Tronox Ltd (NYSE: TROX) is Whitney Tilson’s fourth largest small-cap investment, sitting at the No. 25 spot in his 13F portfolio. The titanium dioxide producer has come slightly light on the revenue side in its last two quarterly financials, and shares have slipped 22.5% over the past six months. On top of this, the company is currently in a lawsuit with Anadarko Petroleum (APC). On the situation, The Motley Fool said it best: “If it [Tronox] wins, the materials maker can paint the future black with profits; a loss just might send it back into bankruptcy.” At 8 times forward earnings and a price-to-book below 1.0x, investors willing to bet on a Tronox victory have the potential to see immense value here, but it’s an obvious risk.
Last but certainly not least, Iconix Brand Group (NASDAQ: ICON) is Tilson’s fifth largest small-cap holding. As its name suggests, Iconix is a brand management company that has beaten analysts’ top and bottom line estimates in four of its past five quarters. As one can expect, this has led to solid appreciation over the past 3-month (28.2%), 6-month (32.8%), and 12-month (27.5%) periods, and shares still trade at relatively cheap earnings and free cash flow multiples. Iconix reports its Q4 FY2012 earnings in mid-February; ardent investors should be watching this date closely. The sell-side expects the company to generate a 38-cent EPS on the back of $82 million in revenues. There’s still room for this stock to run if Iconix can meet or beat these estimates.
Disclosure: I have no positions in any of the stocks mentioned in this article