Miles Lewis

So we really like a company called Compass Diversified Holdings or CODI. The ticker is C-O-D-I. They’re basically a publicly traded private equity firm with a very unique and different model versus public private equity peers, and that’s because they have the permanent capital at the holding company level. And that enables them to take a much longer-term investment horizon with the companies that they invest in. They can have a growth mindset and they can nurture those companies for five to 10 years, sometimes even longer. And that’s attractive to companies that are selling to Compass Diversified because they in turn get an opportunity to take a long-term mindset.

And so we love the management team here and how they invest, and they focus on niche consumer industrial businesses. The other reason that we like it for the coming year is that they just recently converted to a C-Corp. And so we think that that dramatically increases the investor base for them, and with that you’ll see multiple expansion.

Steven McBoyle

There are a lot of disruptive forces at play in the marketplace today. Mortality tables of moats have shortened or, as I like to say, success duration has shortened. And so this idea of company's adaptability to their market forces, both by way of operational, cultural capital allocation is becoming increasingly important.

You can use an example like MKS Instruments. From a capital allocation perspective, they have for the first time transitioned from being a pure play wafer fab equipment manufacturer into material sciences. And they’ve done so because they have specifically had to address an ever-increasing industry shift towards advanced packaging within semiconductor wafer processing, and that’s because of the limitation of Moore’s law. But that’s a great example of adaptability to market forces that are occurring.

Another example would be Kennedy Wilson, who is an alternative real estate manager that has identified the fact that there is this global desire for yield and specifically within alternative investments in real estate. And they have from a position of strength in that 30 years history of property ownership and development shifted from a principal capacity more so into an agency capacity, which obviously is highly accretive to the business model. And they’ve done so in a very short order and have begun to build a very powerful investment management business.

Jim Stoeffel

JOANN stores has all of the aspects we love. We really love the story. We’ve got the predominant supplier of yarn and sewing in a retail environment, which provides actually interestingly enough a lot of protection from internet competition because people who knit, which I don’t but I’ve asked my friends, they like to see the yarn, feel it, see the color, understand it’s important to them. And they’ve taken that strategy and expanded into arts and crafts, which is also a very nice business. I’m sure you all know Hobby Lobby and Michaels stores, and so it’s a nice ancillary business to them and they keep expanding into the arts and crafts, so there’s a natural growth story there.

I think it fits everything we do, broken IPO, the balance sheet is actually clean, which we like, and we have the clear catalyst that once some of the headwinds go away, they’ll return to a growth type of opportunity. So it's the perfect thing for us.

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