Corporate Insiders Are Backing Up the Truck on Two Battered Healthcare-related Companies and One Private Equity Firm

Let’s now refocus our attention on the insider buying activity witnessed at Compass Diversified Holdings (NYSE:CODI), which is a Delaware statutory trust that serves as the sole owner of 100% of the trust interests of Compass Group Diversified Holdings LLC. The two entities were formed to acquire and manage a collection of small and middle-market businesses. Elias J. Sabo, Assistant Secretary of Compass Group Diversified Holdings LLC, purchased 38,212 shares on Monday and 11,788 shares on Tuesday at prices that ranged from $14.62 to $14.80 per share, lifting his overall holding to 455,549 shares. Each share represents one undivided beneficial interest in Compass Diversified Holdings property and corresponds to one trust interest of the limited liability company.

The company primarily focuses on acquiring and managing small and middle market businesses that operate in industries with long-term macroeconomic growth opportunities, have positive and steady cash flow streams, do not experience significant threats of technical or competitive obsolescence, and have strong management teams. The company’s net sales for 2015, net of FOX (Compass owns roughly 41% of outstanding shares of a designer and manufacturer of high-performance ride dynamics products, called Fox Factory Holding Corp (NASDAQ:FOXF); the ownership is accounted for as an equity method investment), grew $251.5 million or 45.4% year-on-year to $805.38 million. The increase was mainly driven by the acquisitions of Clean Earth and Sterno Products in August and October 2014, the acquisition of Manitoba Harvest in July 2015, as well as higher sales from other companies. Compass recently reduced its ownership in Fox to 33% from 41%, after selling 2.50 million shares through a secondary public offering and selling 500,000 shares to the company itself at a price of $15.90 per unit. Shares of Compass Diversified are down 8% year-to-date and trade at a forward P/E multiple of 10.3, which is below the ratio of 17.1 for the companies included in the S&P 500 benchmark. Jim Simons’ Renaissance Technologies acquired a new stake of 12,331 shares in Compass Diversified Holdings (NYSE:CODI) during the December quarter.