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Compass Diversified Holdings Message Board

  • AE_Savant AE_Savant Apr 13, 2010 10:24 AM Flag

    Bought in today

    My buys at 14.80s got blown out so I settled for 14.90's.

    Selling shares to raise capital for investments is not unusual in the BDC space and is more positively looked upon than taking loans - which just eat into the business margin.

    I think like some recent 2ndary offerings, CODI will make short work of the recent drop and trade in the upper 15s in a week - all else being equal, of course.

    Was wise to schedule the announcement just a week or so before ex-date as the price should recover that much more quickly as shares are bought for dividend eligibility.


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    • I took profits in some other stocks I held to buy more CODI - with the dividend coming and the secondary offering soon to be "in the rear view mirror", this is a no-brainer buying opportunity...

    • Yes, welcome. Interesting to me, I have not been able to get the offering price. Using the number of company shares and the published "gross proceeds" to the company, it would seem that the shares sold at a price in the range of 14 to 14-1/2. Assumption that the gross proceeds include the commissions being paid to the underwriters.

      One viewpoint about this is that the market is saying it was a bargain and price at current 15.00 is then also also still a bargain. Kind of a twisted logic like the higher it goes the more it is worth and creates the compulsion to buy more. Hmmm... Seems this also works in reverse.

      Meanwhile, I have doubled my money on this over the last year or so and not ready to give up. In fact, that does not even count distributions.

      Reviewing balance sheet data. It would look like they could use the money to pay down the revolver for starters and both companies recently purchased, the small electronic assembly and the safe manufacturer, are immediately accretive to cash flow, so the offering does make sense.

      Nonetheless, BDC's are a suspicious breed and there is a need to be watchful. I so far regard this company as more of a small venture capital fund rather than a BDC. BDC's such as ALD, MCGC etc, have not really done anything for long term shareholders over the last few years. By the way, I hold this in an IRA and like the fact that they have no Unrelated Business Income, not that I would care the way they have been performing so far.

      If anyone actually has the share price to the secondary buyers, it would be interesting to know what that was, but perhaps we should be like management and not specifically want that information readily in the face. It is really immaterial because the stock price is what it is at the current market.

    • Buy some more.

      The dividend yield at 14.95 is 9.09%.

    • Welcome to CODI.

17.78+0.31(+1.77%)Oct 20 4:02 PMEDT