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Compass Diversified (CODI) Completes Fox Factory Divesture
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Compass Diversified Holdings LLC (CODI - Free Report) recently divested its remaining controlling interests in recreational vehicle parts manufacturer, Fox Factory Holding Corp (FOXF - Free Report) . The strategic move will improve the financial flexibility of Compass Diversified and enable it to capitalize on any favorable acquisition opportunities in the future through higher liquidity.
In the latest transaction, Compass Diversified sold over 5.1 million shares of Fox Factory for net proceeds of $136.1 million. With this, Compass Diversified has sold its entire ownership stake in Fox Factory.
In Jan 2008, Compass Holdings acquired a controlling interest in Fox Factory for $80.9 million. Headquartered in Watsonville, CA, Fox Factory designs and manufactures high-end suspension products for mountain bikes, all terrain vehicles, snowmobiles and other off-road vehicles since its inception in 1974. It operates as a tier one supplier to leading action sport original equipment manufacturers, retailers and distributors.
Compass Diversified has periodically divested its ownership stake in Fox Factory to improve liquidity. In Mar 2016, it sold three million Fox Factory common shares for net proceeds of $47.7 million to reduce its ownership stake from approximately 41% to 33%. Subsequently, in Aug 2016, Compass Diversified sold 3.5 million shares for $63 million in net proceeds to further lower its ownership in Fox Factory to 23%. In Nov 2016, the company sold 3.5 million shares for $71.8 million to reduce its controlling stake in Fox Factory to 14%.
Including the latest transaction, Compass Diversified has realized approximately $525 million in proceeds from Fox Factory. This represents a healthy return on investment (ROI) for the company.
The divesture seems to be the call of the hour for this beleaguered Zacks Rank #5 (Strong Sell) stock to improve its balance sheet position. The company has been a laggard in the recent times, with an average loss of 4.6% against a gain of 8.2% in the last three months for the Zacks categorized Financial – Investment Funds industry.
Compass Diversified owns profitable middle market businesses that cater to the individual market niche segment. The company has controlling interests in eight diversified businesses and creates shareholder wealth by proactively managing these entities. In addition, the company often monetizes its controlling stake in these businesses to improve its return on investment.
Kayne Anderson is currently trading at a forward P/E of 6.87x.
Apollo Global has a long-term earnings growth expectation of 10% and has beaten estimates thrice in the trailing four quarters, the average positive earnings surprise being 58.1%.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
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Compass Diversified (CODI) Completes Fox Factory Divesture
Compass Diversified Holdings LLC (CODI - Free Report) recently divested its remaining controlling interests in recreational vehicle parts manufacturer, Fox Factory Holding Corp (FOXF - Free Report) . The strategic move will improve the financial flexibility of Compass Diversified and enable it to capitalize on any favorable acquisition opportunities in the future through higher liquidity.
In the latest transaction, Compass Diversified sold over 5.1 million shares of Fox Factory for net proceeds of $136.1 million. With this, Compass Diversified has sold its entire ownership stake in Fox Factory.
In Jan 2008, Compass Holdings acquired a controlling interest in Fox Factory for $80.9 million. Headquartered in Watsonville, CA, Fox Factory designs and manufactures high-end suspension products for mountain bikes, all terrain vehicles, snowmobiles and other off-road vehicles since its inception in 1974. It operates as a tier one supplier to leading action sport original equipment manufacturers, retailers and distributors.
Compass Diversified has periodically divested its ownership stake in Fox Factory to improve liquidity. In Mar 2016, it sold three million Fox Factory common shares for net proceeds of $47.7 million to reduce its ownership stake from approximately 41% to 33%. Subsequently, in Aug 2016, Compass Diversified sold 3.5 million shares for $63 million in net proceeds to further lower its ownership in Fox Factory to 23%. In Nov 2016, the company sold 3.5 million shares for $71.8 million to reduce its controlling stake in Fox Factory to 14%.
Including the latest transaction, Compass Diversified has realized approximately $525 million in proceeds from Fox Factory. This represents a healthy return on investment (ROI) for the company.
The divesture seems to be the call of the hour for this beleaguered Zacks Rank #5 (Strong Sell) stock to improve its balance sheet position. The company has been a laggard in the recent times, with an average loss of 4.6% against a gain of 8.2% in the last three months for the Zacks categorized Financial – Investment Funds industry.
Compass Diversified owns profitable middle market businesses that cater to the individual market niche segment. The company has controlling interests in eight diversified businesses and creates shareholder wealth by proactively managing these entities. In addition, the company often monetizes its controlling stake in these businesses to improve its return on investment.
A couple of better-ranked stocks in the industry include Kayne Anderson Energy Development Company and Apollo Global Management, LLC (APO - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Kayne Anderson is currently trading at a forward P/E of 6.87x.
Apollo Global has a long-term earnings growth expectation of 10% and has beaten estimates thrice in the trailing four quarters, the average positive earnings surprise being 58.1%.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>