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Author: ferjen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19935  
Subject: Mini-Berkshire? Date: 5/3/2012 10:08 PM
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A friend of mine just made me aware of CODI, Compass Diversified Holdings. The business description from Yahoo says:

Compass Diversified Holdings is a public investment firm specializing in acquiring controlling stakes in small to middle market companies. The firm seeks to make middle market and buyout investments. It seeks to invest in industries such as manufacturing, distribution, consumer products, and business services. The firm prefers to invest in companies based in North America with a preferred transaction size between $60 million and $300 million in value, cash flows between $5 million and $40 million, with enterprise values between $50 million and $250 million, and a minimum EBITDA of $10 million. It seeks to acquire controlling ownership interests in its portfolio companies and can also make additional platform acquisitions. The firm makes investments through balance sheet. Compass Diversified Holdings was founded in 2005 and is based in Westport, Connecticut. Compass Diversified Holdings operates as a subsidiary of The Compass Group LLC.

Low P/E, Low PEG, 10% Dividend, 20% insider ownership...so far so good...
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Author: ferjen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10100 of 19935
Subject: Re: Mini-Berkshire? Date: 5/3/2012 10:28 PM
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Here's a good analysis type piece on CODI:

http://seekingalpha.com/article/318274-compass-diversified-a...

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Author: hockeypop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10101 of 19935
Subject: Re: Mini-Berkshire? Date: 5/3/2012 11:38 PM
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Everyone wants the next Berkshire. Perhaps it will do well in the future, but if this chart comes out it compares Compass with Markel, LUK, and Brk.b, and it has a higher price to Book Value than those conglomerates over its 5 years of existence.
http://caps.fool.com/Ticker/CODI/Chart.aspx?source=icasittab...

It does take some adjustment, but compare with MKL, LUK, Brk.B, frfhf.pk, pico for five years.

Hockeypop

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10102 of 19935
Subject: Re: Mini-Berkshire? Date: 5/4/2012 2:00 AM
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It does take some adjustment, but compare with MKL, LUK, Brk.B, frfhf.pk, pico for five years.

Hockeypop


I tossed the first three into a 5-year chart

http://finance.yahoo.com/q/bc?t=5y&s=CODI&l=on&z...

Seems to trend with the others to some degree. But CODI has a hefty dividend which could
make up for lagging BRK-B

http://finance.yahoo.com/q/bc?t=5y&s=CODI&l=on&z...

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10103 of 19935
Subject: Re: Mini-Berkshire? Date: 5/4/2012 6:49 AM
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Grr! I hate auto-replace. This was supposed to be the second chart

http://finance.yahoo.com/q/bc?t=1y&s=CODI&l=on&z...

The dividend would likely have made up for the delta between the two ideas.

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Author: wittgenstein Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10104 of 19935
Subject: Re: Mini-Berkshire? Date: 5/4/2012 7:17 AM
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I still think "Berkshire Pacific" (Jardine Strategic) would have my vote. Used Strategic because they have a lower dividend than the parent, which I think is appropriate because Buffett is not a lover of dividend income.

http://finance.yahoo.com/q/bc?s=CODI&t=2y&l=on&z...

jz

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Author: captainccs Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10105 of 19935
Subject: Re: Mini-Berkshire? Date: 5/4/2012 7:36 AM
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Seems to trend with the others to some degree. But CODI has a hefty dividend which could make up for lagging BRK-B

Hohum777


Yahoo! chart data is split and divided adjusted. If you add divis to CODI's chart, you are double counting them.

Denny Schlesinger

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Author: wittgenstein Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10106 of 19935
Subject: Re: Mini-Berkshire? Date: 5/4/2012 7:47 AM
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Important I think that no chart comparison measures break-up value, which is what any sane BRK investor has to be in search of.


jz

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Author: hockeypop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10107 of 19935
Subject: Re: Mini-Berkshire? Date: 5/4/2012 10:23 AM
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It's not exactly breakup, but Price to Book:

CODI: 1.36
http://finance.yahoo.com/q/ks?s=CODI+Key+Statistics

BRK.A: 1.22
http://finance.yahoo.com/q/ks?s=BRK-A+Key+Statistics

FRFHF.pk: 1.15
http://finance.yahoo.com/q/ks?s=FRFHF.PK+Key+Statistics

LUK: .99
http://finance.yahoo.com/q/ks?s=LUK+Key+Statistics

MKL: 1.25
http://finance.yahoo.com/q/ks?s=MKL+Key+Statistics

PICO: 1.05
http://finance.yahoo.com/q/ks?s=PICO+Key+Statistics

BAM: 1.20
http://finance.yahoo.com/q/ks?s=BAM+Key+Statistics

L: .87
http://finance.yahoo.com/q/ks?s=L+Key+Statistics

There is much more to review like past performance, what you like or don't like (like investment guru's, real estate, RIMM, hedges, old founders, oil & gas, etc), and the future.

But, for an uncertain future, there is a lot to like conservatively about each of these. Disclosure: my major investment among these is BRK-B and mostly invest in funds. Other opinions? Did I miss any?

Hockeypop

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Author: kelbon Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10108 of 19935
Subject: Re: Mini-Berkshire? Date: 5/4/2012 10:45 AM
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Low P/E, Low PEG, 10% Dividend, 20% insider ownership...so far so good...


I have become increasingly wary of companies that couple very large dividends and a hefty block of insider ownership. It is, of course, a judgement call as to how much is too much.

But… over the last six years CODI's free cash flow was $5.36 a share. Over the same period the company paid out $7.09 in dividends.

And… the share count has more than doubled over the same period.

Mini-Berkshire? I think Warren Buffett would be horrified.

kelbon

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Author: wittgenstein Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10109 of 19935
Subject: Re: Mini-Berkshire? Date: 5/4/2012 10:47 AM
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Hockey,

there is a lot to like conservatively about each of these

Agreed. (I said breakup, because I have a transaction orientation, having spent 40years in M&A. It was pretty rare to not realise more than book, even from BRK - on the very few transactions we did with them, but it's certainly a more conservative way to view it.)

Do you own Brookfield? I have positions in both BAM an BIP and think Bruce is among the smartest acquirors around.


jz

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Author: hockeypop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10110 of 19935
Subject: Re: Mini-Berkshire? Date: 5/4/2012 10:59 AM
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I have become increasingly wary of companies that couple very large dividends and a hefty block of insider ownership. It is, of course, a judgement call as to how much is too much.

But… over the last six years CODI's free cash flow was $5.36 a share. Over the same period the company paid out $7.09 in dividends.

And… the share count has more than doubled over the same period.

Mini-Berkshire? I think Warren Buffett would be horrified.

kelbon


While I agree with you, another reading of the article sets this as more of an investment finance company that pays out 90% of its proceeds, and keeps them for about 10 years. I get approached to invest in start-ups and a real problem is that it's very hard to see inside those companies that specialize in it.

This company "seems" to have greater transparency, and IS different from a Buffett conglomerate (and much riskier). However, I do think we'll be entering into a time of more business finance start-ups/growth-ups. This could result in greater stock counts.

Hockeypop

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Author: hockeypop Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10111 of 19935
Subject: Re: Mini-Berkshire? Date: 5/4/2012 11:32 AM
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Do you own Brookfield? I have positions in both BAM and BIP and think Bruce is among the smartest acquirors around.

No. I worked in Nebraska about 35 years ago and have followed BRK and Buffett ever since, even though I am largely an index investor. It's presently my largest holding. I need an alternative and these are the ones I follow for my 20% "sandbox."

There are a lot of good choices that I think will still get cheaper.

Part of the reason I watch BAM and BIP is that I think they will do well if/when we find inflation again. I need to watch them closer. It's a good website.


Hockeypop

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10114 of 19935
Subject: Re: Mini-Berkshire? Date: 5/4/2012 2:22 PM
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Yahoo! chart data is split and divided adjusted. If you add divis to CODI's chart, you are double counting them.

Denny Schlesinger


I hear what you are saying, but I have trouble visualizing this. Suppose one started an investment
of equal amounts in CODI and BRK-B. The price of the each entity gets adjusted for the dividend.
Okay, but where is that dividend reflected in the return for each entity? Take the simple
case where one reinvested the dividends of each holding (Oops! no dividend
for BRK-B ;) ) over a
10-year period. Wouldn't one end up with a lot more shares of CODI than one originally started,
whereas BRK-B would still be the original share count?

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Author: captainccs Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10115 of 19935
Subject: Re: Mini-Berkshire? Date: 5/4/2012 3:00 PM
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I hear what you are saying, but I have trouble visualizing this.

Hohum777


This applies only to the CAGR on Mike's charts and the comparative Yahoo! charts. Suppose you buy two stocks, ABC and XYZ, on the same day at $100 each. ABC pays a $10 dividend and XYZ does not. Suppose further that the stocks continue to trade at $100 a year after you bought them.

Yahoo! will show the price of ABC for the day you bought (one year ago) as $90 while XYZ will show at $100. Yahoo will show ABC growing by $10 and XYZ flat. If you now add 10% to ABC, it will be double the real yield.

Did I explain that or did I make a bigger muddle? To see this in action, look at this Yahoo! page, the historical prices for AXP. There is a "Close" column and an "Adj Close*" column. The charts show the "Adj Close*" column. There was a dividend payment on April 3. Go see that row. 20 cents were deducted from the April 2 price and all previous prices (Close) were adjust in proportion.

http://finance.yahoo.com/q/hp?s=AXP+Historical+Prices

Denny Schlesinger

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Author: MrTompkins Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10116 of 19935
Subject: Re: Mini-Berkshire? Date: 5/5/2012 10:45 AM
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[Sorry -- not to hijack the thread -- but]

I am 99% sure that chart data is only closing price and not adjusted price. Looking at CODI's price a year ago confirmed the delta.

It is important to me since I use Yahoo a fair amount and my excel spreadsheets are typically pulling adjusted pricing.

Matthew

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Author: captainccs Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10117 of 19935
Subject: Re: Mini-Berkshire? Date: 5/5/2012 11:06 AM
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I am 99% sure that chart data is only closing price and not adjusted price.

Matthew


Easy enough to check. The first price for AXP is:


Date Close Adj Close*
4/1/1977 36.75 0.95


http://finance.yahoo.com/q/hp?s=AXP&d=4&e=5&f=20...

Now look at the max price chart

http://finance.yahoo.com/q/bc?s=AXP&t=my&l=on&z=...

The starting price is well below $10, it looks like 3. Hmmm...

Let's apply split only to the 36.75


Split Price
36.75
4/3 27.5625
3/2 18.375
2/1 9.1875
3/1 3.0625


My hat off to you, Matthew!

Denny Schlesinger

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