SYTE - Enterprise Diversified

[InelegantInvestor]

All lies and jest, still a man hears what he wants to hear
And disregards the rest, hmmmm

[NoCalledStrikes]

Item 8.01 – Other Events.
 
This morning, Wednesday, November 20, 2019, Enterprise Diversified, Inc. (the “Company”) filed a verified complaint in the Court of Chancery of the State of Delaware commencing a civil action against Woodmont Lexington, LLC, a Delaware limited liability company (“Woodmont”).
 
As previously reported in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 3, 2019, the Company had sold to Woodmont, on June 27, 2019, 65% of the Company’s membership interest in Mt Melrose, LLC, a Delaware limited liability company (“Mt Melrose”), which, as has been previously reported, owns and operates a portfolio of income-producing real estate in Lexington, Kentucky. Since the closing of the Mt Melrose transaction, Woodmont, by its representative, Tice Brown, has made repeated offers to buy out the Company’s remaining interest in Mt Melrose. Woodmont’s most recent offer was received by the Company, in writing, on November 11, 2019, with a deadline for acceptance of 9:00 a.m. Monday, November 18, 2019. All such offers have been rejected or not responded to by the Company, as being unfavorable, undesirable and not in the long-term best interests of the Company and its shareholders.
 
The present action was filed by the Company in response to repeated claims and demands and injurious conduct by Woodmont and its representative, Tice Brown. The Company is seeking, among other relief available, injunctive, declaratory and equitable relief against Woodmont, along with attorneys’ fees and expenses.


https://www.sec.gov/Archives/edgar/data/1096934/000143774919023247/0001437749-19-023247-index.htm

[Moht]

Interesting 8-K.

However, why hasn't Steve or SYTE addressed the Woodmont ownership discrepancy?

Tice says 79.2%. SYTE says 65%.

Seems like a simple thing to clarify. What's the deal?

[Hielko]

Their latest 8K certainly seems to imply that they still have a 35% ownership stake.

[NoCalledStrikes]

FWIW, the version of Schedule A on twitter does not include a signature page.

[Moht]

New shareholder at SYTE: https://www.sec.gov/Archives/edgar/data/1096934/000178522519000001/0001785225-19-000001-index.htm

Likely explains the massive jump in volume over the past 10 days or so.

The Spanish fund/investor likely purchased their shares from Jeff Moore, who is now below 5%: https://www.sec.gov/Archives/edgar/data/1096934/000110465919073877/0001104659-19-073877-index.htm

[cameronfen]

Rename this company from Sitestar to Shitshow.

I just read about 6 months of posts since the last time I checked this thread... someone said it best, this is a nerdy soap opera.

It's like a bunch of kids got their hands on their parent's credit cards, bought 1000 lbs of gummy bears from amazon, and then were completely surprised when they couldn't eat it all and had throw it out. Where are the adults in the room?

And does anyone actually still own any of this? I hope not, this now has years worth of red-flags all over it. I would've hoped you all sold months/years ago. And at this point I wouldn't touch any of the associated investment funds either. It's guilty by association (sorry to say). I mean, how anyone can read this stuff and not think "100% Mickey Mouse Operation" is beyond me. Totally mind blowing.

I think the moral of the story is investors may think that being back seat drivers makes you qualified to run a business, but when things need to scale, it’s not just numbers working out that matters, and it’s not so easy even to be a mediocre operator. 

[ratiman]

I've seen this "It's tough being an operator" argument a number of times. That's not the problem. The problem was that they bought assets that had no business being owned by a publicly traded microcap. Owning residential rental properties is a tough business when it's run out of your kitchen, it's impossible inside the cost structure of a public company, not to mention the lack of REIT status. The thing is, SYTE already knew this, as SYTE already had rental properties it was trying to sell in Virginia. I don't know why management thought that rental properties in Kentucky would somehow perform better than rentals in Virginia. It was a bad  business in Virginia, what would suddenly change in Kentucky?

So no, the problem wasn't a lack of operating experience. They just bought the wrong asset and then, amazingly, bought the same exact asset a second time, expecting magic to happen. And yes, I'm aware that it was different management teams that, incredibly, made the exact same mistake. The first management team was fired for stepping in shit and then the second management team stepped in the exact same shit. It's bonkers.

[Foreign Tuffett]

This has been pointed out earlier in this thread, but the core issue here is that SYTE is very small, yet quite complex. This is a bad combination for a holding company structure.

Corporate level expense was ~$850K last year, and will probably be similar this year. The operating businesses and Alluvial Fund investment are going to have a difficult time offsetting this expense. I think management is moving in the right direction by attempting to simplify the company (aka repenting for past sins), but has become embroiled in this odd legal dispute with Woodmont.

[Spekulatius]

New shareholder at SYTE: https://www.sec.gov/Archives/edgar/data/1096934/000178522519000001/0001785225-19-000001-index.htm

Likely explains the massive jump in volume over the past 10 days or so.

The Spanish fund/investor likely purchased their shares from Jeff Moore, who is now below 5%: https://www.sec.gov/Archives/edgar/data/1096934/000110465919073877/0001104659-19-073877-index.htm

So there is new episode in the SYTE soap opera: ”The Spaniard”

Not sure what they are seeing here to take an ~8% ownership. The acquirer is a real estate company located in Spain. SYTE isn’t really a real estate company any more. Curious to see how this will work out.