Author Topic: SYTE - Enterprise Diversified  (Read 231489 times)

oddballstocks

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2246
    • Oddball Stocks Blog
Re: SYTE - Sitestar
« Reply #190 on: September 19, 2016, 11:51:44 AM »
So beyond all of the obvious problems, no ownership of the GP? Just passive investment as LPs, paying the manager a fee?  Apparently by "asset management business" SYTE means that it will be paying fees to asset managers.
Yeah, providing 10 million in seed fund without getting a stake in the GP seems like a crappy deal to me. But perhaps at least the fee structure is good...

Most people in finance won’t pick up a pencil without carry, so I’m sure that both the HVAC and Alluvial GPs will be getting a nice percentage of any profits.  Also, I’d bet Kiel doesn’t want to be left out and will find a way to arrange some kind of override compensation structure for himself at some point.  A lot of big stomachs to fill for such a little company. 

Truth be told, I don’t really mind the compensation though as long as it’s approved by the owners of the company, including the minority owners.  What really turned me off to this was the private placement they did.  Massively diluting existing shareholders at ‘book value’ after you (a) wrote off/down assets that were ‘cash flowing’ (phrase I believe Kiel himself used in a letter to Erhartic to point out their value) and (b) fail to mention certain off-balance sheet assets (first.com) that could have substantial value in relation to the .048 BV doesn’t strike me as aboveboard.  Doing so, however, under the guise of making quorum?  That’s just downright slippery. 

Keep in mind- there will be another private placement to fund the Alluvial commitment, which will have to be twice the size of the last one.

Yes, the dilution here is epic.  Glad I never pulled the trigger on this.  Might be a buy once the dilution is done and current shareholders are running for the exit.

Are you at the annual meeting?  Seems like an event you'd want to attend, especially if you have such strong feelings.
The ultimate edge for bank investors: http://www.completebankdata.com


InelegantInvestor

  • Full Member
  • ***
  • Posts: 157
Re: SYTE - Sitestar
« Reply #191 on: September 19, 2016, 12:05:33 PM »
So beyond all of the obvious problems, no ownership of the GP? Just passive investment as LPs, paying the manager a fee?  Apparently by "asset management business" SYTE means that it will be paying fees to asset managers.
Yeah, providing 10 million in seed fund without getting a stake in the GP seems like a crappy deal to me. But perhaps at least the fee structure is good...

Most people in finance won’t pick up a pencil without carry, so I’m sure that both the HVAC and Alluvial GPs will be getting a nice percentage of any profits.  Also, I’d bet Kiel doesn’t want to be left out and will find a way to arrange some kind of override compensation structure for himself at some point.  A lot of big stomachs to fill for such a little company. 

Truth be told, I don’t really mind the compensation though as long as it’s approved by the owners of the company, including the minority owners.  What really turned me off to this was the private placement they did.  Massively diluting existing shareholders at ‘book value’ after you (a) wrote off/down assets that were ‘cash flowing’ (phrase I believe Kiel himself used in a letter to Erhartic to point out their value) and (b) fail to mention certain off-balance sheet assets (first.com) that could have substantial value in relation to the .048 BV doesn’t strike me as aboveboard.  Doing so, however, under the guise of making quorum?  That’s just downright slippery. 

Keep in mind- there will be another private placement to fund the Alluvial commitment, which will have to be twice the size of the last one.

Yes, the dilution here is epic.  Glad I never pulled the trigger on this.  Might be a buy once the dilution is done and current shareholders are running for the exit.

Are you at the annual meeting?  Seems like an event you'd want to attend, especially if you have such strong feelings.
Not at the meeting. I certainly would have gone pre-dilution. At this point, I had other things happening and didn't need to push them off so I could go there and have no say.  Management has demonstrated they don't give a rat's ass about shareholders.

NeverLoseMoney

  • Full Member
  • ***
  • Posts: 148
Re: SYTE - Sitestar
« Reply #192 on: September 19, 2016, 01:33:09 PM »
So beyond all of the obvious problems, no ownership of the GP? Just passive investment as LPs, paying the manager a fee?  Apparently by "asset management business" SYTE means that it will be paying fees to asset managers.
Yeah, providing 10 million in seed fund without getting a stake in the GP seems like a crappy deal to me. But perhaps at least the fee structure is good...

Most people in finance won’t pick up a pencil without carry, so I’m sure that both the HVAC and Alluvial GPs will be getting a nice percentage of any profits.  Also, I’d bet Kiel doesn’t want to be left out and will find a way to arrange some kind of override compensation structure for himself at some point.  A lot of big stomachs to fill for such a little company. 

Truth be told, I don’t really mind the compensation though as long as it’s approved by the owners of the company, including the minority owners.  What really turned me off to this was the private placement they did.  Massively diluting existing shareholders at ‘book value’ after you (a) wrote off/down assets that were ‘cash flowing’ (phrase I believe Kiel himself used in a letter to Erhartic to point out their value) and (b) fail to mention certain off-balance sheet assets (first.com) that could have substantial value in relation to the .048 BV doesn’t strike me as aboveboard.  Doing so, however, under the guise of making quorum?  That’s just downright slippery. 

Keep in mind- there will be another private placement to fund the Alluvial commitment, which will have to be twice the size of the last one.

Yes, the dilution here is epic.  Glad I never pulled the trigger on this.  Might be a buy once the dilution is done and current shareholders are running for the exit.

Are you at the annual meeting?  Seems like an event you'd want to attend, especially if you have such strong feelings.
Not at the meeting. I certainly would have gone pre-dilution. At this point, I had other things happening and didn't need to push them off so I could go there and have no say.  Management has demonstrated they don't give a rat's ass about shareholders.
I think shareholders who bought shares when Frank Erhartic was still CEO don't have that much to complain about, really. I think many people only became involved in this company after reading Jeff Moore's posts about Sitestar on his blog. He seemed to like Mr. Erhartic initially and, if I recall correctly, even visited some properties with him that Sitestar owned. I don't want to put words in Jeff's mouth, but I think it is safe to say that he misjudged Mr. Erhartic completely. How many people would even have bothered to look at this company, let alone invest in it, if it were not for those posts on Jeff's blog?

I think anyone who first invested when Mr. Erhartic was in charge deserves a huge loss on their investment. And that's ok, we all get it wrong sometimes. Luckily small shareholders received a huge bailout, because thanks to the efforts of large shareholders Jeff Moore, Steven Kiel and one or two others, value can now be salvaged instead of it continuing to be destroyed by the former CEO.

How they went about all this can definitely be questioned, but it was never going to be an ideal situation, given Mr. Erhartic's large ownership stake. That's why you'd better be damn sure about the CEO's character and behavior when he owns a lot of stock. The truth is that people screwed up investing in this company and now a few large owners are trying to make the best of a messy situation. What would the stock price be today if Mr. Erhartic was still running the show?

Disclosure: I don't own Sitestar stock and never have. I don't know Jeff Moore or Steven Kiel personally. I just read some of the things they write. They seem like honest guys to me and probably good investors as well.

gg

  • Full Member
  • ***
  • Posts: 224
Re: SYTE - Sitestar
« Reply #193 on: September 19, 2016, 01:45:02 PM »

I think shareholders who bought shares when Frank Erhartic was still CEO don't have that much to complain about, really. I think many people only became involved in this company after reading Jeff Moore's posts about Sitestar on his blog. He seemed to like Mr. Erhartic initially and, if I recall correctly, even visited some properties with him that Sitestar owned. I don't want to put words in Jeff's mouth, but I think it is safe to say that he misjudged Mr. Erhartic completely. How many people would even have bothered to look at this company, let alone invest in it, if it were not for those posts on Jeff's blog?

I think anyone who first invested when Mr. Erhartic was in charge deserves a huge loss on their investment. And that's ok, we all get it wrong sometimes. Luckily small shareholders received a huge bailout, because thanks to the efforts of large shareholders Jeff Moore, Steven Kiel and one or two others, value can now be salvaged instead of it continuing to be destroyed by the former CEO.

How they went about all this can definitely be questioned, but it was never going to be an ideal situation, given Mr. Erhartic's large ownership stake. That's why you'd better be damn sure about the CEO's character and behavior when he owns a lot of stock. The truth is that people screwed up investing in this company and now a few large owners are trying to make the best of a messy situation. What would the stock price be today if Mr. Erhartic was still running the show?

Disclosure: I don't own Sitestar stock and never have. I don't know Jeff Moore or Steven Kiel personally. I just read some of the things they write. They seem like honest guys to me and probably good investors as well.

+1.  These situations are so fluid and have many moving parts. Thus far, I don't see much for original SYTE shareholders to be unhappy about...

InelegantInvestor

  • Full Member
  • ***
  • Posts: 157
Re: SYTE - Sitestar
« Reply #194 on: September 19, 2016, 02:17:40 PM »
So beyond all of the obvious problems, no ownership of the GP? Just passive investment as LPs, paying the manager a fee?  Apparently by "asset management business" SYTE means that it will be paying fees to asset managers.
Yeah, providing 10 million in seed fund without getting a stake in the GP seems like a crappy deal to me. But perhaps at least the fee structure is good...

Most people in finance won’t pick up a pencil without carry, so I’m sure that both the HVAC and Alluvial GPs will be getting a nice percentage of any profits.  Also, I’d bet Kiel doesn’t want to be left out and will find a way to arrange some kind of override compensation structure for himself at some point.  A lot of big stomachs to fill for such a little company. 

Truth be told, I don’t really mind the compensation though as long as it’s approved by the owners of the company, including the minority owners.  What really turned me off to this was the private placement they did.  Massively diluting existing shareholders at ‘book value’ after you (a) wrote off/down assets that were ‘cash flowing’ (phrase I believe Kiel himself used in a letter to Erhartic to point out their value) and (b) fail to mention certain off-balance sheet assets (first.com) that could have substantial value in relation to the .048 BV doesn’t strike me as aboveboard.  Doing so, however, under the guise of making quorum?  That’s just downright slippery. 

Keep in mind- there will be another private placement to fund the Alluvial commitment, which will have to be twice the size of the last one.

Yes, the dilution here is epic.  Glad I never pulled the trigger on this.  Might be a buy once the dilution is done and current shareholders are running for the exit.

Are you at the annual meeting?  Seems like an event you'd want to attend, especially if you have such strong feelings.
Not at the meeting. I certainly would have gone pre-dilution. At this point, I had other things happening and didn't need to push them off so I could go there and have no say.  Management has demonstrated they don't give a rat's ass about shareholders.
I think shareholders who bought shares when Frank Erhartic was still CEO don't have that much to complain about, really. I think many people only became involved in this company after reading Jeff Moore's posts about Sitestar on his blog. He seemed to like Mr. Erhartic initially and, if I recall correctly, even visited some properties with him that Sitestar owned. I don't want to put words in Jeff's mouth, but I think it is safe to say that he misjudged Mr. Erhartic completely. How many people would even have bothered to look at this company, let alone invest in it, if it were not for those posts on Jeff's blog?

I think anyone who first invested when Mr. Erhartic was in charge deserves a huge loss on their investment. And that's ok, we all get it wrong sometimes. Luckily small shareholders received a huge bailout, because thanks to the efforts of large shareholders Jeff Moore, Steven Kiel and one or two others, value can now be salvaged instead of it continuing to be destroyed by the former CEO.

How they went about all this can definitely be questioned, but it was never going to be an ideal situation, given Mr. Erhartic's large ownership stake. That's why you'd better be damn sure about the CEO's character and behavior when he owns a lot of stock. The truth is that people screwed up investing in this company and now a few large owners are trying to make the best of a messy situation. What would the stock price be today if Mr. Erhartic was still running the show?

Disclosure: I don't own Sitestar stock and never have. I don't know Jeff Moore or Steven Kiel personally. I just read some of the things they write. They seem like honest guys to me and probably good investors as well.
I can't speak for others, but I had already owned SYTE for some time before Jeff and I first discussed it in August 2011(I believe right after his first post about it). I never bought based on Mr. Erhartic or any other manager. I bought based on my belief that the stock was trading for less than the value of its assets. When I ultimately became disillusioned with Mr. Erhartic's management, I spoke with likeminded shareholders. I supported Mr. Kiel and Mr. Moore. I believe that some of my disclosures led directly to Mr. Erhartic's ouster.

Mr. Kiel owned just over 6% of the company. It was only through a settlement with prior management that he obtained a Board seat. One of the consistent demands of Mr. Moore and Mr. Kiel was for a shareholder meeting to allow all shareholders to have a voice in the company. At the time, Mr. Erhartic owned over 33% of the company. They warned him about making any material moves without shareholder input.

Observe what happened as soon as Mr. Kiel and his 6% were in charge. A shareholder meeting was promised, but not delivered until Mr. Kiel had changed the company's strategy entirely and transformed his 6% stake into a 42% stake- at a discount to market. Apparently, what is good for the goose is not good for the gander.
« Last Edit: September 19, 2016, 02:20:13 PM by InelegantInvestor »

Ballinvarosig Investors

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 752
Re: SYTE - Sitestar
« Reply #195 on: September 19, 2016, 02:21:26 PM »
I think shareholders who bought shares when Frank Erhartic was still CEO don't have that much to complain about, really.
So you're saying because Steve Kiel is only slightly worse than Erhartic, investors should be happy with what they've got?
I think many people only became involved in this company after reading Jeff Moore's posts about Sitestar on his blog.
Nonsense. Most people got involved because of the cash flow generated by the internet business.
How many people would even have bothered to look at this company, let alone invest in it, if it were not for those posts on Jeff's blog?
Jeff is a smart fellow and provided insight, no doubt whatsoever, but the company was followed before he got involved.
I think anyone who first invested when Mr. Erhartic was in charge deserves a huge loss on their investment.
This is a ridiculous statement. Just because Erhartic was a lousy CEO, it doesn't automatically make Sitestar a zero.
Luckily small shareholders received a huge bailout, because thanks to the efforts of large shareholders Jeff Moore, Steven Kiel and one or two others, value can now be salvaged instead of it continuing to be destroyed by the former CEO.
You have a funny definition of a bailout. But yes, value is being salvaged, it's been salvaged for the benefit of Steve Kiel.

InelegantInvestor

  • Full Member
  • ***
  • Posts: 157
Re: SYTE - Sitestar
« Reply #196 on: September 19, 2016, 02:25:11 PM »
Minority Shareholders Deliver Strong Rebuke To Steven Kiel And His Cronies  http://www.inelegantinvestor.com/2016/09/19/minority-shareholders-deliver-strong-rebuke-steven-kiel-cronies/

InelegantInvestor

  • Full Member
  • ***
  • Posts: 157
Re: SYTE - Sitestar
« Reply #197 on: September 19, 2016, 02:26:24 PM »
I think shareholders who bought shares when Frank Erhartic was still CEO don't have that much to complain about, really.
So you're saying because Steve Kiel is only slightly worse than Erhartic, investors should be happy with what they've got?
I think many people only became involved in this company after reading Jeff Moore's posts about Sitestar on his blog.
Nonsense. Most people got involved because of the cash flow generated by the internet business.
How many people would even have bothered to look at this company, let alone invest in it, if it were not for those posts on Jeff's blog?
Jeff is a smart fellow and provided insight, no doubt whatsoever, but the company was followed before he got involved.
I think anyone who first invested when Mr. Erhartic was in charge deserves a huge loss on their investment.
This is a ridiculous statement. Just because Erhartic was a lousy CEO, it doesn't automatically make Sitestar a zero.
Luckily small shareholders received a huge bailout, because thanks to the efforts of large shareholders Jeff Moore, Steven Kiel and one or two others, value can now be salvaged instead of it continuing to be destroyed by the former CEO.
You have a funny definition of a bailout. But yes, value is being salvaged, it's been salvaged for the benefit of Steve Kiel.
Jonathan Dash was activist here long before Kiel, et. al.

Ballinvarosig Investors

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 752
Re: SYTE - Sitestar
« Reply #198 on: September 19, 2016, 02:35:07 PM »
+1.  These situations are so fluid and have many moving parts. Thus far, I don't see much for original SYTE shareholders to be unhappy about...
Are you just replying for the sake of it? If you had followed this situation, you'd know that Inelegant Investor has a significant shareholding of the company and has been blogging about Sitestar for years. You think it's ok that large shareholders should club together to dilute other vocal and minority shareholders like II in order to benefit themselves?

Max Alpha

  • Jr. Member
  • **
  • Posts: 51
Re: SYTE - Sitestar
« Reply #199 on: September 19, 2016, 03:52:15 PM »
What a circus.

The value investing community love throwing stones about shareholder representation and ethics from the outside but once a pot of gold is in sight the average value investor has the same motivations of greed as any other.

This nonsense about a satisfactory end justifying questionable means is the same backwards thinking that prevents people like Biglari from being held to account.