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Compass Diversified Holdings Message Board

  • hgaston31 hgaston31 Feb 23, 2012 9:44 AM Flag

    The problem with codi is

    The real reason, and you all know its true, that CODI is not higher is the risk of its ballance sheet. What I mean is the negative tanagable book value. The company was cobbled together with mostly goodwill and intagable assets. Not that its a problem for me because we do live in a facebook world.

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    • Seems to be consensus in regs that it's annual, cumulative within an account. The Q I could never get answered was if all IRAs (eg: Standard and Roth) had to be taken together within a tax ID number or if they stood alone

      If you're with Scottrade, they don't do anything for you on this one. You can cross the $1k threshold and probably never have an issue, at least until the IRS comes knocking for some other reason and then finds the UBTI issue. I'd resolved to take my chances given that you have to file for an EIN for the IRA and then take a withdrawl (w/penalty & withholding to add insult to injury) to pay the tax with the form 990.

    • It is my understanding that the number is an annual amount of all such income from all holdings in the tax deferred account or IRA.

    • Thank you for the reply. I have done a lot of goggling and binging, and the $1000 does seem to be an annual number. One old site said that it may be a myth, and searching the IRS site was fruitless.

    • I believe UBTI is annual across all holding. You can search the term.

    • There is no problem with CODI that an accretive acquisition wont cure.They need to replace the income they lost from the sale of Staffmark.The attraction of CODI is its distribution.If the free cash flow generated by CODI continues to enable the company to pay out a generous and growing distribution,the other financial metrics,such as price to book, will take on less importance.This is particularly true in this very low interest rate environment.

    • The P/B ratio is 9.49 for CODI so yes, it is high.

      But many growing companies have P/B ratios above 9.

      I am more concerned about CODI meeting earnings estimates this time around as their current P/E ratio is very high and is projected to have a PEG that is much lower and attractive - based on estimates of future earnings.

      It seems right now CODI enjoys the enviable position of being in a growth-divi space. It is valued and acts like a growth stock based on future valuation while offering a nice dividend to sit on it.

      Of course this also makes CODI more volatile and subject to wider price springs up and down in response to macro economic news, like other growth stocks.

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