I’ve been hesitant to publicly speak about Sitestar(SYTE). With a market cap of under $3MM and 50% held by directors, it’s too thinly traded to be relevant to most investors. I also have no intent or interest to move the stock price in the short term. I personally have a relatively large position, comprising between 1 and 2% of outstanding shares. By necessity and temperament, I am in this for the long term.
I first bought a number of years ago on my belief that the cash flow from the company’s declining ISP business was not being valued by the market. Later, as the company purchased real estate at what appeared to be discount prices, I purchased more. Several years ago, I began to become concerned with the company’s stalled progress. Management appeared to be doing nothing at all. Frank Erhartic, CEO and largest shareholder, was apparently unable to devote time
Jeff Moore and others became concerned as well and got involved. This culminated in a proxy fight that ended with a settlement last February adding Mr. Moore, Steven Kiel and Jeremy Gold, as well as an additional management appointee to the Board. What has happened since then? Accelerated decline in the internet business and no discernible activity whatsoever in the real estate business.
I watched patiently for several quarters, but with the release of the latest 10-Q on November 16, my patience has run out. I sent various messages to both management(Mr. Erhartic’s email initially bounced as his mailbox was full) and members of the Moore group with no meaningful response. I am left, therefore, with no choice, but to raise my concerns publicly and hope that will elicit a response. Over the years I have spoken with both Mr. Moore and Mr. Erhartic and my preference would be that they can work together to address the serious concerns of shareholders. I fear, however, that too much time has passed and the company may require change at the top in order to salvage shareholder value.
In the coming days, I will begin sharing my concerns that I shared with the company. I urge anyone interested to contact me and the company in order to help move this forward. Alternatively, if you disagree with any of my concerns, please reach out to me as well- I would love to discuss.
Disclosure: The author holds a significant stake in Sitestar
I appreciate you taking the time to shed light on this situation. I invested under the assumption that the real estate would be monetized (through rent or sales) at a rate that would effectively balance out the declining ISP division. That has, thus far, not happened, and we are left to wonder about what specific strategic actions are in motion. The online shareholder chat a couple of years ago was advertised as the first of many, which has not come to pass. Furthermore, assurances were made that the $900,615 note payable would be cleared, but this continues to be a question mark on the balance sheet. More transparency needed in my humble opinion.
I am also a long term shareholder of SYTE and certainly share your concerns and interests. As you stated, there is value here, the only question is how best to capture it
Unreal that his email bounced back. What kind of amateur shop is this – what emails has he missed that actually cost real value?
Same old story despite continuous reassurances that change is coming. Thank you for raising awareness. I too own shares (not as much as you do) and have run out of patience.
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