SmallCap Posted June 24, 2014 Share Posted June 24, 2014 I couldn't find a thread dedicated to this company even though it's been talked about before. Interesting company that is going through some shareholder activism that is being led by one of our regular board posters If you haven't see it check out these articles. http://www.scavengerreport.com/2014/06/18/sitestar-corporation-strange-happenings-at-this-tiny-real-estate-play/ and straight from the pirate himself http://ragnarisapirate.blogspot.com/2014/06/starting-activism-at-sitestar-syte.html Link to comment Share on other sites More sharing options...
DTEJD1997 Posted June 24, 2014 Share Posted June 24, 2014 I've known Jeff for a while and have every confidence in him. He is an expert when it comes to residential real estate. He is PERFECT for the BOD of Sitestar. He is also a great value investor for small cap stocks. Unfortunately, there is already a thread on this... Link to comment Share on other sites More sharing options...
Sportgamma Posted June 25, 2014 Share Posted June 25, 2014 I had spotted that Jeff was said to be 50 years old according to the SYTE filings and found it amusing. Not so much after reading the letter and blog post from Jeff. The scenario that he describes in the letter and blog are outrageous. No board meetings, CFO refuses to meet a board member, they put his signature on the filing without his consent or him even seeing the filing. I own some shares based on the thesis that cost accounting of the properties understates the true book value of the properties. However, with this out in the open my main worry is that a cockroach in the kitchen is hardly the only one. Another concern I have is this: As I see this, there is no misunderstanding between the two sides and things won´t get patched up. Either management leaves or they don´t. The CEO owns about a third of the shares. Their primary option will be to attempt to buy the activists out. They might try to go dark with the company. As somebody belonging to neither of these groups, my primary concern as to the outcome, is that the activists leave and I´ll be stuck with current management and trapped in a stock with no liquidity. Link to comment Share on other sites More sharing options...
rkbabang Posted June 25, 2014 Share Posted June 25, 2014 I had spotted that Jeff was said to be 50 years old according to the SYTE filings and found it amusing. Not so much after reading the letter and blog post from Jeff. The scenario that he describes in the letter and blog are outrageous. No board meetings, CFO refuses to meet a board member, they put his signature on the filing without his consent or him even seeing the filing. I own some shares based on the thesis that cost accounting of the properties understates the true book value of the properties. However, with this out in the open my main worry is that a cockroach in the kitchen is hardly the only one. Another concern I have is this: As I see this, there is no misunderstanding between the two sides and things won´t get patched up. Either management leaves or they don´t. The CEO owns about a third of the shares. Their primary option will be to attempt to buy the activists out. They might try to go dark with the company. As somebody belonging to neither of these groups, my primary concern as to the outcome, is that the activists leave and I´ll be stuck with current management and trapped in a stock with no liquidity. I'm in the same boat as you, although SYTE is a tiny position for me and I have no plans to buy more at the moment, so I'm just in wait and see mode right now. One concern of mine is the unknown current condition of the properties. How many of them are not occupied? Are they being checked on and maintained or are they just sitting there abandoned? Any property owner knows what it takes to maintain a property and I'm concerned that this might not be taken care of sufficiently here. The properties page on the website, doesn't seem to change very often. How much capital will it take to get the properties ready to be rented/or for sale if they are allowed to deteriorate? There are a lot of unknowns here for us outside shareholders. More info about Sitestar that I'll add to this thread: The old thread in the General category - Topic: The Pirate has hijacked a seat on Sitestar´s board Arquitos Capital's Letter to Sitestar’s management - August 28, 2013 (A lot of good suggestions. A reverse split is a no-brainer and should be done immediately). The recent 13D filing including the Letter to management - June 3, 2014 And also required reading are all of Jeff's blog posts on Sitestar in order: Sitestar: The Cigar Butt That Isn'tAugust 1, 2011 Scut-Scut-Scuttlebutt... March 4, 2012 Why I Am 13D-ing SitestarMay 30, 2012 Sitestar Properties For Sale/RentJune 23, 2012 Portrait Of A CEO: Frank ErharticSeptember 1, 2012 A Board Seat At Sitestar...October 31, 2013 Starting Activism at Sitestar (SYTE) June 23, 2014 Link to comment Share on other sites More sharing options...
writser Posted June 25, 2014 Share Posted June 25, 2014 What surprises me is that the 'portrait of a CEO'-post was really positive about Frank Erhartic. Ragnar gets a board seat, looks forwarding to working together with two incredibly nice and shrewd managers. Hardly two years later he has to go activist because the CFO is fleeing out of the office when he arrives. The whole drama reminds me of Walter Schloss: 'I’m not very good at judging people. So I found that it was much better to look at the figures rather than people. I didn't go to many meetings.'. Probably he experienced stuff like this too ... I really appreciate what Ragnar is trying to achieve and I hope it works out for all of you involved. I'll follow it from the sidelines with a bag of popcorn though. Link to comment Share on other sites More sharing options...
Sportgamma Posted June 25, 2014 Share Posted June 25, 2014 Here are some tidbits from the investor chat in december: http://www.sitestar.com/press_release_December_2013.cfm "We have also cut some major expenses in our Internet division that should be reflected starting late this year and into the first quarter of 2014." "This year, we have been concentrating on fixing up the homes we have purchased and renting them out. We currently have about a dozen houses rented so far this year with about $10,000 a month in rental income. We have many more houses that we are working on for rent and we hope to at least double the monthly rental income in 2014." "We should be able to get most of our properties available to sell or rent within the next 6 months while adding additional properties." "Frank: 2014 Goals & Objectives: Frank: 1. Increase our rental income by at least 2x Frank: 2. Complete all of our existing home renovations that need to be done Frank: 3. Buy and Sell significantly more homes this year Frank: 4. Further develop our in-house systems to make things run more smoothly Frank: 5. Further develop our in-house systems to better capture leads for sale, rent, buying and investing. Frank: 6. Redo our existing home page to better reflect what we are currently doing and to help capture those leads. Frank: 7. Partner with more investors to purchase or invest in more real estate deals Frank: 8. Increase our revenue and net profit significantly Frank: 9. Continue to find ways to cut costs and streamline operations Frank: 10. Increase Shareholder value" "there are over 40 properties that we own and all are free and clear. As we build our rental property inventory, we can leverage this for bigger deals and more deals when we need the money. In the past, I have had to borrow money for Sitestar personally since Sitestar didn’t have many hard assets." "We are looking at really good ROI’s on rental properties. Our target is approximately 20% ROI on rentals. On higher end properties, the ROI doesn’t make sense for rentals so those are typically flips." "Frank: Jeff has been down several times and visits our properties. He has helped move some of them along. We have board meetings on a regular basis." "Frank: I do want to mention something that is a big thing on our balance sheet. That is the USAT debt we show on our financials. We do not believe that we owe this and in fact, we believe that they owe us money. We are trying to solve this through legal means but our auditors will not let us take it off our books as they say that we owe it. We will be entering into arbitration soon and hope to have this resolved soon. There are no guarantees on how this will turn out but we have all of our supporting documents to our attorney and believe we are solid with our claims." "Frank: Let me ask you guys what your thought are on a reverse split. We are getting a quote on what that would cost if that makes sense." "jeff: 1) On the balance sheet’s "Notes Payable, current portion" of $900K -- when does the company thinks that will get taken care of and officially removed? 2) Timing on when the shares of the former employee will be officially cancelled? 3) What is the total dollar size of the real estate opportunity within Frank's geography and circle of competence? Would SYTE consider raising additional equity to take advantage of the real estate opportunities, to the extent that there are still opportunities but unlikely to last long into the future?" "Frank: #1 already answered. Frank: #2: Those share are in treasury and do not reflect outstanding shares. We will probably cancel those officially soon. I am not sure it makes sense to hold on to them any longer unless we want to cancel more shares from others at the same time. Frank: #3: is related to the size of the local market. I don’t have exact figures on that. It is enough to keep us busy for quite some time, however. Frank: another question related to if we would consider raising additional equity to take advantage of RE opportunities.... Frank: I really don’t want to issue more shares if we don’t have to so that is probably unlikely unless we use that as collateral and can purchase them back at some point. I like reducing the number of shares better and using other avenues to raise money which real estate can easily do." "Frank: Would the company be willing to share the shareholder registrar with the public, or at least its investors? Frank: I would have to evaluate it on a case by case basis." Link to comment Share on other sites More sharing options...
rkbabang Posted June 25, 2014 Share Posted June 25, 2014 Here are some tidbits from the investor chat in december: http://www.sitestar.com/press_release_December_2013.cfm ... I read the transcript of the chat in December, but now I'm not sure how much of it to believe. Things seem to have changed. For instance "We have board meetings on a regular basis" has certainly not been the case in 2014, nor did: "We are also planning on an Annual Shareholder meeting in late April or May" (which Frank also said in the chat) ever happen. And: "This year, we have been concentrating on fixing up the homes we have purchased and renting them out. We currently have about a dozen houses rented so far this year with about $10,000 a month in rental income. We have many more houses that we are working on for rent and we hope to at least double the monthly rental income in 2014. We should be able to get most of our properties available to sell or rent within the next 6 months while adding additional properties." Well 6 months has past and I see no evidence (or at least I have no information) that any of that has taken place or any progress what-so-ever toward it has been made. Certainly the properties page on the website doesn't reflect it. The change in management behavior from December to June has been quite disconcerting and makes me glad I have a policy to never allocate too much to any one micro/nano-cap company. I now see the shareholder activism (up to and including replacing the management, if it comes to that) as maybe the only hope to realizing SYTE's value. Link to comment Share on other sites More sharing options...
matjone Posted June 29, 2014 Share Posted June 29, 2014 Have they put out a schedule of their properties anywhere? Or does each shareholder have to drive to Virginia to figure this out? Link to comment Share on other sites More sharing options...
ragnarisapirate Posted June 30, 2014 Share Posted June 30, 2014 No schedule, but you can get an idea at sitestar.com/rentals and sitestar.com/properties There are some that are rented, which are not on the site. You can find out additional info from the various taxing authorities, which all have decent websites. Link to comment Share on other sites More sharing options...
matjone Posted June 30, 2014 Share Posted June 30, 2014 I saw that after posting. I looked through it and only counted 7500 in monthly rent. In the call 6 months ago they said they were at 10k and ramping up. I also checked a couple of the for sale properties against tax assessments and zillow. Some of them were assessed a little lower than the asking price, but it is normal at least where I am from for the assessed values to be lower than market values. I am trying to piece it together from the county websites but there is always the problem of them owning things through other entities that won't show up when you search "sitestar". It would be nice if they would include a schedule of what they owned in their reports. Link to comment Share on other sites More sharing options...
matts Posted July 1, 2014 Share Posted July 1, 2014 I saw that after posting. I looked through it and only counted 7500 in monthly rent. In the call 6 months ago they said they were at 10k and ramping up. I also checked a couple of the for sale properties against tax assessments and zillow. Some of them were assessed a little lower than the asking price, but it is normal at least where I am from for the assessed values to be lower than market values. I am trying to piece it together from the county websites but there is always the problem of them owning things through other entities that won't show up when you search "sitestar". It would be nice if they would include a schedule of what they owned in their reports. Yes, that would be nice. Buuuut, since they are ducking their own director by running away when he is not looking I'm not going to hold my breath on them being nice. This is such a weird case, the fact that they let Jeff on the board at all is very surprising now. Then in December Frank agrees to a shareholder chat that he was under no obligation to do, and after that it deteriorates so rapidly. The behavior of Solitron management is terrible but at least makes some rational sense, they have been consistent in telling shareholders to F off. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted July 1, 2014 Share Posted July 1, 2014 I saw that after posting. I looked through it and only counted 7500 in monthly rent. In the call 6 months ago they said they were at 10k and ramping up. I also checked a couple of the for sale properties against tax assessments and zillow. Some of them were assessed a little lower than the asking price, but it is normal at least where I am from for the assessed values to be lower than market values. I am trying to piece it together from the county websites but there is always the problem of them owning things through other entities that won't show up when you search "sitestar". It would be nice if they would include a schedule of what they owned in their reports. Those are properties that are for rent, not rented. The rented rentals are not listed on the website. Link to comment Share on other sites More sharing options...
gfp Posted January 21, 2015 Share Posted January 21, 2015 Here is an update on Ragnarisapirate's (Jeff Moore) ongoing drama with the management of Sitestar. http://www.sec.gov/Archives/edgar/data/1096934/000138713115000159/moore-dfrn14a_012015.htm This paragraph was new news to me: "On January 12, 2015, over the objection of Mr. Moore, the Board of SiteStar adopted a series of amendments to SiteStar’s bylaws, one of which removed the ability of shareholders to call a meeting of the shareholders. The amendments were not passed with retroactive effect. The Moore Shareholder Group believes that the meeting it has called, and to which this proxy relates, remains properly called pursuant to Nevada law and the SiteStar bylaws in effect when the meeting was called. If the meeting cannot be held in the initial time frame specified when the meeting was called and a new meeting must be called, which is no longer permitted under the bylaws, or the directors were to challenge the validity of the meeting in light of the bylaw amendments, Nevada law permits holders of 15% of the outstanding voting securities to petition a court to order a meeting for the election of directors if no meeting has been held within the prior 18 months. If either of those events occurs, the Moore Shareholder Group will petition the court to order a meeting." I also hadn't known that the CEO was going through a divorce and potentially expressed interest in selling a large block of stock at some point. Interesting to follow, for sure. My in-laws are in Lynchburg VA so I've kept up with this story over the last couple years... Link to comment Share on other sites More sharing options...
constructive Posted January 21, 2015 Share Posted January 21, 2015 Ragnar, how much will 9 directors cost? It seems a little excessive to fly 9 people from all over the country for a company this small. Other than that the proxy makes perfect sense. Here are some people you may want to engage with to vote on it: http://investorshub.advfn.com/Sitestar-Corporation-SYTE-560/ Link to comment Share on other sites More sharing options...
gfp Posted January 21, 2015 Share Posted January 21, 2015 And now this from SYTE: http://www.marketwatch.com/story/sitestar-comments-on-moores-attempt-to-remove-a-majority-of-the-members-of-the-sitestar-board-of-directors-2015-01-21?siteid=bigcharts&dist=bigcharts Link to comment Share on other sites More sharing options...
oddballstocks Posted January 21, 2015 Share Posted January 21, 2015 This is really interesting to watch unfold. Unfortunately sitting management has a variety of tools available to screw shareholders. On my desk is a certificate from an unnamed company with $4m NCAV trading for $800k. I have considered an attempt to take them over multiple times, but there are way too many ways I can end up on the short end. I'll probably send in my certificate and cash out, it's not worth the hassle. Link to comment Share on other sites More sharing options...
rkbabang Posted January 21, 2015 Share Posted January 21, 2015 I just got an email from investorrelations@sitestar.com. I can't find it online anywhere to link to it, so I'll just paste it here: FOR IMMEDIATE RELEASE Contact: Frank R. Erhartic, Jr. 434-239-4272 investorrelations@sitestar.com Sitestar Comments on Moore's Attempt to Remove a Majority of the Members of the Sitestar Board of Directors Advises Stockholders to Take No Action at This Time Lynchburg, Virginia ? January 21, 2015 ? Sitestar Corporation (OTCQB: SYTE) (''Sitestar'' or the ''Company'') today issued the following statement regarding the filing by the Moore Shareholder Group (''Moore'') of definitive proxy materials with the Securities and Exchange Commission (''SEC'') in order to solicit proxies to call a Special Meeting of Sitestar?s stockholders on February 12, 2015 in New Canaan, Connecticut. The purpose of the meeting is to elect nine nominees to the Sitestar Board to replace the majority of the current Board; Frank R. Erhartic, Jr., President and CEO of Sitestar; and Daniel Judd, CFO of Sitestar. Mr. Moore is the third member of the current Sitestar Board and would continue to be a member of the Sitestar Board under the Moore preliminary proxy materials. Sitestar urges all of its stockholders to refrain from taking any action, including returning any proxy card sent by Moore, until they have reviewed the recommendation of Sitestar?s Board of Directors that will be included in a proxy statement to be filed by the Company. Under federal securities laws Moore cannot solicit proxies from Sitestar stockholders until Moore provides stockholders with definitive proxy solicitation materials. The Sitestar Board intends to call for a special meeting of stockholders on March 12, 2015 to allow sufficient time for the December 31, 2014 fiscal year end financial statements to be completed and will pursue the course of action that the Board believes is in the best interests of the Company and all of its stockholders. In response to the Moore proxy solicitation, Frank R. Erhartic, Jr., President and CEO of Sitestar, stated, ''We are committed to the long-term interest of the Company and our shareholders and will oppose any group that seeks to derail our efforts that have turned this Company around. If you believe that you have been approached by this group for purchase of your shares or for a Proxy vote, please contact our office immediately.'' Akerman LLP and FitzGerald Yap Kreditor LLP are serving as legal counsel to the Company. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted January 22, 2015 Share Posted January 22, 2015 Posted by: oddballstocks « on: January 21, 2015, 12:51:20 PM » Insert Quote This is really interesting to watch unfold. Unfortunately sitting management has a variety of tools available to screw shareholders. On my desk is a certificate from an unnamed company with $4m NCAV trading for $800k. I have considered an attempt to take them over multiple times, but there are way too many ways I can end up on the short end. I'll probably send in my certificate and cash out, it's not worth the hassle. Oddball hits on an interesting point here. I too have considered pursuing a more activist approach with some tiny companies but can never get around how time consuming and potentially expensive it could be. Looks like this will cost them around $50k to launch the proxy? I guess they want to be reimbursed for this by Sitestar? "The entire expense of soliciting proxies is being borne by the Moore Shareholder Group. Costs of this solicitation of proxies are currently estimated to be approximately $50,000. The Moore Shareholder Group estimates that through the date hereof its expenses in connection with this solicitation are approximately $25,000." I really do wish them the best and hope that they succeed. I imagine they never intended to have to get this involved... Link to comment Share on other sites More sharing options...
InelegantInvestor Posted January 27, 2015 Share Posted January 27, 2015 The 13Ds filed by management are utterly bizarre. http://www.sec.gov/Archives/edgar/data/1096934/000072174815000045/0000721748-15-000045-index.htm http://www.sec.gov/Archives/edgar/data/1096934/000072174815000047/0000721748-15-000047-index.htm http://www.sec.gov/Archives/edgar/data/1096934/000117031215000007/0001170312-15-000007-index.htm http://www.sec.gov/Archives/edgar/data/1096934/000117031215000006/0001170312-15-000006-index.htm Column 5 is backwards: http://www.sec.gov/Archives/edgar/data/1096934/000117031215000003/xslF345X03/primary_doc.xml 6 months with no response, and this is the best they can come up with? What kind of lawyers do these guys have? DUI attorneys? Link to comment Share on other sites More sharing options...
InelegantInvestor Posted January 30, 2015 Share Posted January 30, 2015 Company has changed bylaws to fend off "corporate raiders" http://www.sec.gov/Archives/edgar/data/1096934/000072174815000059/site8k01282015.htm Getting uglier by the day. Link to comment Share on other sites More sharing options...
gfp Posted February 10, 2015 Share Posted February 10, 2015 Settlement with Ragnar - http://www.sec.gov/Archives/edgar/data/1096934/000138713115000447/jm-corresp_021015.htm Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted February 10, 2015 Share Posted February 10, 2015 Admittedly I haven't looked into SYTE but how do you find an IV or range for IV with such poor management? It seems like you have to fight an uphill battle, price-multiple is likely capped to some extent, even if there's growth in profits the money has been shown to be mis-allocated giving you just a percentage of that growth, and the less efficient style can lead to bankruptcy if the industry experiences tough times. It doesn't make any sense to me to buy deep-value but terribly run stocks unless you have the money to be an activist or owner. What am I missing? Back-tests of strategy proving me wrong? Link to comment Share on other sites More sharing options...
ScottHall Posted February 11, 2015 Share Posted February 11, 2015 Settlement with Ragnar - http://www.sec.gov/Archives/edgar/data/1096934/000138713115000447/jm-corresp_021015.htm Wonder what this is all about. Link to comment Share on other sites More sharing options...
oddballstocks Posted February 11, 2015 Share Posted February 11, 2015 Admittedly I haven't looked into SYTE but how do you find an IV or range for IV with such poor management? It seems like you have to fight an uphill battle, price-multiple is likely capped to some extent, even if there's growth in profits the money has been shown to be mis-allocated giving you just a percentage of that growth, and the less efficient style can lead to bankruptcy if the industry experiences tough times. It doesn't make any sense to me to buy deep-value but terribly run stocks unless you have the money to be an activist or owner. What am I missing? Back-tests of strategy proving me wrong? Two thoughts. As someone running some backtests myself I'd say that anyone who references them going forward is full of crap. I now understand why no quant manager just going by the data ever matches the backtested results. Second thought. Sometimes the assets are worth so much more than it's worth putting up with terrible management. At times an exec will die and the company will be let free. Other times the CEO will finally decide to sell and retire in Boca. And lastly sometimes it's worth doing the activist thing like Jeff did to unlock the value himself. Link to comment Share on other sites More sharing options...
gfp Posted February 11, 2015 Share Posted February 11, 2015 A bit more of the story - http://www.sec.gov/Archives/edgar/data/1096934/000072174815000072/0000721748-15-000072-index.htm Link to comment Share on other sites More sharing options...
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