NeverLoseMoney

The SEC has made some inquiries about the company's status under the 1940 Act. From page 28 of the 10-Q: I'm curious how the company is going to solve this problem. Growing the existing internet business somehow? Another try at making an acquisition? But where is the cash going to come from?

I own a small position. Yes, the business is slowly declining, but they've still been able to eke out profits in most years. The main reason I like it though, is that management has been under pressure from Webb since 2013 and he's been successful. The company had connected transactions with its major shareholder, Asia Optical, and Webb campaigned against these transactions. To read more about this, check out: https://webb-site.com/articles/yorkey.asp and https://webb-site.com/articles/yorkey2.asp. One of his arguments was that Yorkey was extending credit on generous terms to Asia Optical and by doing that, Yorkey's cash basically became a piggy bank for Asia Optical. Ultimately shareholders vetoed the connected transaction with Asia Optical in June 2015: http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0618/LTN20150618376.pdf In the subsequent annual reports I don't see that particular connected transaction anymore, so I assume this is still the status quo. I don't think it's a coincidence that the company decided to pay $10m+ special dividends in the years 2016-2019 after losing this vote. The special dividends were on top of their regular dividends, which also remained high in those years. Management lost the vote and Asia Optical lost control of their piggy bank. Paying out more of that cash to all shareholders became the rational thing to do. So I think that makes it a pretty attractive situation. Yes, the business is not great, but management is probably going to continue to return a substantial amount of cash to shareholders, probably if earnings recover a bit. It's pretty rare to see an activist prevail at a HK-listed company, but I think Webb has forced their hand here. Webb has a serious disease though, so it remains to be seen if he is able to continue to stand up to management if this is needed in the future. But it should be possible to have a representative do this for him. The fact that Webb bought a bit more recently seems positive in that regard, he's not going anywhere.

How did the company pay the distribution? Did they send a cheque, or did they end up using a transfer agent after all?

I would be very surprised if there was any manipulation by management. A lot of stuff has gone wrong at this company and I think it's logical that people become more and more skeptical as a result. But it is also relatively easy to come up with an alternative explanation that makes more sense. Alluvial Capital is SYTE's largest investment. Alluvial Capital's biggest investment by some margin at the end of Q3 was P10 Holdings (PIOE) with 20% of the portfolio. It looks like P10 Holdings is up another ~60% since the end of Q3. That should be pretty good for both Alluvial and SYTE. Perhaps someone got excited about that and bought a bunch of SYTE stock? Or it could just be some random speculation from a bunch of day traders. Anyway, I think the bigger issue is simply the cash flow. They have one subsidiary that is basically a melting ice cube. The other two acquisitions have failed. It was my impression when SYTE made the acquisitions that these were needed to get sufficient scale and cash flow to overcome the costs of being listed and SEC registered. I don't think that problem has gone away. I do really like the investment in Alluvial and think Bonhoeffer will probably do well over time too.

Excelsior Capital's investment portfolio earned a total return of 2% over the two years Michael Glennon managed it. Nothing to write home about. However, I'm not sure I'd characterize it as terrible performance, particularly in light of how tough this market environment has been for deep value investors. Since Michael Glennon started the Glennon Capital Small Companies Portfolio in June 2010 he has outperformed the index by over 120%. Not too bad. It's really irrelevant at this point, he is no longer at the company. Excelsior Capital has been a successful investment me and others on the CoBF board who purchased while the shares traded below NCAV. It's rare to see a quality business that's profitable trading below NCAV. I purchased my shares at $1 and sold for an average price of $1.60. Along the way they paid $.16 in dividends. This is not a company you want to buy and hold forever but the stock is compelling when it's trading below NCAV. I'm glad the investment worked out for you in the end. However, what you just wrote seems quite different in sentiment from what I read in the original write-up that you posted almost two years ago. I also can't view or download the attached write-up anymore. Have you removed it? If so, why and when? If people want to read that original write-up, it can still be viewed at ValueInvestorsClub: https://www.valueinvestorsclub.com/idea/Excelsior_Capital/4180272031 The price was $1.41 at that time. The author thought the business was worth $2.63, excluding any value for tax losses.

The activist proposal to wind-up the company didn't make it: https://asx.api.markitdigital.com/asx-research/1.0/file/2924-02294231-2A1256622?access_token=83ff96335c2d45a094df02a206a39ff4. As expected with Catelan effectively in control of the company. @Cicero: thanks for pointing out the changes in the Australian delisting rules! From what I was able to find, the special resolution that is now required means that a delisting proposal would need at least 75% of the votes to get approved. I think Catelan would not be able to get a delisting through currently. So, how is she going to play this? Continue to leave minority investors hanging for some more years and try a few more tender offers at depressed prices? Or is she willing to sell the company in the near future because the list of stubborn minority shareholders that don't want to sell at depressed prices is too large?

My interpretation of the Lion Rock filing is that they bought the shares at this inflated price to enlarge the free float of Quarto. Quarto did a rights offering (open offer) earlier this year and as a result they ended up with a free float that was too small and Quarto was now violating a stock market rule. By Lion Rock buying the shares, the British fund now owns less than 5%. As a result, the remaining shares in the hands of the British fund now count as part of the free float, because they are no longer deemed to be a substantial holder. So, this purchase seems more of a creative trick to get around Quarto's free float problem. They could've picked up 400k extra shares at half price by being patient in open market purchases, but that would've only made the float smaller and exacerbated Quarto's problem. The positive side to me is that they do still value Quarto's public listing and don't seem to look to delist the company at this time. I own some Quarto. Unfortunately I bought my shares a couple of years ago, so a losing position for me currently. I think C.K. Lau will be able to turn it around. Hopefully the company will have a disaster free year in the near future.

Glad to see we now agree after ~1.5 years. As I feared, Glennon's performance as an investment manager for ECL did turn out to be terrible, as pointed out by the activists. With Catelan now holding close to 50% I wonder how the activists expect to get enough votes. But it's certainly good that they make themselves heard and let Catelan know that they're not happy. It's still my view that a delisting is the end goal of Catelan. The lax delisting rules in Australia make this far too easy and that's why the stock has traded were it has over the last few years. If a shareholder has the capacity to hold on to their shares no matter what, especially in the event of a delisting, I think this should work out well. If enough stubborn shareholders show their support, perhaps it will motivate Catelan to sell sooner rather than later. Time value of money matters and if Catelan realizes she can't scoop up many more shares at depressed prices, she won't have much to gain by letting shareholders hang a lot longer.

that's awesome...where did you see that? or was that photoshopped? I think it was originally posted on Li Lu's facebook page: https://www.facebook.com/li.lu.376043

I'm not from the US, so I don't know about the tax implications. But I saw that this "going private" transaction was done by a Scheme of Arrangement. In case someone else wants to take a look, the document can be found on this page. Why is the scheme consideration being treated as a dividend distribution? That seems strange. Are you sure that is correct? If that is the case, it could be that it has something to do with the US possibly being a "restricted jurisdiction" and that for legal reasons, formally the offer can't be made to you. Perhaps a dividend distribution of the amount of the consideration is a way for the company to get around that problem.

Some critical points about this book: Matthew Walker's "Why We Sleep" Is Riddled with Scientific and Factual Errors. It seems much of the book is not as scientifically accurate as Walker makes it out to be, so I don't think anyone should be too worried if you don't sleep eight hours a night but feel fine. I usually get around seven hours of sleep a night, sometimes a bit less, but feel fully rested. FWIW: I read the book and enjoyed it at the time.

Investing.com was mentioned by someone in another topic. I've been using that site recently and found it surprisingly good. It offers a wide range of countries. Data is for only five years though and it's annoying that the default view for financials is quarterly, not annual, so you have to click an extra button for every single page. But all in all I prefer it to Morningstar and Yahoo.

I skimmed but I didn't see any mention of LSYN or LSYN shares. Focus was on ill gotten gains from sales of FAB Universal not the ridiculous grants of LSYN stock. Hard for a board to keep them in place if they committed serious violations. Of course the board is the same people too. I don't think there was anything about LSYN stock in the SEC complaint either. But in my post above I meant that the activist (Camac), or any other large shareholder, could perhaps use this SEC complaint to start a lawsuit (I guess against the LSYN Board of Directors?) and to basically ask the judge to annul any stock and stock awards that the CEO and CFO have gotten. Since LSYN came out of FAB Universal perhaps you could make the argument that any stock awards given to them after the spin-off were essentially the fruits of their previous fraudulent behavior. Therefore those shares should be cancelled, which has the effect of compensating the LSYN shareholders (some of whom are original FAB Universal shareholders) for the damage done. That said, I'm not a lawyer.

I wrote the post on ValueInvestingBlog.net. I think I pointed out some important issues with this company and I am still happy about my decision not to invest. I ended up buying a major position in Bitcoin instead. Don't worry guys, I sold it all around the ~$19k level. Clearly buying BTC at the time was the right decision and selling near the top was the right thing to do as well. And don't any of you try to tell me otherwise with these flawed analyses I keep reading on this forum and elsewhere, the money in my bank account proves you wrong. Yep, still like that post I wrote on my blog. Looks like the SEC is going after Spencer (CEO) and Busshaus (CFO) for their conduct during the FAB Universal days. The complaint can be found here: https://www.slideshare.net/HindenburgResearch/securities-and-exchangecommissionvspenceretalnysdce190907000010. I found that link on Twitter (an account called "Hindenburg Research"): https://twitter.com/HindenburgRes/status/1179026898749448193. There is no company press release or filing about this matter to be found anywhere though. The stock is down ~15%. Ultimately it's great news for shareholders that these people will probably be gone soon. I think (haven't followed closely for a while) these guys were handed a lot of stock while doing very little. Hopefully Camac will be able to get some kind of clawback of these shares. That should have a decent chance with this SEC complaint in hand, no?

I'm on a desktop. The data can not be viewed properly without having to scroll through every page and having to collapse multiple items in the income statement, balance sheet and cash flow screens. It's completely cluttered. For example: I'm not interested in seeing how much of inventory consists of "raw materials", "work in process", "other", or "finished goods" when I'm looking for a quick snapshot of a company's financials. Of course, none of the things you deselect on a page are remembered by the site, so you have to go through this for every single company you look at. This redesign was clearly done by people who never actually use the site on a daily basis.