NL - NL Industries, Inc.

[siddharth18]

NL is a holding company that owns 30% of Kronos Worldwide (NYSE:KRO) and 87% CompX (NYSE: CIX).

 

The brief thesis is that NL sells for less than the market value of the Knoros Worldwide holdings alone. So CompX business comes for free. One could buy NL outright but then the stock would be exposed to fluctuations in the quoted price of the Kronos Worldwide stock.

 

I don't have much experience with holding companies - do they always seem to trade at a discount to NAV? Then there's no point in buying NL while shorting KRO either?

 

Note: 83% of the stock is owned by Harold Simmons so there's no possibility of activism.

 

Filings: http://www.nl-ind.com/home.nsf/nav?OpenPage&BaseTarget=content

 

Relevant article: http://seekingalpha.com/article/1098381-an-opportunity-in-nl-industries-reminiscent-of-buffett-s-sanborn-map-deal

[Stuart D]

This seems really cheap.

Since the last VIC write up the market cap has fallen from $450m to $170m. The cash balance has increased from $76m to $134m. They still own 30% of Kronos Worldwide (~$400m in value) and total liabilities are <$250m.

 

https://valueinvestorsclub.com/idea/NL_INDUSTRIES/6046555658

 

I'm looking for a reason to stop looking at this one....

[mjm]

acronym comes from former name, national lead.  always were fighting off lawyers on lead based paint lawsuits.  do not know if they have all been resolved, but they are like cockroaches-- there is never just one.

[writser]

If you like it you might also have a look at VHI, the holding company of the estate of Harold Simmons. One of his daughters just died and the company cancelled $667m in preferred shares. For nothing. One of the possible explanations is that this is being done for tax reasons because the kids want to untangle the whole mess. They own almost all of the common as well, so by cancelling the preferreds they do not give up much of their equity but they might receive a more favorable tax treatment (full discloure: I don't know in what way the tax treatment would be different - it's just a theory that is floating out there and it explains the strange move of giving away all your preferred equity for free). Interesting situation, massively undervalued IF THEY DO SO. Which is the big if, of course. Minority shareholders have been routinely ignored in the past.

 

Anyway, a decent primer is on SeekingAlpha: link. I own a few shares. The whole complex is very cheap on a NAV basis and interesting to analyse. Is it a good buy though? Not so sure about that.

 

But if something is going to happen I'd probably rather own VHI than one of the child companies.

[ugadawg_98]

Writser,

 

Isn’t VHI really a bet on Titanium Dioxide pricing? I get the book value discount, but isn’t the bulk of their value going to come from where TiO2 goes?