(CODI) Compass Diversified Holdings - Ratings and Ratios

Compass Diversified Holdings (NYSE:CODI) is a unique holding company that acquires and builds businesses with strong cash flow and growth potential. Unlike traditional private equity firms, CODI operates more like a permanent capital vehicle, allowing it to hold investments for the long term—typically five to seven years—without the pressure of fund lifecycles. This structure enables them to take a patient, value-driven approach to building businesses.

Their investment strategy focuses on mid-sized companies in North America, with a sweet spot for businesses generating $10 million to $150 million in annual EBITDA. They target sectors like industrials, consumer goods, and business services—areas where they can leverage their operational expertise. CODI prefers controlling stakes, often taking a majority position, which gives them the ability to drive strategic decisions and consolidate industries where they see opportunity.

What sets CODI apart is their ability to invest through their balance sheet, giving them flexibility in deal structures. They’re not limited to traditional private equity models, which often rely on debt and short-term exits. Instead, they focus on building durable businesses that can generate consistent cash flow over time. This approach has allowed them to navigate various economic cycles and build a diversified portfolio of companies across multiple industries.

For investors, CODI offers exposure to a diversified portfolio of private-equity-like investments without the illiquidity of traditional private equity funds. Their shares trade on the NYSE, providing public market liquidity. The company has a market capitalization of approximately $1.55 billion, with a forward P/E ratio of around 9.49, which reflects investor expectations for steady earnings growth. Their price-to-book ratio of 1.71 suggests that investors are valuing the company slightly above its book value, likely due to the quality of their portfolio companies and their proven track record of value creation.

Founded in 2006 and headquartered in Westport, Connecticut, with an additional office in Costa Mesa, California, CODI has established itself as a disciplined and patient investor. Their focus on cash flow, operational improvement, and long-term value creation makes them an attractive option for investors seeking exposure to the private equity asset class through a publicly traded vehicle. You can learn more about their strategy and portfolio at https://www.compassdiversified.com.