;)
Jurgis hits the nail on the head, except I will name names. Now that they are management, Jeff and Steven have begun behaving in exactly the ways they previously railed against. This is a public company, with public shareholders. The lack of disclosure is incredibly troublesome. I would love to hear from other shareholders who agree with me. Please message me here, or leave a feedback at inelegantinvestor.com, where I hope to have posted a more detailed set of concerns in the next few days.

Have you called or emailed Jeff or Steve?

Having a full audit plus compiling a 10-K is a lot of work, especially for a small company.  I've spoken to auditors about these things in the past, the delay isn't surprising.  I'm sure the costs will be outrageous.

Regarding the HVAC fund, it's weird.  But then again as a shareholder you've entrusted management to make decisions on your behalf.  Steve and Jeff are value guys who are accessible, but this isn't a democratic company either.  I've never heard of other companies saying "we're thinking about how to allocated capital, can the shareholders vote on it?"  Usually an exec acts when an opportunity exists.

My guess is based on the situation that shareholders will never be happy or satisfied no matter what the new management does.  Maybe this does well, maybe the HVAC stuff goes bonkers.  Or maybe it idles along like most think it will.  Or maybe it all blows up, who knows.

If I had to make guesses it'd be that those houses the company owned aren't all that great once management came into power.

I guess the alternate reality here is these guys could start to act like a pump and dump company releasing every thought management has.  "Sitestar has decided to investigate investing in houses." "Sitestar has decided to focus on other investments." "Sitestar is close to making a major investment with an unnamed company."  But at $400/pop I'm not sure shareholders want that, or maybe they do?

This name intrigues me, but I'll only invest once the dust settles.

I have emailed both Jeff & Steve on multiple occasions. I can assure that if their responses(when they bothered to respond) were any less than totally dismissive, I would not be speaking about this on a public forum. You say they are accessible- it is just flat untrue. Steve made clear in his first communication as CEO that they had no interest in speaking to shareholders outside the meeting(which he promised would happen in the first half of the year).

As a shareholder, I never was given the opportunity to "entrust management to make decisions on my behalf". Steve, Jeff & Jeremy were elected by "written consent", the majority of their votes coming from the previous CEO who they terminated for cause.

I wouldn't expect shareholders to vote on every deal, but they should be sure they have the confidence of shareholders before they take a huge % of the company's capital and invest it in an unproven business. At the very least they should have sought input from shareholders on whether a liquidation or continued operation was preferable.

Again, not asking for one million press releases, but isn't a decision to liquidate the real estate portfolio worthy of being shared with owners?  When you announce that you are investing $2MM in an HVAC fund, shouldn't you say something about the source of funds, when the company previously had nothing remotely like $2MM in cash?

I really wanted to trust this management. But they frankly don't give a crap about their shareholders.

I guess you have two choices:
a) sell your shares
b) mount a proxy battle and try to get on the Board so you have some influence
The ultimate edge for bank investors: http://www.completebankdata.com

premfan

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Re: SYTE - Sitestar
« Reply #104 on: June 22, 2016, 09:54:39 AM »
We'll see how this works out.

But I've seen this pattern in other places and I can't say I like it. Activist "good guys" gain control of (usually small) company to fix it/redirect it/improve it. Then there's silence. Then they go into some weirdo tangent deals without explanation or with "hey this is the best thing since sliced bread" sales pitch that doesn't seem very convincing. Then ... Then ... I'd like to say "profit"... but so far I'm not so sure.

I'll do Buffett "criticize in general" this time and won't name any names. Get back in 3-5 years. ;)
Jurgis hits the nail on the head, except I will name names. Now that they are management, Jeff and Steven have begun behaving in exactly the ways they previously railed against. This is a public company, with public shareholders. The lack of disclosure is incredibly troublesome. I would love to hear from other shareholders who agree with me. Please message me here, or leave a feedback at inelegantinvestor.com, where I hope to have posted a more detailed set of concerns in the next few days.

Have you called or emailed Jeff or Steve?

Having a full audit plus compiling a 10-K is a lot of work, especially for a small company.  I've spoken to auditors about these things in the past, the delay isn't surprising.  I'm sure the costs will be outrageous.

Regarding the HVAC fund, it's weird.  But then again as a shareholder you've entrusted management to make decisions on your behalf.  Steve and Jeff are value guys who are accessible, but this isn't a democratic company either.  I've never heard of other companies saying "we're thinking about how to allocated capital, can the shareholders vote on it?"  Usually an exec acts when an opportunity exists.

My guess is based on the situation that shareholders will never be happy or satisfied no matter what the new management does.  Maybe this does well, maybe the HVAC stuff goes bonkers.  Or maybe it idles along like most think it will.  Or maybe it all blows up, who knows.

If I had to make guesses it'd be that those houses the company owned aren't all that great once management came into power.

I guess the alternate reality here is these guys could start to act like a pump and dump company releasing every thought management has.  "Sitestar has decided to investigate investing in houses." "Sitestar has decided to focus on other investments." "Sitestar is close to making a major investment with an unnamed company."  But at $400/pop I'm not sure shareholders want that, or maybe they do?

This name intrigues me, but I'll only invest once the dust settles.

I have emailed both Jeff & Steve on multiple occasions. I can assure that if their responses(when they bothered to respond) were any less than totally dismissive, I would not be speaking about this on a public forum. You say they are accessible- it is just flat untrue. Steve made clear in his first communication as CEO that they had no interest in speaking to shareholders outside the meeting(which he promised would happen in the first half of the year).

As a shareholder, I never was given the opportunity to "entrust management to make decisions on my behalf". Steve, Jeff & Jeremy were elected by "written consent", the majority of their votes coming from the previous CEO who they terminated for cause.

I wouldn't expect shareholders to vote on every deal, but they should be sure they have the confidence of shareholders before they take a huge % of the company's capital and invest it in an unproven business. At the very least they should have sought input from shareholders on whether a liquidation or continued operation was preferable.

Again, not asking for one million press releases, but isn't a decision to liquidate the real estate portfolio worthy of being shared with owners?  When you announce that you are investing $2MM in an HVAC fund, shouldn't you say something about the source of funds, when the company previously had nothing remotely like $2MM in cash?

I really wanted to trust this management. But they frankly don't give a crap about their shareholders.

Inelegant,

As a seed investor to a startup company you should let the entrepreneur create value. Any ranting will not create value. Either the entrepreneur's will create value or not.  90ish percent of idea companies fail or get your money back. Then the 5 percent of idea companies show nonlinear growth. This follows the power law formula that vc's use.  Investors in such early stage idea companies are essentially public market seed (angel) investors. Either the idea company shows traction or fails or gets your money back. Truth is self revealing and in 2-4 years we will know if these guys are real entrepreneur's or living in poserville.

Now maybe when you made the investment you thought this was a "value" investment. Then i would understand rant.  The seed investing game requires much more patience then usually required.  In the private world its 5-8 year process. Knowing what category your investments fall into helps putting the situation in context.




InelegantInvestor

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Re: SYTE - Sitestar
« Reply #105 on: June 22, 2016, 09:58:31 AM »


I guess you have two choices:
a) sell your shares
b) mount a proxy battle and try to get on the Board so you have some influence
Yes, those are the two most likely options.

InelegantInvestor

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Re: SYTE - Sitestar
« Reply #106 on: June 22, 2016, 10:02:27 AM »
Inelegant,

As a seed investor to a startup company you should let the entrepreneur create value. Any ranting will not create value. Either the entrepreneur's will create value or not.  90ish percent of idea companies fail or get your money back. Then the 5 percent of idea companies show nonlinear growth. This follows the power law formula that vc's use.  Investors in such early stage idea companies are essentially public market seed (angel) investors. Either the idea company shows traction or fails or gets your money back. Truth is self revealing and in 2-4 years we will know if these guys are real entrepreneur's or living in poserville.

Now maybe when you made the investment you thought this was a "value" investment. Then i would understand rant.  The seed investing game requires much more patience then usually required.  In the private world its 5-8 year process. Knowing what category your investments fall into helps putting the situation in context.

I'm not a seed investor in a startup company here and this management are not entrepreneurs. I have spent time in that space and I understand they dynamics. This was, for all involved, a value investment. That is, most of the major holders that I know, current management included, purchased because we saw assets whose value exceeded the business's market cap by a significant margin of safety.  My very complaint is that they have now decided to morph it into a seed investment without shareholder input.

valuedontlie

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Re: SYTE - Sitestar
« Reply #107 on: June 22, 2016, 10:09:25 AM »
I rather like the "HVAC Fund" idea having looked at purchasing a few local/regional HVAC companies myself... Had a similar idea to "roll-up" a specific area by purchasing a few smaller companies and cobbling together back-office/management (which they already have)... Prices are very attractive at the transaction size they are talking about... This could be pretty meaningful to SYTE... It is not unreasonable to acquire private HVAC companies at 2-4x EBITDA/CF...

matts

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Re: SYTE - Sitestar
« Reply #108 on: June 22, 2016, 10:15:47 AM »
Inelegant,

As a seed investor to a startup company you should let the entrepreneur create value. Any ranting will not create value. Either the entrepreneur's will create value or not.  90ish percent of idea companies fail or get your money back. Then the 5 percent of idea companies show nonlinear growth. This follows the power law formula that vc's use.  Investors in such early stage idea companies are essentially public market seed (angel) investors. Either the idea company shows traction or fails or gets your money back. Truth is self revealing and in 2-4 years we will know if these guys are real entrepreneur's or living in poserville.

Now maybe when you made the investment you thought this was a "value" investment. Then i would understand rant.  The seed investing game requires much more patience then usually required.  In the private world its 5-8 year process. Knowing what category your investments fall into helps putting the situation in context.

I'm not a seed investor in a startup company here and this management are not entrepreneurs. I have spent time in that space and I understand they dynamics. This was, for all involved, a value investment. That is, most of the major holders that I know, current management included, purchased because we saw assets whose value exceeded the business's market cap by a significant margin of safety.  My very complaint is that they have now decided to morph it into a seed investment without shareholder input.

I think you need to come to grips with the fact that the decision has been made (right or wrong). This is now a growth vehicle, not an asset-based value play. Whatever they decide to do now with the real estate or any other assets, they are not giving it back to the shareholders. More disclosure would be nice but you won't change their mind. So again, realize the thesis underlying your position has changed and decide whether you want to be involved with the new company and new investment style. The old company is gone.


InelegantInvestor

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Re: SYTE - Sitestar
« Reply #109 on: June 22, 2016, 10:19:24 AM »
I rather like the "HVAC Fund" idea having looked at purchasing a few local/regional HVAC companies myself... Had a similar idea to "roll-up" a specific area by purchasing a few smaller companies and cobbling together back-office/management (which they already have)... Prices are very attractive at the transaction size they are talking about... This could be pretty meaningful to SYTE... It is not unreasonable to acquire private HVAC companies at 2-4x EBITDA/CF...
I don't dislike the idea. I really have no information on it. My point is not that it's a bad idea, just that management is overstepping and is not treating shareholders as partners.