Valhi, Inc. (NYSE:VHI)

VHI owns 83% of NL (directly), 74.9% of KRO (directly and indirectly), 72.2% of CIX (indirectly), and 100% of WCS (directly). It also has small investments in sugar and titanium companies, approximately offset by corporate level debt.

The current market values are as follows.
83% of NL: $608M
Less 24.9% of KRO: -$665M
Less 72.2% of CIX: -$134M
83% of NL, excluding KRO and CIX stakes: -$191M

74.9% of KRO: $2B
72.2% of CIX: $134M
Total: $1.94B

Current VHI market cap: $6.73B

WCS had $7M in revenue in 2010, 144 employees, and 1 large landfill site. Although WCS is expanding operations at their landfill (including nuclear waste), I believe it is worth less than $500M. VHI appears significantly overpriced relative to its public subsidiaries, particularly NL. However NL (formerly National Lead) may not be an appropriate long position because of legal issues.

They are currently facing lead, asbestos, and environmental lawsuits brought by the EPA and others. Also, VHI subsidiary pension funds are underfunded.

Matt Taibbi's recent article in Rolling Stone accuses Valhi majority owner Harold Simmons and Texas governor Rick Perry of bribery and corruption. A key quote: "In a supremely ironic demonstration of how the modern system of payola capitalism works, Simmons is now being paid millions by taxpayers, via the federal Energy Department, to clean up his own mess, moving radioactive waste from his dump in Ohio to the one in Texas." Read more here: http://www.rollingstone.com/politics/news/rick-perry-the-best-little-whore-in-texas-20111026#ixzz1cIq7qWls

I think VHI is highly overpriced, probably because it is a momentum stock and has a small publicly traded float.

I may also reconsider my small position in Keystone Industries (a steel wire company trading at a deep value, also owned by Simmons through his holding company Contran) because Simmons really seems like a jerk.

Price is 96 p/e and 36 times book... over 10 times VHI 5 year avg. That alone is more than enough reason, but the main reason is overt price manipulation by the owner, Harold Simmons, that is unchecked by the SEC or any other gov't agency charged to oversee. Hmmmmmm.