“It’s absurd that a business that is turning profitable again with $80 million in revenue would be valued at a negative number.” - CFO of GEE Group
Asymmetric bets like this are the types of stocks I love the most. An illiquid stock left for dead with very strong downside protection. Management is aligned with shareholders and there is a strong cohort of activist owners involved to keep an eye on them.
If you get JOB, (what a catchy ticker) it will cost you $27mn, but you get $20mn in cash back, and own an operating business that can be sold for $50mn.
JOB is an Illinois corporation with headquarters in Jacksonville, FL. They staff roles for information technology, accounting, finance, office work, engineering and medical roles.
The company is slightly profitable. Cumulatively over the last four fiscal years, the company has generated something like $2–4mn of total Adjusted EBITDA. Corporate expenses run at $1.5mn/quarter.
There is value in these stranded corporate costs being taken out. An acquirer can come in, buy the company, take out the overhead and tack it on to their portfolio. The value unlocked for the enterprise by removing these corporate expenses and adding adjusted EBITDA (capitalized at a 12.5% discount rate) is worth $56mn.
In fact, Star Equity Holdings has made an offer along those lines. Star has a portfolio of staffing companies that they would like to add JOB to, and they made on offer at $0.30/share (on the condition that management’s change in control provisions are waived).
But many other staffing companies could acquire this business at a higher price. Hirequest comes to mind. They have the capital and appetite to buy JOB. With Roth as an advisor, they made an all-cash offer to acquire a major business segment of competitor Trueblue, and are now likely considering other targets. The Hirequest business model is to buy a staffing company, franchise out the locations and collect a 8% royalty stream on the income. Historically they have bought companies at 1.0–1.3x gross profit, which on $53mn of JOB gross profit is $53-69mn. Considering this triangulation on value, I’ll use $50mn for the operating business.
Notably, the current COO was involved in a company buyout by hirequest.
There are also other costs to consider in this transaction. Management has generous change-in-control (CIC) provisions that are a significant consideration in a transaction here. While this incentivizes management to sell the business, the large size of these packages eat into shareholder returns. Key management personnel with CIC provisions are CEO Derek Dewan, CFO Kim Thorpe, and COO Alex Stuckey.
Management CIC Costs:
CIC is base plus max bonus x3. Management owns 1-2mn in stock, so at a $0.5/share takeout, the value of their stock ownership dwarfs the value they get from any change in control.
Then the Gross-Up.
Each executive’s 280G “base amount” is his five-year average taxable comp. $355k for the others. An excess tax of 20% applies to everything over the 2.99x safe harbors (1.6mn / 1.06mn). Also the company must pay the excise tax plus all taxes on the gross-up itself.
Estimating these fees at a 37% federal rate:
Dewan: Parachute of 3.4mn, excess of 2.85mn, excise of $570k plus 37% on 3.4mn = $1.4mn
Stuckey and Thorpe: parachute of 2.2mn, excess of 1.8mn, excise of $360k plus 37% on 2.2mn = $0.9mn
All together this is $3.2mn.
SOTP Valuation
Activists see the value in this business and have been working hard to unlock it. As mentioned above, the latest activist is Star Equity Fund, LP the investment arm of Star Equity Holdings (NASDAQ: STRR), run by Jeff Eberwein, a serial small‑cap activist. The fund owns 6,285,065 shares (5.7%) of JOB. Star has initiated an activist campaign that has escalated throughout 2026:
Jan 21, 2026 – Star publicly proposed that GEE merge with them, arguing that it should not be a public company considering its high corporate costs and public company costs. And also asked that GEE stop making acquisitions given the poor record of past deals. The letter went unanswered. Access Newswire
Feb 13, 2026 - On their analyst call, Management was asked: If GEE were sold at a multiple comparable to BGSF’s sale of its professional division (EV/revenue), there would be about 150% upside to the stock, so why isn’t the company pursuing that? The answer was: “I would say that, that’s extremely low, and that would be not what we believe is fair value for our shares. And if there is an offer, we anticipate it’ll be much better than that.” He also said the multiple offers received were being evaluated and couldn’t be discussed.
Note: The BGSF sale was done at 0.59x revenue. Here that would be $53mn. A reasonable price.
Mar 3, 2026 – GEE announces they are running a sale process - engaging ROTH Capital as a strategic advisor. On the Aug 13 call, Dewan said the process reviewed “multiple expressions of interest” for an M&A transaction.
March 6, 2026 - Director William Isaac, resigned. The company’s 8-K framed it as retirement. He’s in his early 80s, a director since 2015
Apr 29, 2026 – Star attacked the April 2023 employment agreements for Dewan, Thorpe and Stuckey, signed within a month of a prior 13D filing. Per Star, a change in control triggers a large lump sum cash severance and the CIC definition trips at just 20% ownership or a 20% asset sale. They estimated that a CIC per the 2023 agreements would trigger payments of at least $8 million to the three executives.
May 2026, Star sends IOI. Made offer at $0.30/share on the condition that Dewan, Thorpe and Stuckey forgo the severance triggered by a change in control.
June 1, 2026 – Star nominated Rick Coleman to the board and filed a proposal to remove two directors.
June 1, 2026- Director Darla Moore, resigned. No reason given.
Aug 13, 2026 - Management remains open to a sale. When asked if management would consider a sale considering the company is below book value. Dewar answers “yes, we’ve discussed that.” Also commits to not making acquisitions while in the strategic review, and defends past acquisitions.
Aug 21, 2026 – Cooperation agreement. GEE agreed to declassify the board (majority declassified at the 2027 meeting, fully by 2028). Star withdrew its nominee and removal proposal, accepted a standstill (no proxy solicitation, 7.5% ownership cap, vote with the board), but kept the right to vote freely on “Extraordinary Transactions.” The standstill is short: it expires when the nomination window for the 2027 meeting opens, so Star can be back in roughly nine months with a declassified board that’s easier to replace.
Next major events:
Sept 24, 2026 - Say-on-pay (Proposal 5). If this fails, or is even 60% or less, there will be pressure on the management team to compromise their CIC agreements in negotiations of a sale.
Sept 24, 2026 - Votes on 1-30 reverse stock split. And director elections: Director elections. James and Sandberg, remain uncontested (Star withdrew)
Some time in May 2027 the standstill agreement dies.
Fall 2027 - annual meeting, majority of board declassified. If the board is replaced here, it triggers the CIC provision, so funds would be paying this cost in order to clear the way to a deal.
In summary, this is a business with a large cash balance, strong downside protection, and significant upside should the current strategic review produce a sale. Even paying out the significant CIC provisions in a sale, the return on investment is significant. We have management aligned on getting to a sale, and significant activist ownership (35%) adding pressure for them to do so, perhaps at a reasonably reduced compensation amount. A newly declassified board and coming pressure on pay are all favorable for shareholders. I except a sale within a year.
Disclaimer: The information provided in this publication is for informational and educational purposes only and should not be construed as investment advice, financial advice, or a recommendation to buy or sell any securities. I am not a licensed financial advisor, and the views expressed are solely my own. Any investment decisions you make are at your own risk. Always do your own due diligence or consult a licensed financial advisor before making any financial decisions. Past performance is not indicative of future results.
I do hold a position in this security.
However, I would deduct goodwill. Without goodwill, price / tangible book is around 1, which is not so cheap. It is also not a net-net according to Graham. Further, operating cash flow, while TTM-positive, has been inconsistent quarter to quarter. Still, I like the setup - net cash plus an active catalyst is a decent combination, even without a classic value discount.
I am hearing mixed things on ROTH Capital. They have a low hit rate on their sales processes. On the other hand, there are a lot of buyers that see value here. I feel like anyone could sell this even ROTH.