It's definitely a tax loss selling candidate
It could be anyone or everyone selling given how many winners 2021 has produced. I may have missed the "Calendar Q4" bit. I did remember hearing Q4.
I did catch the 10 million + cash you reference suggesting they generated a lot of cash in the quarter. Cash generation should be impressive if they run operations well given the amount of depreciation/amortization they take. Growth is going to consume some of that. If a sequential increase of say 3 million topline is going to cost them more than 1.5 million in cash for expanded AR.
The main $10 mill SNI PPP loan I believe will be in Q1 (fiscal). There was a $1.3 mill loan forgiven for this Q IIRC (fiscal Q4). The rest sounded like will mostly be calendar Q4/fiscal Q1 but not sure.
I think there was a fund selling lately (guessing tax loss but who knows). I could see the pressure with the ask and hitting bids the last week or so. I think we are at a base period right now running around $38 mill/Q with a bit of wiggle room from Q to Q.
One thing that reassured me a bit is that even with the cash they should have ($10 mill+ and growing), the CEO brought up taking care of internal things first before acquiring and that they were focusing internally first when people were asking about acquisitions going off memory. They’ve never really had much low cost liquidity to fund/improve things internally so it makes sense they’d use at least a little cash to help beef up internally right now.
I bought more today too.
The nice thing here is if you assume they are getting back the 18 million or so they have left on the books for PPP, they will have 25 million in case meaning your enterprise value is 25 million.
Even if you don't get any incremental improvement from last quarter you are looking at this trading at about 2 times ev/ebitda, with an earnings run rate of about .06 annualized if this is the going forward norm.
Also I thought they said in that virtual investor conference that they were going to have the loans forgiven in Q4. Not clear if they meant fiscal or calendar Q4.
At some point those loans are going to flow through earnings and create 16 cents or so in EPS. I think it looks very cheap relative to other staffing companies if they can execute on operations, and there is a trading sweetener to boot the way things run lately for no reason. It has been over 2 not that long ago and institutions were paying .60
Plus they have already said the current quarter is great. Looks asymmetric to me, but the market says I'm missing something :)
Absolutely. The cost was actually 16% if you include the PIK feature. It makes zero sense to make an acquisition where borrowing costs are above (basicallly double) the EBITDA unless U think there are big synergies and the market entry will bring big windfalls- neither of which happened. I definitely would park that in their brain if on a CC or corresponding directly with them. It nearly wiped out the company.
But as I mentioned, the company was probably headed nowhere at the scale it was so I think they just Hail Maried it. I do still have enough confidence in Derek Dewan at this juncture because they never generated cash to a level to just fund basic operations so they brain farted on SNI trying to gamble when they had very little going on.
Now that they have financial health finally, I highly suspect they would not try any large acquisitions any time soon given the valuations won’t be there unless they have some miraculous connection or something (obviously very unlikely).
Do you wonder about their judgement when they bought SNI, a company with an 8.5% ebitda margin by borrowing money at 11%?
I mean wth? How in the world did they think that made sense? I’m guessing you have an answer :)
They did mention acquisitions on the virtual investor conference. Personally I would prefer they tread cautiously on acquisitions. They seem to want to acquire in hot areas like cyber security. I assume those are more likely to be expensive, and when the loans are forgiven, I’m a little worried they will have a strong urge to go shopping with that cash.
Please just run a strong operation, and be opportunistic when the right thing becomes available.
Still stable for now on the health front with the family member but lots of side effect issues, etc…
Bill rates in IT are up around mid single digits YOY, but other professional sectors are also seeing increases so that is a net positive as long as customers will stomach the increases. Thankfully, with all the inflation talk, many of the reporting professional staffing firms have noted customers have found it is a necessary cost to stomach if they want the talent. Remote working can alleviate some, but many companies still want employees close geographically in many cases. JOB does have a few virtual offices.
Jacksonville right now actually has the highest sequential IT job posting increase of anywhere in the country from calendar Q2 to Q3 although I think JOB is going to be a developing story with a few more Qs (kind of like HRTH a year ago when things weren’t obvious to the superficial glances). Jacksonville is HQ but they have several areas of presence geographically- mostly east and south with Fla and Texas being two and Ohio being a third.
I’m encouraged the CEO is talking more about organic positioning first before acquisitions. Seems like investors on every call keep bugging them about acquisitions when they nearly went BK from that. they need to grow their own engine first and now that they have enough of a base to feed them I think they will.
The high risk acquisitions of the past were because they were just too small to be able to do much (attract good talent, gain major customers, hire and keep better recruiters, etc). Now that they cleaned all that up, it is the first chance Derek really has since joining in 2015 to push the company forward on a longer term profitable scale.
All IMO only.
The savvy board has generally been elevator pitches since the beginning of time. Multi paragraph DD was always uncommon. Wade is toxic though. I agree with that and I muted him some time ago. I still get plenty of value from the usual suspects (hweb, researcher, Nelson, KiK, Larry and others)
I think there might be a MCC write up on JOB already, so I might say something there or shoutbox it.
I can tell you from experience that the IT industry is smoking hot which is good for them. I’m semi-retired now, but if I was in the market I could demand an astronomical salary, probably 40% more than I make now. I like staffing in general because I believe escalating salaries and higher inflation will continue to generate higher bill rates for staffing and more labor market churn for placement firms as people take advantage of the hot market.
It almost doesn’t matter who you are, if you aren’t at least contemplating finding a new job with a big raise you’re a fool.
Hope all is otherwise well.
Ah sorry was just thinking of mentioning symbol at microcapclub, not a full write up, to plant it in there for discussion. On second thought I’ll probably keep adding so never mind :).
The solicitation thing was from the 1990s so was being a bit tongue in cheek there showing I’d dug around a bit. He seems pretty steady Eddie, long term marriage and grown kids, lives in same area, house is nice but not real expensive (say maybe $2 mill, not some opulent $10+ mill place) etc….
PS I don’t post on savvy with wade around, seems like his powers have spread and infected a few others at times. Not too many active posters putting up heavy DD any more seems like. If I had more time I could post a ton but am constrained for now, good luck,
Thanks for the thoughts. I don’t really care about a solicitation issue TBH. I had a recollection that management was shaky, but I didn’t remember why. I need to be better about taking notes to refer back to.
I may do a quick write up on MCC, but I need to get a better grasp of this first. My knowledge is a bit shallow still. Really you should be on that site yourself. Your research is as good or better than anything there.
I have said this about other companies like RGP. Selling labor into a labor shortage seems like a good business to be in, but that’s a superficial macro statement not proof that any particular company is a good buy.
I don’t have much time to write up much but have dug pretty deep on them. CEO got picked up for solicitations undercover female cop years ago (never admitted guilt, paid small fine), got shot in the chest at a bank drive up window by a robber, etc… but he does seem like a highly competent person in professional staffing and has done a massive amount of acquisitions from Accustaff/Modis days. The problem they face is they were too small and needed critical mass so went dumb in acquiring businesses on highly toxic debt terms paying more in debt cost than EBITDA the businesses generated so BK was highly likely til all this restructuring IMO.
That debt burden forced the restructuring where convertible holders and shareholders got clobbered. But now they own those headline$100 mill acquisitions basically free and clear and do have the competency to do well now that they have their internal engine in a place where they can avoid toxic debt.
Not thrilled with them not buying in the open market but that might have to do with the numbers not out yet.
Microcap club should be all over this. SMID was the only write up I did for them but if I had time I’d make this my second write up. Could u do me the favor mentioning it over there? There are a couple small hedge fund guys over there that might find it interesting.
the problem with HRTH is their pension liability. This company is also in a hyper competitive market but they have a deep team (and not the pension liability- balance sheet is clean now). Given the acquisitions lower margin big players (Manpower buying ettain, Kelly buying Softworld for example) are making toward professional staffing, this is easily at least undervalued by half without growth but I think they’re going to grow in the coming couple years (even with them losing market share for years after the SNI acquisition). They now have a little cash to rev up their organic drivers and won’t drown in toxic debt terms anymore.
Congrats on HRTH btw
I did pick up a small JOB position. I may try to pick your brain on it if you don’t mind.
One broad question. What is your opinion of management?
Biggest position FWIW. Much like HRTH last year around this time, at the beginning of a major turnaround IMO.
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You like this thing at the moment?
Up or down by next year?? In at .60
No I am not...
Will you be making another video here?
Appears ready. Should fill the gap this week. Let’s get it Georgie!!
In at .6378 at the Open.
Love the Insider buys
Re: None 0
JOB And at GEE Group Inc (JOB), there was insider buying on Monday, by Senior Vice President, CFO Kim D. Thorpe who purchased 83,333 shares for a cost of $0.60 each, for a trade totaling $50,000 . This buy marks the first one filed by Thorpe in the past twelve months. GEE Group Inc is trading up about 1.9% on the day Tuesday. .58 now
JOB...576...in the P/M...Took a starter on the offering...on this Oversold Chart...
JACKSONVILLE, FL / ACCESSWIRE / April 14, 2021 / GEE Group Inc. (NYSE American:JOB)("GEE"or the "Company") a provider of professional staffing services and solutions, today announced the pricing of an underwritten public offering of 83,333,333 shares of its common stock at a public offering price of $0.60 per share, for gross proceeds of approximately $50,000,000, before deducting the underwriting discount and commissions and offering expenses payable by the Company. GEE has granted the underwriters a 45-day option to purchase up to an additional 12,499,999 shares of the Company's common stock to cover over-allotments, if any, at the public offering price, less the underwriting discount. All of the shares of common stock are being offered by the Company.
The Company intends to use the net proceeds of this offering, together with available cash to repay approximately $55,000,000 in aggregate outstanding indebtedness under its existing Revolving Credit, Term Loan and Security Agreement and the remainder, if any, for general corporate purposes, including working capital and potential acquisitions.
The offering is expected to close on April 19, 2021, subject to satisfaction of customary closing conditions.
JOB : looks like its back in Play
1.07 close, very thin asks to 1.29, 20% swing.
bounce from 1.02 lows. sweeeet JOB additions...