Thanks for the posting! It's always good to see what others are saying. Of course in the case of Moodys, aren't they the ones that rated all the subprime AAA?
But in this instance, I think Moodys is correct ... With economically sensitive businesses, cash flow will be below expectations for a while. Even if distributions were to drop to CAD, that would be about a 10% distribution yield, without touching the $100m in cap gains on the books.
The ratings agencies are a joke. The downgrade was from (very good liquidity profile) to good liquidity profile. It's free to register to see the whole release, which I'd recommend doing. They are expecting CODI to resume generating free cash flow by 2010.
Reuter's has a "Neutral" on CODI. It notes strong "Outperform" fundamentals.
I'm looking at CODI as a stable dividend play (it is incrementally increasing distributions). It recently retired a lot of debt, which only means they have sufficient cash for current plans and operations, plus they will doubtless continue raising the dividend: management owns 30% of the float!
Also, it seems to have strong positions in nice little companies they can help manage and finance. Not everybody (e.g., GE) can spin off businesses as easily as holding companies like this.
I think I've talked myself into taking a position in CODI. It has lagged the S&P's recovery so far, so it could have legs if the U.S. economy ever starts to recover in earnest.