Buying Compass Diversified Holdings

What is Compass Diversified Holdings (CODI) and what do they do?

• Acquires controlling interests in profitable small to middle market businesses in attractive niche industries;
• Works with the management of those companies to pursue growth opportunities, provide strategic support and increase cash flow in the intermediate to long term;
• Provides investors an opportunity to participate in the ownership and growth of businesses that traditionally have been owned and managed by private equity firms, wealthy individuals or families or large corporations;
• Enables our shareholders to participate in the operating cash flows of our companies through the receipt of regular distributions; and
• Offers sellers of middle market businesses transaction financing certainty and an efficient and streamlined due diligence process.

Watch these following videos (apologize for video performance). The first from October 2008 then January 2009 with CEO Joseph Massoud:

What is interesting is the outlook and patience from Massoud. In October he saw companies “holding on” to assets and then in January, saw them coming onto the market. It is also important to note that through the crisis he did not jump in early rather preferring to wait until summer/fall. To me that says he is a very disciplined CEO who plan on making deals this year. Along this line, Compass recently raised $45 million in a stock offering to raise additional funds for investment opportunities.

Now $45 million may not sound like a lot of money, but when you consider they have over $300 million available through credit agreements AND the company has a current market cap of $277 million, the potential to make a deal that provides large and immediate earnings boosts is very real.

Perhaps this is why management has been consistently buying shares since late 2008 and into 2009.

Here is the most recent 10-Q. This is a good read as they break out each reporting segment:
Compass 10-Q

Disclosure (“none” means no position):Long CODI