Author Topic: SYTE - Enterprise Diversified  (Read 239244 times)

LowIQinvestor

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Re: SYTE - Enterprise Diversified
« Reply #710 on: May 16, 2019, 11:57:54 AM »
how do does one generate $182k in rental revenue & generate a loss of $213k ( Q1 2019 )

This will not end well.


Tim Eriksen

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Re: SYTE - Enterprise Diversified
« Reply #711 on: May 16, 2019, 12:10:06 PM »
What exactly was the miscommunication with Moore?

It seems he understood freedom to ramp up the business (acquisitions and support structure) whereas management did not.

InelegantInvestor

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Re: SYTE - Enterprise Diversified
« Reply #712 on: May 16, 2019, 12:20:27 PM »
What exactly was the miscommunication with Moore?

It seems he understood freedom to ramp up the business (acquisitions and support structure) whereas management did not.
Where might he have gotten that idea?
https://www.sec.gov/Archives/edgar/data/1096934/000156459017024810/syte-ex992_9.htm
"Sitestar will add significant working capital to the business and provide Jeff with the freedom to allocate that capital"
"Sitestar intends to commit the next $10 million of cash that we internally generate to the subsidiary. Some of that will come from debt that we will raise at the corporate level. The initial allocation to the subsidiary will likely be in the range of $3 million. 
 
Jeff will not earn a salary. He will receive an annual bonus based on book value growth with a high-water mark."

rkbabang

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Re: SYTE - Enterprise Diversified
« Reply #713 on: May 16, 2019, 12:30:43 PM »
What exactly was the miscommunication with Moore?

It seems he understood freedom to ramp up the business (acquisitions and support structure) whereas management did not.
Where might he have gotten that idea?
https://www.sec.gov/Archives/edgar/data/1096934/000156459017024810/syte-ex992_9.htm
"Sitestar will add significant working capital to the business and provide Jeff with the freedom to allocate that capital"
"Sitestar intends to commit the next $10 million of cash that we internally generate to the subsidiary. Some of that will come from debt that we will raise at the corporate level. The initial allocation to the subsidiary will likely be in the range of $3 million. 
 
Jeff will not earn a salary. He will receive an annual bonus based on book value growth with a high-water mark."

I think you can make an argument that management was naive, inexperienced, or, at worst, incompetent.  I think it is pretty hard to argue that they have been lying to shareholders or intentionally committing any kind of fraud.

Read the Footnotes

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Re: SYTE - Enterprise Diversified
« Reply #714 on: May 16, 2019, 12:48:31 PM »
What exactly was the miscommunication with Moore?

It seems he understood freedom to ramp up the business (acquisitions and support structure) whereas management did not.
Where might he have gotten that idea?
https://www.sec.gov/Archives/edgar/data/1096934/000156459017024810/syte-ex992_9.htm
"Sitestar will add significant working capital to the business and provide Jeff with the freedom to allocate that capital"
"Sitestar intends to commit the next $10 million of cash that we internally generate to the subsidiary. Some of that will come from debt that we will raise at the corporate level. The initial allocation to the subsidiary will likely be in the range of $3 million. 
 
Jeff will not earn a salary. He will receive an annual bonus based on book value growth with a high-water mark."

I think you can make an argument that management was naive, inexperienced, or, at worst, incompetent.  I think it is pretty hard to argue that they have been lying to shareholders or intentionally committing any kind of fraud.


Time will prove which of these diametrically opposed narratives is closest to the truth, but here are some thoughts.

I think you have to incorporate many issues to get closer to reality. I will make an abbreviated attempt that is based in part upon the assumptions and guesses of an outsider:
  • The new management discovered many more issues than expected after taking over the company and getting access to information including that
  • The business and former management was more troubled than expected.
  • The new management may have been very accomplished, well intentioned and highly ethical, but
  • inexperienced at the exact challenges before them.
  • Add to this the issues surrounding being a very small public company
  • that made a couple of material blunders soon after taking over.

If you accept the narrative above, it's easy to explain today's situation while retaining respect for those that were involved.

Read the Footnotes

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Re: SYTE - Enterprise Diversified
« Reply #715 on: May 16, 2019, 12:52:02 PM »
What exactly was the miscommunication with Moore?

It seems he understood freedom to ramp up the business (acquisitions and support structure) whereas management did not.
Where might he have gotten that idea?
https://www.sec.gov/Archives/edgar/data/1096934/000156459017024810/syte-ex992_9.htm
"Sitestar will add significant working capital to the business and provide Jeff with the freedom to allocate that capital"
"Sitestar intends to commit the next $10 million of cash that we internally generate to the subsidiary. Some of that will come from debt that we will raise at the corporate level. The initial allocation to the subsidiary will likely be in the range of $3 million. 
 
Jeff will not earn a salary. He will receive an annual bonus based on book value growth with a high-water mark."
InelegentInvestor, from having spoken to you, I know you are a very talented analyst. It's good to see you contributing to discussions again. If I may change the subject a bit, I am wondering if you have thoughts about Sardar Biglari? Please feel free to switch the conversation to a more appropriate thread, if you respond to this question.
RtF

NoCalledStrikes

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Re: SYTE - Enterprise Diversified
« Reply #716 on: May 16, 2019, 02:46:19 PM »
The parallels between this company and Biglari Holdings are almost too much...

This is nonsensical.  Biglari takes advantage of shareholders at every turn while Kiel bends over backwards to put SYTE shareholders in front of his own interests.  It is a free market, so feel free to criticize Steve’s business decisions, but to compare Steve’s integrity to one of the most shameless extortionists of our generation, is just too damn much.

InelegantInvestor

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Re: SYTE - Enterprise Diversified
« Reply #717 on: May 16, 2019, 03:15:20 PM »
What exactly was the miscommunication with Moore?

It seems he understood freedom to ramp up the business (acquisitions and support structure) whereas management did not.
Where might he have gotten that idea?
https://www.sec.gov/Archives/edgar/data/1096934/000156459017024810/syte-ex992_9.htm
"Sitestar will add significant working capital to the business and provide Jeff with the freedom to allocate that capital"
"Sitestar intends to commit the next $10 million of cash that we internally generate to the subsidiary. Some of that will come from debt that we will raise at the corporate level. The initial allocation to the subsidiary will likely be in the range of $3 million. 
 
Jeff will not earn a salary. He will receive an annual bonus based on book value growth with a high-water mark."

I think you can make an argument that management was naive, inexperienced, or, at worst, incompetent.  I think it is pretty hard to argue that they have been lying to shareholders or intentionally committing any kind of fraud.
I want to be very clear. I have not accused anyone here of fraud. Nor do I think that this is nearly the same as Biglari.

InelegantInvestor

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Re: SYTE - Enterprise Diversified
« Reply #718 on: May 16, 2019, 03:24:02 PM »
What exactly was the miscommunication with Moore?

It seems he understood freedom to ramp up the business (acquisitions and support structure) whereas management did not.
Where might he have gotten that idea?
https://www.sec.gov/Archives/edgar/data/1096934/000156459017024810/syte-ex992_9.htm
"Sitestar will add significant working capital to the business and provide Jeff with the freedom to allocate that capital"
"Sitestar intends to commit the next $10 million of cash that we internally generate to the subsidiary. Some of that will come from debt that we will raise at the corporate level. The initial allocation to the subsidiary will likely be in the range of $3 million. 
 
Jeff will not earn a salary. He will receive an annual bonus based on book value growth with a high-water mark."
InelegentInvestor, from having spoken to you, I know you are a very talented analyst. It's good to see you contributing to discussions again. If I may change the subject a bit, I am wondering if you have thoughts about Sardar Biglari? Please feel free to switch the conversation to a more appropriate thread, if you respond to this question.
RtF
Briefly, I have written quite a bit about Biglari over the years: https://www.inelegantinvestor.com/?s=biglari
https://www.inelegantinvestor.com/2016/03/28/sardar-biglari-serial-defamation-victim/
https://www.inelegantinvestor.com/2015/12/14/biglari-continues-to-pursue-revenge-against-swenson-on-companys-dime/
https://www.inelegantinvestor.com/2015/12/05/biglari-stock-price-decreases-while-ceo-focuses-on-new-strategy-of-creeping-out-models/
https://www.inelegantinvestor.com/2012/08/15/sardar-biglari-adds-another-puppet-to-biglari-holdings-board-fails-to-disclose-ties/
https://www.inelegantinvestor.com/2011/02/08/biglari-continues-to-quack-wear-duck-costume/

Suffice to say that time has not enhanced my opinion of Mr. Biglari. The latest shareholder meeting was an absolute farce. He played a role in investors' fantasies of finding a young Buffett and used it to enrich himself. He will continue to enrich himself at the expense of anyone who does business with him or invests in his company. There is no price at which one could buy BH.

I do think, to make this topical, that there is a price at which one could buy SYTE. But it is far below recent trades.

Tim Eriksen

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Re: SYTE - Enterprise Diversified
« Reply #719 on: May 28, 2019, 02:34:24 PM »
Sitestar (Enterprise Diversified) sold its HVAC operations in Arizona.  They will receive a revenue royalty over the next five years.

https://finance.yahoo.com/news/enterprise-diversified-announces-sale-home-211600304.html