While the NL pennant race heats up and my bullpen-less Philadelphia Phillies cling to the 7th seed in the playoffs out of eight teams, there's another NL heating up, too. NL Industries (NL) , a somewhat odd, sum-of-the parts story, jumped 25% late in the normal trading day on Friday on about 10 times normal average volume.
NL is one of those stories that is difficult to explain. It is the former National Lead Corp., which changed its name in 1971 to NL Industries (for obvious reasons). The company owns stakes in three publicly traded companies: Kronos Worldwide (KRO) (35.2 million shares valued at $463 million), CompX International (CIX) (NL owns 83% of the company, or 10.8 million shares valued at $183 million), and Valhi (VHI) (1.2 million shares valued at $18 million). VHI, in turn, owns 83% of NL, which makes it all rather odd.
NL's total ownership of the three companies is valued at more than $660 million, while its current market cap is $224 million. The company ended its latest quarter with $134 million, or $2.75 per share, in cash. Because CompX is consolidated into NL's financials, part of that cash is from CIX. NL currently garners no analyst coverage, trades at 20x trailing earnings and yields 3.5%.
The reasons for Friday's move were not immediately apparent, as there was no news. However, CIX also had a big day, advancing 21% late in the day on more than 12x normal average volume. That was the reason for NL's big day. However, that begs the question of why CIX also took off. If you guessed that there was no news for CIX, either, you'd be correct. And it also has no analyst coverage.
The move by NL and CIX certainly made for a nice end to Friday's trading, and perhaps here on Monday we'll be able to figure out just what was the driving force. Interestingly, VHI (which, again, owns 83% of NL and consequently has a huge stake in CIX) was down slightly on Friday.