Really more like an epiphany. [more]
First I have to preface this by saying I'm not any sort of qualified accountant or analyst. I'm just your average joe blow investor trying to make the best decisions I can for my own financial wellbeing. It was the Motley Fool that empowered me to take responsibility for my own money and financial decisions. I do sleep well at night.
I must admit, it is difficult for me to wrap my brain around the entirety of the complexities of this mini-conglomerate CODI
After listening to the conference call and reading through the latest 10-K, I do have some reservations. I wouldn't recommend any new money to be invested at this time, but I would and I am myself going to hold on to shares already owned.
The first and major reason to hold is the increase in the distribution to trust shareholders.
Second is, I like the diversity of the companies under their control. It's been a rough year for American Furniture Manufacturing and the outlook for 2011 doesn't look promising either. A reflection of our economy and housing market. StaffMark had some trouble, especially in CA, but they seem to be weathering the storm and I see a better 2011 for StaffMark.
The remainder of their companies performed well and I feel good about them with the exception of Tridien. Plenty depends on how some of the healthcare legislation works out.
The main thing to read in the 10-K is ITEM 1A — RISK FACTORS
The biggest thing on my mind right now is Joseph Massoud. His absence right now is something to keep a close eye on. He seems to be the lynchpin that is holding it all together. The current managing staff is more than qualified to run the ship, but let me show you part of what concerns me from ITEM 1A...
..."We may have difficulty severing ties with Mr. Massoud.
Under the management services agreement, the Company’s board of directors may, after due consultation with our Manager, at any time request that our Manager replace any individual seconded to the Company and our Manager will, as promptly as practicable, replace any such individual. However, because Mr. Massoud is the managing member of our Manager with a significant ownership interest therein, we may have difficulty completely severing ties with Mr. Massoud absent terminating the management services agreement and our relationship with our Manager.
If the management services agreement is terminated, our Manager, as holder of the Allocation Interests in the Company, has the right to cause the Company to purchase such Allocation Interests, which may materially adversely affect our liquidity and ability to grow.
If the management services agreement is terminated at any time other than as a result of our Manager’s resignation or if our Manager resigns on any date that is at least three years after the closing of our initial public offering, our Manager will have the right, but not the obligation, for one year from the date of termination or resignation, as the case may be, to cause the Company to purchase the Allocation Interests for the put price. If our Manager elects to cause the Company to purchase its Allocation Interests, we are obligated to do so and, until we have done so, our ability to conduct our business, including incurring debt, would be restricted and, accordingly, our liquidity and ability to grow may be adversely affected. "
So I wait to see how it plays out while Mr. Massoud has to deal with the SEC inquiries that have nothing to do with CODI, but may affect any decisions Mr. Massoud may make in regarding his relationship with CODI.
On a positive note, CODI's credit is looking good. They're well over or within their Covenant Ratio Requirements. They will experience difficulty if interest rates start to rise though.
As for the rest of their companies; Halo, Fox Shox, ERGObaby, Liberty Safes, and Advanced Circuits; I'm expecting big things.
Thanks for bearing with me through this novice analyzing. The main thing is all investing is risk and I'm willing to hold on to the risk of CODI for the time being.
blesto, holding CODI [more]
I don't know, maybe not, but this is what I'm gonna do. [more]
All for the Children's Miracle Network Hospitals and other designated local charities. [more]