Author Topic: SYTE - Enterprise Diversified  (Read 210448 times)

InelegantInvestor

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Re: SYTE - Sitestar
« Reply #440 on: April 12, 2018, 11:16:03 AM »
Yeah, it seems there are potential conflicts to be navigated (as there are with the BOMN guys, and others).  My response was just addressing the "double compensation" issue as discussed in the post prior to mine. 



Right, I've raised that. It is certainly more of an issue for the LPs in the fund, but even for investors in the company, it is distasteful that he is paid twice. Particularly the bonus. If the intention of bonus is to incentivize performance does getting paid for the same performance twice add enough additional incentive to overcome any performance drag. And when you can do things like sell yourself cheap stock to boost performance... It's just a conflict that probably is insoluble.


Tim Eriksen

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Re: SYTE - Sitestar
« Reply #441 on: April 12, 2018, 11:36:40 AM »
Yeah, it seems there are potential conflicts to be navigated (as there are with the BOMN guys, and others).  My response was just addressing the "double compensation" issue as discussed in the post prior to mine. 



Right, I've raised that. It is certainly more of an issue for the LPs in the fund, but even for investors in the company, it is distasteful that he is paid twice. Particularly the bonus. If the intention of bonus is to incentivize performance does getting paid for the same performance twice add enough additional incentive to overcome any performance drag. And when you can do things like sell yourself cheap stock to boost performance... It's just a conflict that probably is insoluble.

But he is not really paid twice.  If they had hired someone at a higher rate it probably wouldn't bother you.  It is not the same performance.  It is two different jobs each with their own respective compensation.  The confusion is that the same person is fulfilling both roles.  There is no performance drag.  It is a benefit for shareholders in SYTE and his fund to have a cheaper CEO who is more tied into the overall results.  Spending time on SYTE probably takes time away from analyzing other potential investments but so far that has not hurt his LPs, it has been a benefit. 

I guess we will continue to see it differently.  It is not surprising that we haven't arrived at the same conclusion when we can't agree on the facts.  Respectful disagreement.           

InelegantInvestor

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Re: SYTE - Sitestar
« Reply #442 on: April 12, 2018, 11:42:31 AM »
Yeah, it seems there are potential conflicts to be navigated (as there are with the BOMN guys, and others).  My response was just addressing the "double compensation" issue as discussed in the post prior to mine. 



Right, I've raised that. It is certainly more of an issue for the LPs in the fund, but even for investors in the company, it is distasteful that he is paid twice. Particularly the bonus. If the intention of bonus is to incentivize performance does getting paid for the same performance twice add enough additional incentive to overcome any performance drag. And when you can do things like sell yourself cheap stock to boost performance... It's just a conflict that probably is insoluble.

But he is not really paid twice.  If they had hired someone at a higher rate it probably wouldn't bother you.  It is not the same performance.  It is two different jobs each with their own respective compensation.  The confusion is that the same person is fulfilling both roles.  There is no performance drag.  It is a benefit for shareholders in SYTE and his fund to have a cheaper CEO who is more tied into the overall results.  Spending time on SYTE probably takes time away from analyzing other potential investments but so far that has not hurt his LPs, it has been a benefit. 

I guess we will continue to see it differently.  It is not surprising that we haven't arrived at the same conclusion when we can't agree on the facts.  Respectful disagreement.         

Agreed. It is certainly not at the level of He who must not be named, where he then had the company invest in his fund. I hope we never see that here. 

I think it's important to conduct oneself in such a way that nobody can harbor suspicions of you. The setup here is just not conducive to that.

slkiel

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Re: SYTE - Sitestar
« Reply #443 on: April 12, 2018, 12:33:42 PM »
With regards to the ADV filing, I lived in Virginia when I started the fund and then California and had to register as an RIA in each state when I lived there. I then moved the office to New York and New York does not require (or allow) me to be registered, so I'm not. I won't be registered with the SEC until the fund gets to $150m.

Neal- to your comments, there are quite a few facts in which we disagree. I am not sure how we bridge that gap. The suspicions have primarily come from you on items that are not based on the facts of the situation. We have an independent board, corporate staff, and subsidiary managers who all are comfortable with our decisions and absolutely comfortable with our ethical behavior.  Do you really think someone like Keith Smith, who is the most ethical person in the world, would have not raised an objection if we were anywhere close to the line? What I would ask is that you be  a bit more humble towards the judgements of people like Keith, Jeff, and others who know all of the facts and pressures we were under.

Also, to be clear, my reference to the results being good were about the operations, not the share price.
« Last Edit: April 12, 2018, 12:51:59 PM by slkiel »

InelegantInvestor

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Re: SYTE - Sitestar
« Reply #444 on: April 12, 2018, 01:44:54 PM »


Neal- to your comments, there are quite a few facts in which we disagree. I am not sure how we bridge that gap. The suspicions have primarily come from you on items that are not based on the facts of the situation. We have an independent board, corporate staff, and subsidiary managers who all are comfortable with our decisions and absolutely comfortable with our ethical behavior.  Do you really think someone like Keith Smith, who is the most ethical person in the world, would have not raised an objection if we were anywhere close to the line? What I would ask is that you be  a bit more humble towards the judgements of people like Keith, Jeff, and others who know all of the facts and pressures we were under.

Also, to be clear, my reference to the results being good were about the operations, not the share price.

No doubt, we disagree. I have no interest in rehashing all of this. I am considerably more humble than you might think. In particularly, my humility leads me to be exceedingly cautious when something does not smell right rather than believe that I can figure it out. Fact is, that there are a series of behaviors on your part, that just don't smell right. You might be the best investor and operator in the world, but if you're not paying attention to the optics of what you do, that's a red flag. Likewise, I don't really know Keith. I'm sure is he ethical and all, but I don't see how pulling him into this sheds any light on the key questions.

There are certain facts that are not open to dispute, nor judgement.
1) By the time the first meeting of shareholders was held, you had already sold yourself a controlling interest in the company, making any shareholder vote pointless.
2) You never offered to me the opportunity, or indicated to me in any way that it was possible, to participate in any private placement.

As for the operations being "astronomically good", I guess I'm just not seeing it. HVAC is, charitably, a wash, and, less charitably, in trouble. Asset management- you'd know better than me as I have not seen Q1 numbers, but it remains to be seen how it performs in down quarters. It was an easy business to make money in last year...

I sincerely hope my fears are unfounded and that the company performs well. I do still have a significant position.
I keep speaking for two reasons:
1) I think it is important for other investors to have the full picture
2) I hope that you will have the humility to ponder whether there is any truth to what I'm saying, examine your behavior, and use my feedback to improve the performance of the company going forward.

As I said, I'm happy to discuss with you at any point. In fact, I would prefer to do so privately. You know how to reach me should you so wish.

Tim Eriksen

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Re: SYTE - Sitestar
« Reply #445 on: April 12, 2018, 03:07:51 PM »
Some of those certain facts sure seem in dispute.  Maybe you didn't get a personal phone call inviting you to participate, but neither did I, or most people.  The fact of the matter is they made it clear they were doing a private placement (PP) for the Alluvial investment.  Even if you missed that one, the November 8, 2016 press release made it clear that the PP was open and anyone could get the same price. 

Because the original funding goal was not met, Sitestar will open the capital raise a final time on February 1, 2017. Members of the Board of Directors have agreed to backstop the February 1, 2017 capital raise with at least $1.8 million in additional funding.

Further to say that you "don't see how pulling (Keith an independent director) into this sheds any light" shows that you don't realize that when you impugn Steve's character related to the PPs you are impugning the Board's as well.  Independent directors had to approve the PPs. 

I know you hope Steve will ponder if there is any truth to what you are saying, and that is fair.   i don't recall if there was any heads up to the first PP.   I hope you ponder whether frustration or something else is clouding your objectivity regarding the facts and whether your comments fairly attack the character of others.  I don't say that as someone who knows everything or is immune from blind spots.  Evaluating ourselves can be one of the most difficult things there is to do.  We can see the speck in someone else's eye but not the log in our own.   I can be unfairly critical of others.

One thing we all agree on is that we hope Sitestar and its shareholders do well.  With that I will end my participation in this sub topic.  Well at least try to.

slkiel

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Re: SYTE - Sitestar
« Reply #446 on: April 12, 2018, 03:48:54 PM »
We had to do the first capital raise in order to have a quorum at the shareholder meeting. I have previously discussed this, I believe in this thread. The former CEO indicated that he would not vote. We could not otherwise hold a shareholder meeting. We had no other options. We did not do it to "take over" the company. We were already in control of the company. We did it to hit the quorum so we could hold the shareholder meeting and get on with running the company.

With regards to specifically offering you an opportunity, Neal, we are not allowed to "solicit." What we did was try to make people aware of the offering so they could reach out to us. We accepted everyone who then contacted us. We would have loved to have you participate.

The reason why I am engaging on this platform is because, as Tim referenced, you are attacking the character of the people involved with the company along with me. It is not fair to them, and it is not accurate. And, I will add, no one who has taken the time to come to our meeting and meet the people involved with the company feel as you do. They all understand why we took the actions we did. If you come to the meeting and ask your questions, you will come away feeling as they do.

At this point all of us have said how we feel. Readers can use their own judgment from here.

Spekulatius

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Re: SYTE - Sitestar
« Reply #447 on: April 12, 2018, 03:52:56 PM »
It’s seems to me that investors in SYT get a fair disclosure and as of now a fair price for their equity $0.11) if they chose to exit. That’s better than most Microcaps for sure

I don’t like SYTE and how it is structured due to the high cost burden (600k annually) and a high likelihood that the HVAC business will turn out to be a failure. I also don’t see, why owning a fund or several funds within a C-Corp is a good idea, it certainly isn’t tax efficient.

In my opinion, the smart play from a risk reward perspective would be just to invest in Alluvial as a LP and be done with it.
« Last Edit: April 12, 2018, 06:26:39 PM by Spekulatius »
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LC

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Re: SYTE - Sitestar
« Reply #448 on: April 12, 2018, 04:18:38 PM »
I think the governance issue is well covered thus far.

I agree with Spekulatius. I don't think the underlying businesses are that exciting. But there are many ways to skin a cat, and I hope everyone here makes a lot of $$ :)
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Parsad

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Re: SYTE - Sitestar
« Reply #449 on: April 12, 2018, 05:29:28 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!
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