Tuesday, March 9, 2010

U.S. Concrete (RMIX) and Grubb & Ellis (GBE) Giving Up Yesterday's Gains

U.S. Concrete (RMIX) down 15% (ten cents) today, giving back its irrational rally gains from yesterday. 

NASDAQ has sent them a Deficiency Notice regarding their penny stock status, although this is a non-issue that can be easily resolved using a reverse split. 

Still seeing tons of "RMIX bankruptcy" searches coming here. Tomorrow is the big day when they will announce earnings and probably a restructuring plan. 

Maybe they will file BK! Who knows? That's why I'm short tons of the common.

Grubb & Ellis (GBE) is only down slightly today but importantly it has lost its rally momentum. Here's a good comment from Seeking Alpha on my critique of human services companies
You are exactly right. Just like investment banks that went public, the partners of these formerly private firms realized they could have their cake and eat it too - i.e. cash out their equity value in a public offering and then keep the majority of the profits going forward through lucrative compensation packages. From a human capital position, GBE is in a worse capital position than JLL and CBRE, who have huge investment management portfolios that they can leverage to keep their brokers captive. GBE can only attract productive brokers by competing on splits - some of their top brokers can make 75%+ of their gross commissions, leaving a few pennies for the owners after overhead. In the best of times, they might generate an EBITDA margin in the mid-teens, but in bad times, they always lose money - it is an ugly business model.

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