If I were forced to sell that could be true. On a longer term basis unless they decide to reduce the dividend or they go bankrupt, I could lock in a very nice return. In my model (I'm more of an investor than a trader) short term weakness does nothing except provide buying opportunities. As for the risk of bankruptcy/dividend reductions, I would be very interested in hearing about those types of projections. Again, this is my first real look at CODI but the model seems okay and the cash ratios seem very acceptable. I have a little more reading to do first but I expect I will be adding some of this to my portfolio
As we have stated in our previous call FOX is no longer included in our calculation of our cash flow following the successful completion of the company’s August 2013 IPO, in which CODI generated debt and equity proceeds totaling approximately $142.4 million. FOX’s results however will continue to be consolidated with the results of our other subsidiaries until our ownership percentage drops below controlling interest.
Compass Diversified's (CODI) CEO Alan Offenberg on Q1 2014 Results - Earnings Call Transcript
Sentiment: Strong Sell
I first starting purchasing CODI shares in April 2010. I decided to sell a few weeks ago because I was very concerned about the company and the stock.There is no way that I could hold on to this risky stock. Apparently, I sold the stock at the right time. I sold on May 1. I am absolutely certain that I made the right decision.
Sentiment: Strong Sell
You can get a high yield for a high risk. If the price of the stock drops (which is likely) then
your return on investment will be well below 8.5%.
Sentiment: Strong Sell
I have not dug into this yet but at first blush.......The two things I see are that FOX was spun off and no longer counts in the cash flow numbers. The only ding looks like a US military contract for camelback (low margin - high volume) that was completed last year. This reduced sales but not earnings. Now I realize they "missed earnings" but they actually only missed what the analysts projected and not what management projected. Given that they seem to be under control, I'm okay with a company that is "stagnant" at an 8.5% dividend yield. Especially when that same company has cash, borrowing capacity and no significant debt repayment requirements until 2017. But like I said, this is only a cursory look
Where are the additional expenses being absorbed? Is this a continuing concern? Are margins too low? Did they take any 1 time write downs? Does anyone on this board know this company well? I can't seem be able to research any of this information. I am not familiar enough with diversified companies to look into the financials deep enough.
Listen to yourself, SELL BECAUSE THE STOCK IS DOWN 5%....typical rookie.
I know lots of companies who own only 1 company... and make lots of money. So owning only 8 companies is a ridiculous reason to sell. Maybe selling is the correct "prediction" but you clearly have no idea why other than the fact that you are looking for a better buy in point.
Care to elaborate? Why will it drop further? I'm not doubting you, I just hate uneducated guesses. Do you have a substantial thought behind your prediction Nostradamus?
Operating income seemed okay compared to last year and EPS came in above estimates so the only thing I can see is cash flow -- (6000) vs 20000 last year. Seems like a large increase in inventory. Is anyone else seeing the same thing. I don't have many shares but am looking to increase if risk is negligible. Can anyone explain the beating this stock is taking after the earnings release. Also, looking at the increase in accounts payable last year it was 17,000 and this year (22). That's a huge difference and explains the difference between (6000) vs 20000. So, is this a one time phenomenon or an ongoing problem? Comments.
That the stock goes down so much off of great #s. Does everyone forget that they own 53% of Fox? If they liquidate this today, after fees that is about $265 million of cash. They could take the cash and buy back 16 million shares of stock tomorrow. Now they would have 32 million shares of stock and $60 million of cash flow to pay it (ex-FOX). They could raise the dividend from $1.44 to $1.85 and still have a payout rate at 90%, AND have growing cash flows with minimal cap-ex. Mrparkland, I hope you short pays off today so you can afford to pay me my $1.85 dividend after they sell Fox.
I have had a substantial (for me) position in CODI for about 4 years. Counting dividends (reinvested) and growth, CODI has returned 62% on my initial investment even after this recent drop. I think it is a good long-term investment, and now at an increasingly attractive price.
One of the 'better' companies you mentioned was T. I have owned CODI the last 2 years. Here is the comparison chart.http://finance.yahoo.com/echarts?s=T+Interactive#symbol=T;range=2y