Jonathan's questions to Compass Diversified Holdings (CODI) leadership • Q3 2024
Question
An analyst named Jonathan from TD Cowen asked how the company prioritizes capital allocation between share buybacks, potential acquisitions, and debt management, particularly in the current environment of strong performance and decreasing interest rates.
Answer
Executive Elias Sabo explained that capital allocation is fluid, with the primary strategic goal being acquisitions to reach $1 billion of EBITDA. However, he stressed that when the stock price is at a significant discount to intrinsic value, buybacks become a priority. He also highlighted the ongoing raising of preferred capital as a flexible funding source for investments in Lugano, buybacks, acquisitions, or general deleveraging, noting that divestitures are also a tool to fund the strategic plan.