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Compass Diversified Holdings Message Board

  • mthiker2004 mthiker2004 Jun 3, 2009 4:56 PM Flag

    5m new share dilution

    Not too excited about the dilution and sure don't see the need with cash and credit available. I sure hope this means that CODI has an accretive acquisition or two in mind for this share offering. I still have faith in CODI management, but sure would like to have some more information. I guess the good news is this should give me a share price pullback to buy some more shares!

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    • yes, i'll also mention that in the 4Q they seemed to indicate to me that they are looking...i believe they used the words "actively"

      and now they're trying to raise money...after issuing guidance...

    • Can't raise the cash internally because previous acquisition of staffmark now suffering. Hemmoraging cash almost everywhere. questionable receivables and goodwill vastly over-valued. weak cash position can't be hidden any longer by bullying Bernie Massoudoff mgmt despite blind following keeping stock price up.

    • In at max position this am also. I missed the open, but with level II I was able to buy at 8.40 during one of the drops. I actually would like to see it stay in this area for a while so I can accumulate a boat load of shares via TD Ameri's auto DRIP. This is a very long term retirement hold for me.

    • F*CKING B*LLSH!T!!!
      I'm not impressed with a 15%+ drop first thing off on the open.
      Where is the recovery?
      I'm continually surprised at people's comments about "I have faith in the management".
      A lot of folks had faith with the crooks that ran ENRON.

      • 2 Replies to techrepjapan
      • Well, I have to admit there is always the possibility that CODI mgmt is just pulling the wool over my eyes! ;-) As much as I'd like to say otherwise, most of my analysis starts with assumption that reported figures are mostly honest. Personally, I'm no good at assessing mgmt so it plays little in my investment decisions.

        One reason CODI mgmt has such a 'faith following', though, is their history of navigating this recession. There was a time when they were monetizing businesses & holding onto the cash & investors were saying, 'What the hell? Put that cash to work!' This would have been in mgmt's best interests since they are compensated sort of on a percentage of assets under management.

        But they didn't...they held the cash & repaid debt at the expense of their own compensation. And for what? To hear from investors complaining about lack of acquisitions. Ha! There's nothing less fun than doing the correct thing for an ingrate at your OWN personal expense! ;-)

        Regarding flat out fraud, you are probably wise to be suspicious in all cases! However, I would submit that it would be harder to 'pull an Enron' at CODI. Enron was engaged in esoteric business that was difficult to observe and understand even when it was above boards. CODI's business portfolio is a little easier to cross check. It's pretty tough to fake your way out of a fire at AFM, for example. If you think results there are out of line you can easily check results against any number of competitors. Same with Staffmark...there are several public competitors that can be used to cross check facts & trends.

        Doesn't mean fraud is impossible. Just means that it would have to be executed very, very well.

        And finally, you can't restate a distribution. Cash sent to your account is cash in your account. Dividends require discipline & enforce honesty.

      • You are right, and perhaps those of us who have faith in management will be proven wrong, just as some were proven wrong at Enron. If so, it certainly won't be the first or last time that I have been wrong. When I lose faith in management, I plan an exit strategy and move on.

        Good luck to all.

    • I added to a max position at $8.31 this morning. I believe the company has good management and knows what its doing with debt, which is important...

    • Part of the move was most likely driven by the way their borrowing base is determined. Recall that the borrowing base is periodically reset based on the TTM ebitda of the subsids. CODI guided that borrowing base reduction would continue in 2009.

      If you pay attention to the remarks they gave regarding their individual subsidiaries during the last conference call, more than one are likely to see stable but materially reduced sales and operating earnings for the rest of 2009. So who knows where the borrowing base will wind up? It stands at 185MM as of 31mar, but it wouldn't surprise me to see it at or a little less than 150MM.

      During the call they mentioned one or possibly two acquisitions. And talked about a couple more that they walked away from. A couple of acquisitions could easily 80MM to 100MM invested. That would take a lot of cash of the balance sheet & potentially draw down half of their borrowing base.

      Probably, they just didn't want to get themselves into that spot. Small risk, huge impact. We've all seen what a train wreck it turns into if a given company is forced to sell illiquid biz-related assets into an unwilling market because they have to pay down a facility.

      • 2 Replies to Brennus01
      • I agree. I recall the limitation on borrowing base, determined by trailing EBITDA, and with the dismal first quarter, it likely eroded the borrowing base substantially.

        Although I am always dismayed by seeing secondaries at below NAV (at least when I'm long), I'm not as troubled in the case of CODI because I continue to have faith in management and CODI's future. I'll use this as an opportunity to try to increase my position at more attractive prices.

      • They are raising 50 million dollars and they pay dividends of about the same, per year. I would almost rather see them cut the dividend and reinvest that money into deals. The number of outstanding shares will be 15% more after the offering. Also, help me understand this. THEY buy companies at 3-4 times cash flow, but WE buy their stock at over 10 times cash flow. Isn't the stock over priced?

    • No doubt there will be an announcement of an acquisition soon. The statement they made about the divy was positive and there is no other reason for these additional share offering other than to fund an acquisition. I think its going to be a big one. Insider purchase of 15,000 shares on the 15th. This is all good news IMO. I would buy more, but CODI is already my largest position by far. Buckle up cause we're about to take off!... I hope :)

    • I agree.There is no apparant reason for this offering at this time unless the proceeds are needed to finance the acquisition of some companies.At what price will they sell the stock?

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