Compass Diversified Holdings

Where It Passes

Where It Falls Short

• Profitability0% pass✓ 4✗ 31▾

  No clean pass — all 16 investors flag at least one profitability criterion

  Positive EPS (10 years)10/21 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)-170.1%

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)12/21 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-12.4%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)0.6% (latest)

  ✗BuffettStable or rising over 10 years

  Free Cash Flow Proxy$-128.2M

  ✗BuffettPositive and growing

  Earnings Variance (10-yr CoV)2.41

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  ROE0.1%

  ✗Lynch> 15%

  EBIT / Enterprise Value4.5%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=4.5%, ROC=20.1%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets-7.45%

  ✗PiotroskiROA > 0

  ROA Change YoY-6.33% -> -7.45% (delta: -1.12%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=-0.22%, ROA=-7.45%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY42.0% -> 43.5%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue0.0%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity0.1%

  ✗Dreman> 12%

  Margin of SafetyP/B=2.0x

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity-22.2% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency12/19 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue6.0%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity0.1%

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend-4.1% (2023) -> 0.6% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 39.9% -> 43.5%, operating margin -4.1% -> 0.6%

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  Net income / market capitalization+0.08%; #3165/6340 (top 49.9%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Gross profit / total assets+28.73%; #1507/3702 (top 40.7%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+0.14%; #2897/5226 (top 55.4%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0473; #2512/5884 (top 42.7%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR-9.3% over 4 years

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years4/10 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Debt & Leverage0% pass✓ 2✗ 13▾

  No clean pass — all 12 investors flag at least one debt & leverage criterion

  LT Debt vs Net Current AssetsLT Debt $1.5B vs NCA $392.3M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 4.25, IC: 0.1x

  ✗BuffettD/E < 0.5 AND Interest Coverage > 5x

  Total Debt / Equity3.23

  ✗Lynch< 0.33

  Cash - Long-term Debt$-1.4B

  ✗LynchPositive preferred

  LT Debt / Total Assets Change0.00% -> 60.54%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities2.07

  ✓Dreman> 1.5✓SchlossCurrent ratio >= 1.50x (app cutoff)

  Total Debt / Shareholders' Equity3.23

  ✗Dreman< 0.8✗Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✗SchlossD/E < 1.00x

  Debt Levels3.23

  ✗MungerDebt/Equity < 0.5✗AkreDebt/Equity < 0.3

  Interest Coverage & Debt/EBITDAIC=0.1x, D/EBITDA=12.2x

  ✗MarksInterest Coverage > 3x; Debt/EBITDA < 4x

  Total Debt / Shareholders Equity3.23

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-3.2286; #3947/4210 (top 93.8%)

  ✗AsnessTop 30% of eligible cross-section
• Valuation0% pass✓ 2✗ 26▾

  No clean pass — all 13 investors flag at least one valuation criterion

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio2.0x

  ✗Graham<= 1.5x

  P/E x P/B

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value4.5%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=4.5%, ROC=20.1%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)N/A (negative CFPS)

  ✗Dreman< 8x

  Price / Book Value per Share2.0x

  ✗Dreman< 1.2x✗Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Valuation ReasonablenessOE Yield=-14.6%

  ✗MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF YieldFCF Yield=-5.8%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/B=2.0x

  ✓MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Price vs. Trailing Low242% of trailing low ($4.80)

  ✗Templeton<= 120% of trailing low (certified split-adjusted live window)

  Net income / market capitalization+0.08%; #3165/6340 (top 49.9%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive book equity / market capitalization+0.5522; #2685/6449 (top 41.6%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E

  ✗Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per ShareN/A (non-positive TBVPS)

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change-65.3%

  ✗SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+1.9896; #1092/5247 (top 20.8%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+14.17%; #446/4519 (top 9.9%)

  ✓OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+2.56%; #2351/6202 (top 37.9%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth13% pass✓ 3✗ 10▾

  7 of 8 flag CODI's growth — Graham, Lynch, Dreman +4 more

  EPS Growth (3-yr avg, 10-yr window)-170.1%

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  Inventory Growth vs Revenue GrowthInv: -29.3% vs Rev: 4.8%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction$0.66 (2006) -> $-3.59 (2025)

  ✗DremanPositive over recent years

  EPS CAGR8.0% CAGR over 17 years

  ✓Dreman> 5% annualized

  Positive Net Income Frequency12/19 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth4.8%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency2/5 years with positive EPS growth

  ✗AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendgross margin 39.9% -> 43.5%, operating margin -4.1% -> 0.6%

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR3.7%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR-9.3% over 4 years

  ✗Neff7%-20% annualized
• Verdicts13% pass✓ 2✗ 14▾

  Split decision: 13 FAIL · 2 PASS · 1 NEUTRAL

  Overall verdict

  ✗GrahamFAIL (2/9)✗BuffettFAIL (0/9)✗LynchFAIL (1/7)✗GreenblattRank #1262✓PiotroskiPASS (F-Score 5)✗DremanFAIL (2/11)✗MungerFAIL (0/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (3/5)✗AckmanFAIL (2/9)✗TempletonFAIL (2/8)✓SleepPASS (3/6)✗AsnessFAIL (Rank #1108/2370 (Top 46.8%))✗NeffFAIL (2/6)✗SchlossFAIL (1/7)•OshaughnessyNEUTRAL (Not ranked)
• Efficiency38% pass✓ 4✗ 7▾

  5 of 8 flag CODI's efficiency — Buffett, Greenblatt, Munger +2 more

  Current Ratio2.07

  ✓Graham>= 2.0

  ROIC (3-5 yr avg)0.7%

  ✗Buffett> 10%

  ROIC - WACC-9.3%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)20.1%

  ✗Greenblatt> 25%

  Current Ratio Change YoY0.40 -> 2.42

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.54x -> 0.62x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities2.07

  ✓Dreman> 1.5

  Return on Invested Capital4.1%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=-2.3%; FY2024: ROIC=-0.5%; FY2025: ROIC=0.4%

  ✗AkreLatest 3 consecutive FYs: ROIC > 15% in each

  Reinvestment Rate x ROICN/A (non-positive net income)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest 0.4%)

  ✗SleepROIC > 12% in a majority of years
• Cash Flow40% pass✓ 6✗ 6▾

  6 of 10 flag CODI's cash flow — Buffett, Lynch, Piotroski +3 more

  Free Cash Flow Proxy$-128.2M

  ✗BuffettPositive and growing

  FCF Positive and Growing$-51.1M

  ✗LynchPositive and growing

  Operating Cash Flow$-6.8M

  ✗PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=-0.22%, ROA=-7.45%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)N/A (negative CFPS)

  ✗Dreman< 8x

  P/E or FCF YieldFCF Yield=-5.8%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive13/17 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap14.2%

  ✓Ackman>= 4%

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency16/19 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$124.1M

  ✓Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization+14.17%; #446/4519 (top 9.9%)

  ✓OshaughnessyTop 10% of eligible cross-section