GEE Group Inc (JOB)

[littlefish]

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.