Author Topic: SYTE - Enterprise Diversified  (Read 164337 times)

Sportgamma

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Re: SYTE - Sitestar
« Reply #480 on: August 12, 2018, 12:08:01 PM »
Not really on topic, but I think this is the first time that I come across a filing where a business segment is recording negative revenue. It seems kind of silly that asset managers have to accrue performance fees on the income statement like that.

If an investor would pull out of a fund at a loss, it's not like the asset manager would have to pay the investor the negative performance fee. Here's a question: If an investor pulls out at a loss, does the asset manager record revenues as the negative performance fees are wiped out of the accrual fees?
« Last Edit: August 12, 2018, 01:51:43 PM by Sportgamma »


John Hjorth

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Re: SYTE - Sitestar
« Reply #481 on: August 12, 2018, 12:21:48 PM »
Sportgamma,

It's most likely a consequense of a [x + y] fee agreement with the limited partners involved. While using accrual accounting, this may be a logical consequense in a given quarter [it is for 2018Q2 isolated, not for 2018H1 here], related to x, from an accounting perspective.

Interesting question. You're very observant.
« Last Edit: August 12, 2018, 12:27:43 PM by John Hjorth »
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Tim Eriksen

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Re: SYTE - Sitestar
« Reply #482 on: August 12, 2018, 01:16:00 PM »
The negative revenues is due to the large investment in the Alluvial fund declining during the quarter.  Instead of being reported as other income it is reported under Asset Management segment along with management fees.  While a negative quarter may happen in the future due to inventive accruals, Alluvial had not surpassed the 6% hurdle for this year.

Sportgamma

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Re: SYTE - Sitestar
« Reply #483 on: August 12, 2018, 02:46:55 PM »
The negative revenues is due to the large investment in the Alluvial fund declining during the quarter.  Instead of being reported as other income it is reported under Asset Management segment along with management fees.  While a negative quarter may happen in the future due to inventive accruals, Alluvial had not surpassed the 6% hurdle for this year.

Hi Tim,

Interesting. Thank you for the clarification. You would think that even though there is a fee sharing agreement in place, losses and gains from the seed investment itself would be accounted for as comprehensive income. I assume that they will pay capital gains taxes on any realized profits from the seed investment, right? Just thinking aloud here.

Tim Eriksen

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Re: SYTE - Sitestar
« Reply #484 on: August 12, 2018, 09:20:11 PM »
The negative revenues is due to the large investment in the Alluvial fund declining during the quarter.  Instead of being reported as other income it is reported under Asset Management segment along with management fees.  While a negative quarter may happen in the future due to inventive accruals, Alluvial had not surpassed the 6% hurdle for this year.

Hi Tim,

Interesting. Thank you for the clarification. You would think that even though there is a fee sharing agreement in place, losses and gains from the seed investment itself would be accounted for as comprehensive income. I assume that they will pay capital gains taxes on any realized profits from the seed investment, right? Just thinking aloud here.

It used to be that way but not now due to the new tax rules.  Pretty sure US companies do not get a lower rate on capital gains than income.   

globalfinancepartners

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Re: SYTE - Enterprise Diversified
« Reply #485 on: August 13, 2018, 05:58:12 AM »
Tim is right.  Same change that affected Berkshire's reporting starting in January.  Not sure it had anything to do with the tax bill per se, but was a change announced to GAAP before the tax bill passed.  I think it was telegraphed as early as 2016.

And yes, corporations pay the corporate income tax rate on capital gains.  There are different rates on dividend income depending on what percentage of the investee they own, what type of corporation the owner is (insurance company, etc), and other complications.

DTEJD1997

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Re: SYTE - Enterprise Diversified
« Reply #486 on: October 07, 2018, 08:42:34 AM »
Hey all:

Anybody else see this?

https://gallery.mailchimp.com/2511717cdf1bae9a0638c942a/files/232c9e53-f4b9-4ba3-acbd-c435ac7ec739/100518_Shareholder_Letter_Chairman_CEO.pdf

The letter is kind of vague, but it seems that ENDI is going solely towards asset management:

"Our assets are ideas and the managers with whom we are affiliated.
The business does not have to rely on significant capital expenditures, inventory,
or debt to succeed.  As part of our focus on asset management, we will be restructuring
all of ENDI toward that goal.  This will take some time.  Stay tuned for additional details."

I am going to guess that HVAC will be gone, interweb access & domain names gone, but what happens to the real estate?

Seems kind of odd, a complete change of direction...

Spekulatius

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Re: SYTE - Enterprise Diversified
« Reply #487 on: October 07, 2018, 09:11:30 AM »
Hey all:

Anybody else see this?

https://gallery.mailchimp.com/2511717cdf1bae9a0638c942a/files/232c9e53-f4b9-4ba3-acbd-c435ac7ec739/100518_Shareholder_Letter_Chairman_CEO.pdf

The letter is kind of vague, but it seems that ENDI is going solely towards asset management:

"Our assets are ideas and the managers with whom we are affiliated.
The business does not have to rely on significant capital expenditures, inventory,
or debt to succeed.  As part of our focus on asset management, we will be restructuring
all of ENDI toward that goal.  This will take some time.  Stay tuned for additional details."

I am going to guess that HVAC will be gone, interweb access & domain names gone, but what happens to the real estate?

Seems kind of odd, a complete change of direction...

My guess is that real estate will fall under the asset management and SYTE will become a mini version of BAM. I think HVAC and the Internet  operations will be disposed off. I predict that there are significant write offs with HVAC. The internet ops have been shrinking, but they generated nice profits covering a lot of the overhead. it will be interesting how the financials look, after the restructuring is done. I felt that the HVAC in particular looked like a bad investment and didn’t seem to be working as envisioned.
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roark33

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Re: SYTE - Enterprise Diversified
« Reply #488 on: October 07, 2018, 10:23:38 AM »
It's sort of funny how the only real "investment" that SYTE management made was the HVAC and that was a horrible one.  But, now the investors who made that investment will be moving on to remake themselves as asset managers.  It really shows how much of a sham asset managers are.  Complete fee-driven business without performance being accurately accounted for.  This case has that written all over it. 

Tim Eriksen

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Re: SYTE - Enterprise Diversified
« Reply #489 on: October 07, 2018, 01:01:43 PM »
It's sort of funny how the only real "investment" that SYTE management made was the HVAC and that was a horrible one.  But, now the investors who made that investment will be moving on to remake themselves as asset managers.  It really shows how much of a sham asset managers are.  Complete fee-driven business without performance being accurately accounted for.  This case has that written all over it.

Your comment doesn't make sense.  Yes HVAC has not performed well.  Why is the existing asset management business not an investment?  Why is Mt. Melrose not an investment?  Both are many times larger.  They are not moving to something new.  Maybe you are not familiar with what they have been doing the past year and a half.  Why are asset managers a sham??  They sell a service to clients just like other service businesses do.  Maybe you don't need it but that doesn't mean others don't.