CODI equity has declined by about 20% over the last 4 years, what is wrong
I have been looking at the web site disclosure information on the quarterly and annual reports. The assets have been declining, the debts have been increasing and the equity of investors has been declining.
Could investors tell me why this company has had such a rough go of it over the last 3-4 years where most companies have been recovering quite nicely.
I do not expect it to perform like the car companies, the oil companies over the last three years, but to be going downhill each year. What is the real story here.
I realize the dividend is somewhat enticing and that has been holding the share price up and in fact moved the share price up over the last year but the basic fundamentals just do not look very good.
The company basically is showing losses from continuing operations every year if you eliminate special adjustments to the accounting records.
What do the long time investors think and what can you tell me. Normally after doing my due diligence if I do not see improving asset growth, debt declining rather than rising, equity not going up but declining I just pass on the investment and move on. Am I missing something?
CODI is not a fast growing investment company. They purchase companies and manage them. They sell
companies that they no longer want to keep. The dividend is what keeps investors interested in this stock. I don't see this as a high growth company or high growth stock.
It's a good question. But looking at the most recent form 10K annual report (March 2013) I'm struck by a couple of things.
Under Risk Factors, they make a point that their businesses generate earnings and cash flow, which allow them to give CODI interest and principal payments to CODI. "We will rely entirely on receipts from our businesses to make distributions to our shareholders. The Trust’s sole asset is its interest in the Company, which holds controlling interests in our businesses. Therefore, we are dependent upon the ability of our businesses to generate earnings and cash flow and distribute them to us in the form of interest and principal payments on indebtedness and, from time to time, dividends on equity to enable us, first, to satisfy our financial obligations and, second to make distributions to our shareholders. "
Cash Avail for Distribution (CAD) - see page 128. It seems to be working.
Compass Diversified Holdings is currently rated as having Average Accounting & Governance Risk (AGR®), receiving an AGR Score of 39 percentile among the approximately 8,000 companies in North America rated by GMI, indicating higher accounting and governance risk than -- of the other companies.
High Divy higher risk.I've owned CODI about three years,and yes the divy is enticing.
thanks for the comment but it did not really address my issues on declining assets, increasing debt and shrinking equity, none of which are good metrics. So beside the high pay out I only see declining strength of the business.