thowed Posted November 7, 2019 Share Posted November 7, 2019 What is the point of only partnering with long-only, concentrated, small-cap strategies? It will all blow up at the same time. Good point. They should probably roll up some HVAC contractors in Arizona or buy a bunch of residential real estate in Kentucky to diversify. Amazing. Link to comment Share on other sites More sharing options...
thowed Posted November 7, 2019 Share Posted November 7, 2019 On a serious note, I can't say 100% what the governance/execution situation is like at SYTE/Enterprise. But I sure as hell know that I don't feel 100% confident about them, in the light of the past 12 months. So where does this put someone who thinks that a fund like Alluvial looks really interesting, and the manager a smart, very decent guy? I wonder if some people are reluctant to invest in Alluvial purely because of the SYTE connection? Link to comment Share on other sites More sharing options...
KJP Posted November 7, 2019 Share Posted November 7, 2019 So where does this put someone who thinks that a fund like Alluvial looks really interesting, and the manager a smart, very decent guy? I wonder if some people are reluctant to invest in Alluvial purely because of the SYTE connection? I know more about Alluvial's SMAs than Alluvial Fund, LP, but my understanding is that Alluvial invests in publicly-traded equities and the investment decisions are made by one person (Dave Waters). So, I don't see how paying Dave Waters to make investment decisions on your behalf presents any of the corporate governance concerns or dubious M&A decision risks that have plagued SYTE. Link to comment Share on other sites More sharing options...
Hielko Posted November 7, 2019 Share Posted November 7, 2019 It would probably not affect potential investors in Alluvial or the other funds in any tangible way. But at the same time, being associated with something that is starting to look like a train crash in progress isn't good for the brand. Not for the current managers, nor for the future managers they hope to attract. If you are considering investing in a fund and come across a story like this. How many people would just decide not to spend any energy on it, and just look for something else? Link to comment Share on other sites More sharing options...
Guest roark33 Posted November 7, 2019 Share Posted November 7, 2019 The most direct way a blow up at ENDI could affect Alluvial is for ENDI to go down the drain and require immediate redemption of its investment, which would create forced selling among its position. Since the position are not highly liquid, this has the potential to cause problems with Alluvial's returns in the short term. Link to comment Share on other sites More sharing options...
writser Posted November 7, 2019 Share Posted November 7, 2019 The most direct way a blow up at ENDI could affect Alluvial is for ENDI to go down the drain and require immediate redemption of its investment, which would create forced selling among its position. Since the position are not highly liquid, this has the potential to cause problems with Alluvial's returns in the short term. Yep. It would probably be a minor factor in case I have to determine whether I would invest with Dave (whom I think is a very solid investor) but it's something to keep in mind. Hielko points out the bigger problem though. Link to comment Share on other sites More sharing options...
5xEBITDA Posted November 7, 2019 Share Posted November 7, 2019 The most direct way a blow up at ENDI could affect Alluvial is for ENDI to go down the drain and require immediate redemption of its investment, which would create forced selling among its position. Since the position are not highly liquid, this has the potential to cause problems with Alluvial's returns in the short term. Yep. It would probably be a minor factor in case I have to determine whether I would invest with Dave (whom I think is a very solid investor) but it's something to keep in mind. Hielko points out the bigger problem though. This would usually be a major factor to institutional investors and likely a hard "no" the majority of the time until Alluvial diversifies their AUM base away from ENDI. Probably < 1/3 is when most people would ease up about it. Link to comment Share on other sites More sharing options...
oddballstocks Posted November 7, 2019 Share Posted November 7, 2019 Just when you think the story couldn't get any crazier... I feel bad for Tice here. This isn't a case of buyer's remorse or not doing DD, there are a lot of other factors given the deal. He is trying to work this out and unwind. The liabilities are unique here, and my sense is ENDI didn't really know what they had either. If you do a UCC search in Kentucky there is nothing for Mt Melrose, ENDI (all ways of spelling), or even for Jeff individually. If any of this is secured (maybe questionable?) then they secured it under other entities, maybe single purpose entities. It's possible there are liens on houses that don't exist, or contractual liabilities only documented on paper or secured by individuals. I wouldn't let any of this color impressions of Dave, he's a really solid individual. In full disclosure we get together and have beers and talk investments at a fairly regular interval (plug that if you're in Pittsburgh, in the North Hills give us a shout out) and this hasn't hampered his ability to find value in the weeds. Link to comment Share on other sites More sharing options...
Guest roark33 Posted November 7, 2019 Share Posted November 7, 2019 The other issue For ENDI/Willow Oak is a lemon problem. Alluvial and Dave signed up with Steven Kiel when he had a good reputation, but now that reputation is probably gone forever. What up and coming fund wants to sign with Willow Oak now? Take John Huber...do you think he would hitch his carriage to that horse, no way, so maybe you get other funds who have no one knocking at their door, i.e. Focused Compounding, but like Groucho used to say, who wants to be a member of a club that will have you. Link to comment Share on other sites More sharing options...
thowed Posted November 7, 2019 Share Posted November 7, 2019 I wouldn't let any of this color impressions of Dave, he's a really solid individual. Thanks to all for your thoughts. To clarify - everything I've read from Dave, and emails from him have impressed me - without having met him (would love to get to Pittsburgh, but I'm quite far away!), so far, I believe he has great integrity. So I think it's a real shame, as I think the involvement of ENDI makes one pause in a way that you wouldn't otherwise. Furthermore, things are potentially further confused as Alluvial and Arquitos have some overlapping holdings - if the ENDI issues mean people retreat from Arquitos, I don't know if this would be problematic in the forced selling of illiquid shares. I think it's easy to say something is 'good' or 'bad'. I have a hunch that Mr Kiel is not a 'villain', that he meant well and has talent, but got way over his head with ENDI, and it's really spiralled, with errors now compounding. Ultimately though, I think Alluvial is really interesting (and Dave seems like he cares about clients) and I think that if the fund extracted itself from ENDI, it would be pretty killer. I don't know as much about Bonhoeffer and Keith, but I imagine a lot of the above also applies. Link to comment Share on other sites More sharing options...
stahleyp Posted November 7, 2019 Share Posted November 7, 2019 I don't see Waters extracting himself from SYTE (whether he would like to or not, I don't know). If SYTE finished their $10 million commitment that's almost half of his fund. Link to comment Share on other sites More sharing options...
Spekulatius Posted November 7, 2019 Share Posted November 7, 2019 Missing houses etc may be real reason they decided to get rid off that sub, rather than auditing costs etc. I guess Mt Melrose is the microcap incarnation of WeWork. Link to comment Share on other sites More sharing options...
John Hjorth Posted November 8, 2019 Share Posted November 8, 2019 SYTE 2019Q3 10-Q available now. Link to comment Share on other sites More sharing options...
Spekulatius Posted November 9, 2019 Share Posted November 9, 2019 SYTE 2019Q3 10-Q available now. Down to $160k in cash, excluding committed funds to Alluvial. They need some spare change to keep the lights on soon. This Mt Melrose saga means expensive lawyer bills. Link to comment Share on other sites More sharing options...
oddballstocks Posted November 9, 2019 Share Posted November 9, 2019 SYTE 2019Q3 10-Q available now. Quite the read! Wonder where they are going to get money to seed Focused Compounding? I'm still in awe at the ability to lose so much money on RE in a year. I mean how? Link to comment Share on other sites More sharing options...
ratiman Posted November 9, 2019 Share Posted November 9, 2019 Guys, I've found an expert on the Lexington real estate market. Maybe he can explain what went wrong: Link to comment Share on other sites More sharing options...
Guest roark33 Posted November 11, 2019 Share Posted November 11, 2019 At some point, they will have to start selling their interest in Alluvial fund to keep the lights on. Link to comment Share on other sites More sharing options...
writser Posted November 18, 2019 Share Posted November 18, 2019 . The fun continues. Link to comment Share on other sites More sharing options...
LowIQinvestor Posted November 18, 2019 Share Posted November 18, 2019 :o "$SYTE makes material misrepresentations in its Q3 10-Q. We notified them of these errors, but ENDI repeats them in its 11/14 Investor Presentation." Link to comment Share on other sites More sharing options...
LC Posted November 18, 2019 Share Posted November 18, 2019 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. Link to comment Share on other sites More sharing options...
InelegantInvestor Posted November 18, 2019 Share Posted November 18, 2019 All lies and jest, still a man hears what he wants to hear And disregards the rest, hmmmm Link to comment Share on other sites More sharing options...
NoCalledStrikes Posted November 20, 2019 Share Posted November 20, 2019 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 Link to comment Share on other sites More sharing options...
Moht Posted November 20, 2019 Share Posted November 20, 2019 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? Link to comment Share on other sites More sharing options...
Hielko Posted November 20, 2019 Share Posted November 20, 2019 Their latest 8K certainly seems to imply that they still have a 35% ownership stake. Link to comment Share on other sites More sharing options...
NoCalledStrikes Posted November 20, 2019 Share Posted November 20, 2019 FWIW, the version of Schedule A on twitter does not include a signature page. Link to comment Share on other sites More sharing options...
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