Shares of the somewhat mysterious, and underfollowed NL Industries (NL) are on the upswing again, following Wednesday's 24% jump on about 10x normal average volume. We last saw a move like that for NL back on September 18th, when it rose 25%. That puts NL up about 65% since mid-September, to a 2 ½ year high.
Reasons for the move are unclear at this point, other than the possibility that investors are realizing that shares are cheap. NL owns stakes in three publicly traded companies: Kronos Worldwide (KRO) (35.2 million shares valued at $515 million), CompX International (CIX) (NL owns 83% of the company, or 10.8 million shares valued at $153 million), and Valhi (VHI) (1.2 million shares valued at $24 million - VHI, in turn, owns 83% of NL). Upward movements in those stocks can and should drive NL, but recent movements in those stocks have been fairly tepid overall.
KRO shares, for instance, are up about 13% since just prior to NL's September move, while CIX is down 20%, and VHI is up 35%. Interestingly, however, and perhaps at the crux of the sum-of-the parts story, NL's ownership in the three companies is currently worth about $692 million, while its current market cap is just $295 million.
NL currently trades at just 1.05x tangible book value, and ended its latest quarter with $129 million or about $2.64 per share in cash. Since CIX is consolidated into NL's financials - given its 83% stake - part of that cash is from CIX. NL has no debt, and currently yields 2.6%.
NL currently garners no analyst coverage, which is one of the reasons that you've likely never heard of the company.
Another reason that those investors who are actually familiar with the name have been hands-off may have to do with the company history. Founded in 1891, NL was known as the National Lead Company for its first 80 years. Lead equals lawsuits, and NL has been a party to some over the years, however the cloud appeared to lift somewhat on that issue in July, 2019. Indeed, the company carries both environmental remediation and litigation settlement cost liabilities on its balance sheet. These totaled $154 million as of the latest quarter, down from $166 million at year-end 2019.
