Author Topic: SYTE - Enterprise Diversified  (Read 211910 times)

Sportgamma

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Re: SYTE - Enterprise Diversified
« Reply #550 on: November 06, 2018, 12:22:37 PM »
This might be a really stupid question, but let's say they bring in a manager that kills it and assets go up to several billion. What would stop the manager from setting up shop on their own?

Nothing.

Also, from my own experience, I agree with whoever pointed out that in this space you better be hands-on. They will NOT get the same results with an external manager. All these guys do is find tenants (usually not very well vetted) and collect rent. They mindlessly instruct tradespeople to fix issues when a tenant calls. They don't care about costs, efficiency or logic.

I think Stahleyp is talking about the Asset Management Business.


bizaro86

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Re: SYTE - Enterprise Diversified
« Reply #551 on: November 06, 2018, 12:54:49 PM »

Aren't you missing the larger point here? The whole point of buying the properties was so that Jeff and his team could manage them. With Jeff and his team out, the rationale for SYTE owning 119 low quality single family rental properties in Lexington, KY is gone. I don't know who the best owner of these properties is, but I guarantee that it's not SYTE. If they need to hold on to some of them to avoid 40 Act concerns that's one thing, but let's not pretend like this isn't a dumpster fire.

Also, SYTE was trading at a large premium to TBV because "the market" had lots of faith in the company's management. To put it mildly, that faith has now been shaken.


I don't think I am.  I think others are.  I understood the whole point of buying properties so Jeff and his team (whether employees or contractors) could reposition them.  The expertise and value creation was in repositioning not managing rentals.   The properties went from low quality to medium quality, or better.   

Maybe it is because I bought the stock before the Mt Melrose acquisition so it was never key to the thesis.  I never hated the property business but was never excited about it either.  I want them to be an asset manager.  They don't have to be big seeders.  They cannot do a bunch of Alluvial deals due to the 40 Act, but can do a bunch of Bonhoeffer deals.  I would like to see them acquire some closed end funds and grow AUM. 

I agree the market reaction is due to reputation.  That happens.

These are good points, but your response is buried in a multi-quote (and so looks like I said it). I'm not offended, but I bet a lot of people breezed over this because it doesn't appear to be a new post. I noticed it was new, because I would have remembered typing it.
« Last Edit: November 06, 2018, 02:38:23 PM by bizaro86 »

valueyoda

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Re: SYTE - Enterprise Diversified
« Reply #552 on: November 06, 2018, 01:19:08 PM »
The premium placed on the entire holding company was in my opinion unsustainable, and the decline so far has only put a dent into this premium valuation. Even being generous when it comes to the asset management business, I still think that the stock should trade at a discount to book (and the question now becomes how overstated book value is).

stahleyp

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Re: SYTE - Enterprise Diversified
« Reply #553 on: November 06, 2018, 01:31:28 PM »
This might be a really stupid question, but let's say they bring in a manager that kills it and assets go up to several billion. What would stop the manager from setting up shop on their own?

Nothing.

Also, from my own experience, I agree with whoever pointed out that in this space you better be hands-on. They will NOT get the same results with an external manager. All these guys do is find tenants (usually not very well vetted) and collect rent. They mindlessly instruct tradespeople to fix issues when a tenant calls. They don't care about costs, efficiency or logic.

I think Stahleyp is talking about the Asset Management Business.

Yeah, that's correct. I should've made that more clear.
Paul

gg

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Re: SYTE - Enterprise Diversified
« Reply #554 on: November 06, 2018, 02:33:35 PM »
I wasn't clear on the 8-k .... is Jeff no longer on the board of ENDI? My reading was that he was no longer an officer of Mt Melrose, but wasn't clear on his position with ENDI.

NoCalledStrikes

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Re: SYTE - Enterprise Diversified
« Reply #555 on: November 06, 2018, 02:42:04 PM »
I wasn't clear on the 8-k .... is Jeff no longer on the board of ENDI? My reading was that he was no longer an officer of Mt Melrose, but wasn't clear on his position with ENDI.

On Friday, October 5, 2018, the Board of Directors of the Company, acting unanimously, appointed Director, Steven L. Kiel as Chairman of the Board of the Board of Directors of the Company.  As Chairman of the Board, Mr. Kiel replaces Jeffrey I. Moore, whose service on the Board of Directors continues in the capacity as a regular Director.


Tim Eriksen

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Re: SYTE - Enterprise Diversified
« Reply #556 on: November 06, 2018, 02:54:05 PM »
The premium placed on the entire holding company was in my opinion unsustainable, and the decline so far has only put a dent into this premium valuation. Even being generous when it comes to the asset management business, I still think that the stock should trade at a discount to book (and the question now becomes how overstated book value is).

It is easy to throw comments out there.  Can you support it with some facts?  Book value of the asset management business is the investment in Alluvial.  The revenue interests in Bonhoeffer have no book value and certainly has some worth.  The Alluvial revenue interest is tied to the investment but I would argue has value in excess of the investment.  Huckleberry is carried at cost.  Likely worth more.  The internet operations are clearly worth multiples of its 400k book.  They earned over 725k pre-tax in ttm.   Virginia real estate has already been written down.  So there is no reason to value it at less than book.  HVAC may be worth a bit less than book.  That leaves Mt. Melrose.  While some properties that have not been repaired may be worth a bit less than the purchase, those that have been repaired and have stable renters are likely worth more. 

Please explain why you disagree     
« Last Edit: November 06, 2018, 02:56:05 PM by Tim Eriksen »

roark33

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Re: SYTE - Enterprise Diversified
« Reply #557 on: November 06, 2018, 06:28:44 PM »
Well, I think the easiest argument against book value is that Kiel is basically 0 out of 2 in investments in operations, so, no offense to Dave Waters, but you have to assume there might be a pattern there, i.e. Alluvial might not turn out.  If so, then that is a huge write down to book value.  And same thing with the other investment, forget the name off hand. 

Foreign Tuffett

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Re: SYTE - Enterprise Diversified
« Reply #558 on: November 06, 2018, 07:10:45 PM »
The premium placed on the entire holding company was in my opinion unsustainable, and the decline so far has only put a dent into this premium valuation. Even being generous when it comes to the asset management business, I still think that the stock should trade at a discount to book (and the question now becomes how overstated book value is).

It is easy to throw comments out there.  Can you support it with some facts?  Book value of the asset management business is the investment in Alluvial.  The revenue interests in Bonhoeffer have no book value and certainly has some worth.  The Alluvial revenue interest is tied to the investment but I would argue has value in excess of the investment.  Huckleberry is carried at cost.  Likely worth more.  The internet operations are clearly worth multiples of its 400k book.  They earned over 725k pre-tax in ttm.   Virginia real estate has already been written down.  So there is no reason to value it at less than book.  HVAC may be worth a bit less than book.  That leaves Mt. Melrose.  While some properties that have not been repaired may be worth a bit less than the purchase, those that have been repaired and have stable renters are likely worth more. 

Please explain why you disagree     

NPV corporate expenses needs to be factored in.

From the most recent 10-Q: "Corporate expenses for the six months ended June 30, 2018 totaled $510,304."

Spekulatius

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Re: SYTE - Enterprise Diversified
« Reply #559 on: November 06, 2018, 07:31:07 PM »
The premium placed on the entire holding company was in my opinion unsustainable, and the decline so far has only put a dent into this premium valuation. Even being generous when it comes to the asset management business, I still think that the stock should trade at a discount to book (and the question now becomes how overstated book value is).

It is easy to throw comments out there.  Can you support it with some facts?  Book value of the asset management business is the investment in Alluvial.  The revenue interests in Bonhoeffer have no book value and certainly has some worth.  The Alluvial revenue interest is tied to the investment but I would argue has value in excess of the investment.  Huckleberry is carried at cost.  Likely worth more.  The internet operations are clearly worth multiples of its 400k book.  They earned over 725k pre-tax in ttm.   Virginia real estate has already been written down.  So there is no reason to value it at less than book.  HVAC may be worth a bit less than book.  That leaves Mt. Melrose.  While some properties that have not been repaired may be worth a bit less than the purchase, those that have been repaired and have stable renters are likely worth more. 

Please explain why you disagree     

NPV corporate expenses needs to be factored in.

From the most recent 10-Q: "Corporate expenses for the six months ended June 30, 2018 totaled $510,304."

With 2 of the 3 business lines being workout situations,  and the high afformentioned corporate cost burden, I don’t think book value represents a good value here, so it looks like SYTE is still overvalued from my POV.  Doesn’t matter to me, because as it stands, it’s uninvestible for my anyways.
« Last Edit: November 06, 2018, 07:32:40 PM by Spekulatius »
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