There's always something interesting happening in small-cap land, and this past week or so has been no exception.
It appears as though busted IPO footwear name Allbirds (BIRD) , which I recently discussed, may have (heavy on the italics, in this market anything can happen) found a bottom. The shares, which have been decimated since the November 2021 IPO, and are down 64% year-to-date, are up 50% over the past three weeks.
Now, when your shares rise 50% in a few weeks, but are still down 64% YTD, you know you are working with a small share price. Last week's announcement by Nordstrom (JWN) during an earnings call that the retailer would begin offering BIRD products in some stores, and online sometime in the summer provided BIRD a modest boost.
Meanwhile, on Wednesday, SPAC RedBall Acquisition (RBAC) and Seat Geek terminated their merger, due to "unfavorable market conditions." I was initially interested in the possibility that RBAC, whose co-chairman is none other than Billy Beane (former MLB player, vice president of baseball operations for the Oakland A's, and the subject of the book and movie Moneyball) would take a stake in a baseball franchise.
The rumored merger with Boston Red Sox owner John Henry's Fenway Sports Group LLC never materialized. RBAC is still little else but a pile of cash -- $576 million as of the latest quarter-looking for something to buy into. I had no interest in the Seat Geek deal, but now that its over, I may take another look.
Meanwhile, sum-of-the parts story NL Industries (NL) continues its solid run, is trading at a four-year high and is up 23% over the past month. What's driving NL is the performance of Kronos Worldwide (KRO) of which NL owns 31% (worth $680 million without applying any discount).
NL's other stakes in publicly traded names include an 86% stake in CompX International (CIX) (worth $235 million) and 1.2 million shares of parent company Valhi (VHI) (worth $55 million). That's $970 million in stock for a company with a $448 million market cap. Now, the story is not that simple with NL. I don't expect that it to trade in lock step with the value of the shares it owns, but there is still a significant discount built in.
However, if you want to see movement in NL, keep an eye on what KRO does. KRO currently trades at 9.5x 2023 consensus estimates, and yields 3.88%. NL, which yields 3.2% in its own right, is a big beneficiary of KRO dividends, to the tune of $25.4 million in each of the past three fiscal years. NL paid its shareholders $11.7 million in 2021, up from $7.8 million in 2020.