Author Topic: SYTE - Enterprise Diversified  (Read 222860 times)

InelegantInvestor

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Re: SYTE - Sitestar
« Reply #110 on: June 22, 2016, 10:23:17 AM »
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.
It is still an asset-based value play. The assets, I believe are still worth more than the market cap. It is hard to say, of course, since the company has not released financials. If that's the case, why should their small stake enable them to force me to sell below value?

Shareholders are the owners of a company. Shares of stock are not pieces of paper, they are are shares in a business. Management is our steward, not our tyrant.


premfan

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Re: SYTE - Sitestar
« Reply #111 on: June 22, 2016, 10:28:09 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.

Inelegant,

If you choose option B some recent craziness has been happening in the activist game. Swenson launched a proxy against biglari with only 0.1 percent of shares. Currently paragon technologies is launching a proxy against rubicon with 0.1 percent of shares. It would only cost 4,450 dollars + legal + marketing fees to launch something if you want influence. Do the math see if it works.

InelegantInvestor

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Re: SYTE - Sitestar
« Reply #112 on: June 22, 2016, 10:36:29 AM »
Very familiar with Swenson as well as Biglari's ongoing retaliation against him. Also familiar with Gad and his Rubicon proxy(though I'd point out that SED ended pretty damn poorly for him).  Also, I own more than .1%, and I'm confident that I'm not alone among shareholders in my feelings. It's funny how people start contacting you when you take a position...

Inelegant,

If you choose option B some recent craziness has been happening in the activist game. Swenson launched a proxy against biglari with only 0.1 percent of shares. Currently paragon technologies is launching a proxy against rubicon with 0.1 percent of shares. It would only cost 4,450 dollars + legal + marketing fees to launch something if you want influence. Do the math see if it works.

Ballinvarosig Investors

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Re: SYTE - Sitestar
« Reply #113 on: July 18, 2016, 02:35:53 PM »
Sitestar 10k is out - https://www.sec.gov/Archives/edgar/data/1096934/000072174816001455/site07141610k.htm

Some crazy stuff has gone on at this company!

Quote
As of December 31, 2015, the Company leased its corporate headquarters located at 7109 Timberlake Road, Lynchburg, Virginia from Frank Erhartic, Jr., a stockholder of the Company and the Company’s former CEO. The terms of the lease directed the company to pay Mr. Erhartic $48,000 per year. The Company now believes that Mr. Erhartic was not the legal owner of the property.

Quote
Litigation
 
On April 12, 2016, Sitestar filed a civil action complaint against Frank Erhartic, Jr. (the “Former CEO”), the Company’s former CEO and director and currently an owner of record or beneficially of more than five percent of the Company’s Common Stock, alleging, among other things, that the Former CEO engaged in, and caused the Company to engage in to its detriment, a series of unauthorized and wrongful related party transactions, including causing the Company to borrow certain amounts from the Former CEO’s mother unnecessarily and at a commercially unreasonable rate of interest, converting certain funds of the Company for personal rent payments to the Former CEO, commingling in land trusts certain real properties owned by the Company and real properties owned by the Former CEO, causing the Company to pay certain amounts to the Former CEO for lease payments under an unauthorized lease as to a storage facility owned by the Former CEO, causing the Company to pay rent on its corporate headquarters owned by the Former CEO’s ex-wife in amounts commercially unreasonable and excessive and to make real estate tax payments thereon for the personal benefit of the Former CEO, converting to the Former CEO and/or [absconding with] five motor vehicles owned by the Company, causing the Company to pay real property and personal property taxes on numerous properties owned personally by the Former CEO, causing the Company to pay personal credit card debt of the Former CEO, causing the Company to significantly overpay the Former CEO’s health and dental insurance for the benefit of the Former CEO, and causing the Company to pay the Former CEO’s personal automobile insurance. The Company is seeking, among other relief available, monetary damages in excess of $350,000. This litigation matter is currently pending in the Circuit Court for the City of Lynchburg (Lynchburg, Virginia).
They sacked the CFO and tried to remove him as director, but he has refused to go!
Quote
At the Board of Directors meeting on December 14, 2015 the Company’s former CFO, Dan Judd, was placed on probation in light of the circumstances that had led to the termination of the former CEO. New management engaged an outside financial consultant to review the Company’s accounting practices and to assist Mr. Judd in carrying out his duties. As previously reported in our Current Report of Form 8-K filed with the SEC on March 7, 2016, Mr. Judd subsequently was terminated on March 3, 2016. The Board has requested that he resign as a Director, but Mr. Judd has not responded favorably to that request and has not participated in Board meetings since his dismissal as CFO.
Most of the properties have been sold off now, as a whole sold for above the carrying value.
Quote
Subsequent to December 31, 2015, and as of July 18, 2016, we have sold 21 residential properties including four properties that are pending closing. Of the 17 properties that have closed, the net proceeds total $1,399,121. This compares to their carrying value as of the year ended December 31, 2015 of $1,338,495.
Steve Kiel has wrote a shareholder letter.

http://sitestar.com/letters/2015ltr.pdf

Ballinvarosig Investors

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Re: SYTE - Sitestar
« Reply #114 on: July 18, 2016, 02:57:41 PM »
It really does sounds like the current management team are going to make this their own investment vehicle. I have to wonder why would they bother? Surely the ex-CEO who still has 32% of the stock, if he wants to cause trouble, he has a large enough block of stock to do so.

brendanb22

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Re: SYTE - Sitestar
« Reply #115 on: July 18, 2016, 06:38:56 PM »
Looks like the margin of safety is no longer there -- company is trading above NAV with restated values and the real estate portfolio is no longer able to generate a return per Steven Kiel's letter. I trust that they will generate shareholder value going forward, but I am not sure the valuation is as compelling as it once seemed

AccentricInv

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Re: SYTE - Sitestar
« Reply #116 on: July 18, 2016, 07:35:12 PM »
Does anyone know if they ended up with a decent return on the real estate?  I remember reading about it on Ragnar's site a few years ago. But it seems the value they thought was there was either fake or eroded by all the other issues?

The story seems to be a lesson in the perils of deep value nanocap investing.
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oddballstocks

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Re: SYTE - Sitestar
« Reply #117 on: July 18, 2016, 08:43:45 PM »
Does anyone know if they ended up with a decent return on the real estate?  I remember reading about it on Ragnar's site a few years ago. But it seems the value they thought was there was either fake or eroded by all the other issues?

The story seems to be a lesson in the perils of deep value nanocap investing.

The perils but also possibilities.  Mismanagement at GE? Good luck getting on the Board.  Mismanagement at Sitestar, Jeff and Steve took the thing over!

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NeverLoseMoney

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Re: SYTE - Sitestar
« Reply #118 on: July 19, 2016, 04:08:45 AM »
It really does sounds like the current management team are going to make this their own investment vehicle. I have to wonder why would they bother? Surely the ex-CEO who still has 32% of the stock, if he wants to cause trouble, he has a large enough block of stock to do so.
It's an awkward situation with Mr. Erhartic owning such a large stake. Best option now is probably to try to reach a settlement on the lawsuit that Sitestar filed against Mr. Erhartic. The company drops the lawsuit and in return Erhartic sells his shares back to the company at a reasonable price. Try to find a solution where all the disputes with the former management are settled and everyone can go their separate ways.

After all the things that took place here, I don't think I'd be happy working hard and running this company while making Erhartic rich if the company succeeds.

AccentricInv

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Re: SYTE - Sitestar
« Reply #119 on: July 19, 2016, 06:55:15 AM »
Does anyone know if they ended up with a decent return on the real estate?  I remember reading about it on Ragnar's site a few years ago. But it seems the value they thought was there was either fake or eroded by all the other issues?

The story seems to be a lesson in the perils of deep value nanocap investing.

The perils but also possibilities.  Mismanagement at GE? Good luck getting on the Board.  Mismanagement at Sitestar, Jeff and Steve took the thing over!

Yeah, but if they weren't able to extract the real estate value that they originally thought, isn't that an issue? 

Took 4 years and countless headaches just to take control of a company that ended up not being undervalued?  They could have started an investment holding company from scratch in 1/4th the time!

Again an interesting story to follow though, and impressed Jeff, Steve, & co were able to pull it off.
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