I'm surprised no one has posted regarding the Staffmark IPO. I'm similarly surprised that the share price didn't get a bounce from this announcement. CODI has only sold two other businesses, giving CODI shareholders about $100m in cap gains from those two sales. As Staffmark is proportionately larger than the two entities previously sold, it is not unreasonable to guess that the cap gain will be similarly larger. I'm guessing that a quick comparison of multiples to MAN might give us an idea of what Staffmark might yield.
Of course the announcement isn't likely to help all the shorts that have poured into CODI in the past few weeks.
I'm not planning an exit at this time. I was just a little surprised that the IPO announcement seemed to fall on deaf ears.
And certainly no long will complain about today's bounce. On good volume, too. Someone with deep pockets apparently decided that it was a good value at these prices. Or someone learned that Massoud's issue is behind him and he's coming back soon ... The public always learns these events after the fact.
I know that CODI is not a BDC, but, generally given their business structure and then the BDC structure, what is the requirement for payout of capital gains to shareholders vs just regular income payout?
I don't know the answer to your question, but if you review the last 2-3 years of CC transcripts/calls, you will hear Joe talking about $100m in cap gains from the two prior sales, that have not been distributed to shareholders. (That was at least part of the justification for maintaining the distribution during the Great Crash, even though earnings didn't cover the distribution.)
The timing is interesting since Staffmark's industry is supposedly picking up. The whole staffing sector has been very strong of late. Is management expecting another downturn in employment, or do they have something better in mind for the money? More than likely, it is an expectation that Staffmark will get a higher valuation outside of CODI. CODI will get the cash from the IPO and whatever percentage that is kept (if any) will get a valuation boost.