It has been a little while since I've updated my thoughts on Compass Diversified Holdings (CODI), but, in the meantime, not all that much has changed. Distributable cash continues to grow at a mid-single-digit rate, the actual distribution has been steady, and management continues to prioritize consumer businesses.
On the negative side, the company continues to hang on to some lackluster, lagging enterprises that aren't really living up to their potential, but senior management has at least shown a willingness to shake up company-level management at some of the laggards.
CODI has generated an annualized total return of around 18% over the last three years, and that's not bad. Moreover, the corporate structure (a partnership) can provide some tax advantages for investors, though creating challenges and complications for others. I would call the valuation "okay" today, but I do have some near-term concerns about deal multiples limiting management's ability to effectively deploy and recycle capital.
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