Author Topic: SYTE - Enterprise Diversified  (Read 243875 times)

LR1400

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Re: SYTE - Sitestar
« Reply #170 on: September 13, 2016, 12:29:23 PM »
I don't have a clear picture as to why they are liquidating the real estate portfolio. I believe someone noted they are moving that capital to the HVAC business.

Is the real estate overvalued and they are able to sell out for large numbers?

Renting out houses is reasonably passive, especially when using a property manager. Often you get ok cash flow and long term wealth when held for awhile.
I'll be watching that HVAC business, that could do pretty decently. It could be a good roll-up platform. I do see HVAC being reasonably hard to scale though. I understand it has been done, but it seems tough.

I'm assuming they think that they can earn loftier returns elsewhere.  I'm just glad that many of these properties are no longer going to be sitting vacant and deteriorating anymore.  If you are not going to make use of them in some productive manner (and the former management wasn't) selling them is certainly the best option.  It also seems as if they are getting slightly more for them than expected which is a nice bonus.   Now we will see how the current management uses the capital.

I wasn't sure if the properties were vacant or not. Vacant property that can't be rented at reasonable rates....makes sense to sell. The former CEO said new management forced tenants out and then sold...


rkbabang

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Re: SYTE - Sitestar
« Reply #171 on: September 13, 2016, 12:32:49 PM »
I don't have a clear picture as to why they are liquidating the real estate portfolio. I believe someone noted they are moving that capital to the HVAC business.

Is the real estate overvalued and they are able to sell out for large numbers?

Renting out houses is reasonably passive, especially when using a property manager. Often you get ok cash flow and long term wealth when held for awhile.
I'll be watching that HVAC business, that could do pretty decently. It could be a good roll-up platform. I do see HVAC being reasonably hard to scale though. I understand it has been done, but it seems tough.

I'm assuming they think that they can earn loftier returns elsewhere.  I'm just glad that many of these properties are no longer going to be sitting vacant and deteriorating anymore.  If you are not going to make use of them in some productive manner (and the former management wasn't) selling them is certainly the best option.  It also seems as if they are getting slightly more for them than expected which is a nice bonus.   Now we will see how the current management uses the capital.

I wasn't sure if the properties were vacant or not. Vacant property that can't be rented at reasonable rates....makes sense to sell. The former CEO said new management forced tenants out and then sold...

They were not all vacant, but unless I am mistaken, most of them were.

LR1400

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Re: SYTE - Sitestar
« Reply #172 on: September 13, 2016, 12:48:03 PM »
I don't have a clear picture as to why they are liquidating the real estate portfolio. I believe someone noted they are moving that capital to the HVAC business.

Is the real estate overvalued and they are able to sell out for large numbers?

Renting out houses is reasonably passive, especially when using a property manager. Often you get ok cash flow and long term wealth when held for awhile.
I'll be watching that HVAC business, that could do pretty decently. It could be a good roll-up platform. I do see HVAC being reasonably hard to scale though. I understand it has been done, but it seems tough.

I'm assuming they think that they can earn loftier returns elsewhere.  I'm just glad that many of these properties are no longer going to be sitting vacant and deteriorating anymore.  If you are not going to make use of them in some productive manner (and the former management wasn't) selling them is certainly the best option.  It also seems as if they are getting slightly more for them than expected which is a nice bonus.   Now we will see how the current management uses the capital.

I wasn't sure if the properties were vacant or not. Vacant property that can't be rented at reasonable rates....makes sense to sell. The former CEO said new management forced tenants out and then sold...

They were not all vacant, but unless I am mistaken, most of them were.

I think the annual report said 8 were occupied. I wonder why they didn't know this going in/through due diligence. I like most of their approach and it is something to watch and possibly emulate.

rkbabang

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Re: SYTE - Sitestar
« Reply #173 on: September 13, 2016, 12:54:52 PM »
I don't have a clear picture as to why they are liquidating the real estate portfolio. I believe someone noted they are moving that capital to the HVAC business.

Is the real estate overvalued and they are able to sell out for large numbers?

Renting out houses is reasonably passive, especially when using a property manager. Often you get ok cash flow and long term wealth when held for awhile.
I'll be watching that HVAC business, that could do pretty decently. It could be a good roll-up platform. I do see HVAC being reasonably hard to scale though. I understand it has been done, but it seems tough.

I'm assuming they think that they can earn loftier returns elsewhere.  I'm just glad that many of these properties are no longer going to be sitting vacant and deteriorating anymore.  If you are not going to make use of them in some productive manner (and the former management wasn't) selling them is certainly the best option.  It also seems as if they are getting slightly more for them than expected which is a nice bonus.   Now we will see how the current management uses the capital.

I wasn't sure if the properties were vacant or not. Vacant property that can't be rented at reasonable rates....makes sense to sell. The former CEO said new management forced tenants out and then sold...

They were not all vacant, but unless I am mistaken, most of them were.

I think the annual report said 8 were occupied. I wonder why they didn't know this going in/through due diligence. I like most of their approach and it is something to watch and possibly emulate.

They did know this going in.  The fact that SYTE wasn't doing anything with the properties it owned, and some of them needed significant work that wasn't being done, was one of the reasons for the activism which eventually led to the management change.


My initial thesis was that SYTE was sitting on value that wasn't being utilized and the addition of Jeff Moore to the board was a sign that management was ready to start renovating and doing something with these properties. That didn't turn out to be the case.  I didn't expect what happened.
« Last Edit: September 13, 2016, 01:00:27 PM by rkbabang »

LR1400

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Re: SYTE - Sitestar
« Reply #174 on: September 13, 2016, 01:44:30 PM »
I don't have a clear picture as to why they are liquidating the real estate portfolio. I believe someone noted they are moving that capital to the HVAC business.

Is the real estate overvalued and they are able to sell out for large numbers?

Renting out houses is reasonably passive, especially when using a property manager. Often you get ok cash flow and long term wealth when held for awhile.
I'll be watching that HVAC business, that could do pretty decently. It could be a good roll-up platform. I do see HVAC being reasonably hard to scale though. I understand it has been done, but it seems tough.

I'm assuming they think that they can earn loftier returns elsewhere.  I'm just glad that many of these properties are no longer going to be sitting vacant and deteriorating anymore.  If you are not going to make use of them in some productive manner (and the former management wasn't) selling them is certainly the best option.  It also seems as if they are getting slightly more for them than expected which is a nice bonus.   Now we will see how the current management uses the capital.

I wasn't sure if the properties were vacant or not. Vacant property that can't be rented at reasonable rates....makes sense to sell. The former CEO said new management forced tenants out and then sold...

They were not all vacant, but unless I am mistaken, most of them were.

I think the annual report said 8 were occupied. I wonder why they didn't know this going in/through due diligence. I like most of their approach and it is something to watch and possibly emulate.

They did know this going in.  The fact that SYTE wasn't doing anything with the properties it owned, and some of them needed significant work that wasn't being done, was one of the reasons for the activism which eventually led to the management change.


My initial thesis was that SYTE was sitting on value that wasn't being utilized and the addition of Jeff Moore to the board was a sign that management was ready to start renovating and doing something with these properties. That didn't turn out to be the case.  I didn't expect what happened.

That would've probably worked well until the dilution. The price is too high now.

Hopefully everyone got in pretty early on this. Buying distressed property, renovating then leasing or selling has worked for lots of people.

Do you feel the HVAC business is truly scale-able, at least with minimal capital?

rkbabang

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Re: SYTE - Sitestar
« Reply #175 on: September 14, 2016, 07:19:54 AM »
That would've probably worked well until the dilution. The price is too high now.

Hopefully everyone got in pretty early on this. Buying distressed property, renovating then leasing or selling has worked for lots of people.

Do you feel the HVAC business is truly scale-able, at least with minimal capital?

I don't know anything about the HVAC business.  It was completely off my radar until this.   I'm still trying to figure out what they see in it.  I was under the impression that HVAC businesses were mostly small local owner-operator/father-son type companies without many employees or much scale.  That is certainly true here in the northeast, I don't know anything about the southwest where they appear to be focussing.

Most HVAC related public companies are equipment manufacturers, not installers.  I can find only one public company that appears to be solely in the HVAC installation business. NYSE:FIX
It is almost a $1B market cap company, profitable, pays a dividend, but doesn't appear to be rapidly growing.

LR1400

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Re: SYTE - Sitestar
« Reply #176 on: September 14, 2016, 09:28:24 AM »
That would've probably worked well until the dilution. The price is too high now.

Hopefully everyone got in pretty early on this. Buying distressed property, renovating then leasing or selling has worked for lots of people.

Do you feel the HVAC business is truly scale-able, at least with minimal capital?

I don't know anything about the HVAC business.  It was completely off my radar until this.   I'm still trying to figure out what they see in it.  I was under the impression that HVAC businesses were mostly small local owner-operator/father-son type companies without many employees or much scale.  That is certainly true here in the northeast, I don't know anything about the southwest where they appear to be focussing.

Most HVAC related public companies are equipment manufacturers, not installers.  I can find only one public company that appears to be solely in the HVAC installation business. NYSE:FIX
It is almost a $1B market cap company, profitable, pays a dividend, but doesn't appear to be rapidly growing.

I read about the industry consolidating years ago and perhaps it is or will be doing that again. I also view it as a largely small, regional business. That doesn't make them bad, however, they rely on local knowledge/connections or low price. A friend owns one and does reasonably well with it, he will end up reasonably wealthy, but without him and his partner the business would struggle to exist. Basically, the owner of most of these is the brand. Now, rolling them up in a region and rebranding, maybe that would work.

I view the industry as having tow segments:

1. Service/Maintenance
2. Contracting

Service and maintenance seems repeatable and somewhat easier to scale. I am assuming most systems are similar these days and expertise can be gained and passed on relatively quickly. The volume of service and maintenance should be more consistent as well. The contracting side is going to be project based and dependent on microeconomics of the operating area and somewhat dependent on overall macro levels and trends. This is going to be cyclical. Contracting requires more detailed knowledge in estimating, project management, negotiating, etc.

In my view both segments are primarily price driven, so being the low cost operator is essential.

Most every contracting business is going to follow this model.

InelegantInvestor

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Re: SYTE - Sitestar
« Reply #177 on: September 16, 2016, 06:53:36 AM »
Why I'm Withholding My Votes For All Sitestar Directors http://www.inelegantinvestor.com/2016/09/16/im-withholding-votes-sitestar-directors/

InelegantInvestor

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Re: SYTE - Sitestar
« Reply #178 on: September 19, 2016, 07:54:51 AM »
Massive dilution continues as sitestar commits more than its total equity to new fund.
Sitestar to Make a Seed Investment in Alluvial Fund, LP

LYNCHBURG, VA--(Marketwired - September 19, 2016) - Sitestar Corporation (OTCQB: SYTE) today announced an agreement with Alluvial Capital Management, LLC to make a seed investment in a soon to be launched private investment partnership. The partnership will be managed by David Waters. Alluvial Capital will act as the general partner and Sitestar will invest in the private investment partnership as a limited partner.

"We are thrilled to invest in David and provide seed capital for the launch of his investment partnership. David has proven himself as a talented investor and committed fiduciary. He has a strong track record of uncovering previously unknown companies in his client accounts through Alluvial Capital and through his blog at www.otcadventures.com. We are excited to team up with him," said Steven Kiel, Sitestar's CEO.

"I am extremely excited to partner with Sitestar. I have enjoyed watching Sitestar's turnaround and I expect great things from the company. I look forward to a long and profitable partnership and I am certain that both Sitestar shareholders and Alluvial clients will benefit from this arrangement," said David Waters, Alluvial Capital's Managing Member.

The private investment partnership, to be named Alluvial Fund, LP, has a target launch date of January 1, 2017. Sitestar has agreed to make a seed investment of $10 million, which will be funded through cash on hand and through the proceeds of a private placement. In conjunction with the investment, Sitestar will be developing an asset management business.

gg

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Re: SYTE - Sitestar
« Reply #179 on: September 19, 2016, 08:12:22 AM »
$10 million???

Anyone know how big Kiel's fund us? I'm surprised they can be sure they will be raise 10 million unless it's raised already...
« Last Edit: September 19, 2016, 08:15:52 AM by gg »