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Compass Diversified Holdings Message Board

  • misterstockwell misterstockwell Nov 12, 2010 4:10 PM Flag

    Why?

    Did they not say in recent calls that it was time to utilize their borrowing capacity and lever up a bit? Did they not say there was no need for secondaries with their huge borrowing capacity? I don't understand why they would need to sell stock and dilute current shareholders AGAIN. The stock was finally showing solid strength and WHAM, welcome to a 6% haircut. The only possible reason I can see for them to do a secondary at this time is a HUGE acquisition that requires cash and borrowings to get done. Otherwise, this is simply money out of shareholder pockets. Without an acquisition, it means there are more shares needing the $1.36 payout, which means the earnings have to go further, which means current shareholders will NOT be getting a bigger payout soon. However, if they make a nice big accretive acquisition, we all benefit. to be so bold as to do a secondary, I would hope they have that acquisition in their sights.

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    • This is an investment company, and they need capital to make investments. In the past, they have made good acquisitions with their capital, and I have no reason to doubt that this will happen this time too. But capital takes time to generate returns, and investment of capital always involves risk. Hence the price drop.

 
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