SYTE - Enterprise Diversified

[oddballstocks]

Just when you think the story couldn't get any crazier...

I feel bad for Tice here.  This isn't a case of buyer's remorse or not doing DD, there are a lot of other factors given the deal.  He is trying to work this out and unwind. 

The liabilities are unique here, and my sense is ENDI didn't really know what they had either.  If you do a UCC search in Kentucky there is nothing for Mt Melrose, ENDI (all ways of spelling), or even for Jeff individually.  If any of this is secured (maybe questionable?) then they secured it under other entities, maybe single purpose entities.  It's possible there are liens on houses that don't exist, or contractual liabilities only documented on paper or secured by individuals.

I wouldn't let any of this color impressions of Dave, he's a really solid individual.  In full disclosure we get together and have beers and talk investments at a fairly regular interval (plug that if you're in Pittsburgh, in the North Hills give us a shout out) and this hasn't hampered his ability to find value in the weeds.

[roark33]

The other issue For ENDI/Willow Oak is a lemon problem.  Alluvial and Dave signed up with Steven Kiel when he had a good reputation, but now that reputation is probably gone forever.  What up and coming fund wants to sign with Willow Oak now?  Take John Huber...do you think he would hitch his carriage to that horse, no way, so maybe you get other funds who have no one knocking at their door, i.e. Focused Compounding, but like Groucho used to say, who wants to be a member of a club that will have you. 

[thowed]

I wouldn't let any of this color impressions of Dave, he's a really solid individual.

Thanks to all for your thoughts.

To clarify - everything I've read from Dave, and emails from him have impressed me - without having met him (would love to get to Pittsburgh, but I'm quite far away!), so far, I believe he has great integrity.

So I think it's a real shame, as I think the involvement of ENDI makes one pause in a way that you wouldn't otherwise.

Furthermore, things are potentially further confused as Alluvial and Arquitos have some overlapping holdings - if the ENDI issues mean people retreat from Arquitos, I don't know if this would be problematic in the forced selling of illiquid shares.

I think it's easy to say something is 'good' or 'bad'.  I have a hunch that Mr Kiel is not a 'villain', that he meant well and has talent, but got way over his head with ENDI, and it's really spiralled, with errors now compounding.

Ultimately though, I think Alluvial is really interesting (and Dave seems like he cares about clients) and I think that if the fund extracted itself from ENDI, it would be pretty killer.

I don't know as much about Bonhoeffer and Keith, but I imagine a lot of the above also applies.

[stahleyp]

I don't see Waters extracting himself from SYTE (whether he would like to or not, I don't know). If SYTE finished their $10 million commitment that's almost half of his fund.

[Spekulatius]

Missing houses etc may be real reason they decided to get rid off that sub, rather than auditing costs etc.

I guess Mt Melrose is the microcap incarnation of WeWork.

[John Hjorth]

SYTE 2019Q3 10-Q available now.

[Spekulatius]

SYTE 2019Q3 10-Q available now.

Down to $160k in cash, excluding committed funds to Alluvial. They need some spare change to keep the lights on soon. This Mt Melrose saga means expensive lawyer bills.

[oddballstocks]

SYTE 2019Q3 10-Q available now.

Quite the read!  Wonder where they are going to get money to seed Focused Compounding?

I'm still in awe at the ability to lose so much money on RE in a year.  I mean how?

[ratiman]

Guys, I've found an expert on the Lexington real estate market. Maybe he can explain what went wrong:

[roark33]

At some point, they will have to start selling their interest in Alluvial fund to keep the lights on.