Hedge Funds Are Dumping Rentech, Inc. (RTK)

Is Rentech, Inc. (NYSEAMEX:RTK) ready to rally soon? Money managers are taking a pessimistic view. The number of long hedge fund bets decreased by 7 lately.

To the average investor, there are plenty of metrics market participants can use to track the equity markets. Two of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top money managers can outperform the S&P 500 by a healthy amount (see just how much).

Equally as key, positive insider trading activity is another way to break down the stock market universe. There are plenty of incentives for an executive to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this tactic if shareholders understand what to do (learn more here).

With all of this in mind, let’s take a glance at the latest action surrounding Rentech, Inc. (NYSEAMEX:RTK).

How have hedgies been trading Rentech, Inc. (NYSEAMEX:RTK)?

At the end of the first quarter, a total of 15 of the hedge funds we track held long positions in this stock, a change of -32% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably.

When looking at the hedgies we track, Peter S. Park’s Park West Asset Management had the most valuable position in Rentech, Inc. (NYSEAMEX:RTK), worth close to $23.6 million, accounting for 2.7% of its total 13F portfolio. On Park West Asset Management’s heels is Renaissance Technologies, managed by Jim Simons, which held a $21.1 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedgies that are bullish include Bart Baum’s Ionic Capital Management, John W. Rogers’s Ariel Investments and Christopher Pucillo’s Solus Alternative Asset Management.

Due to the fact that Rentech, Inc. (NYSEAMEX:RTK) has experienced a declination in interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few fund managers that slashed their full holdings in Q1. Intriguingly, Neil Chriss’s Hutchin Hill Capital cut the largest investment of all the hedgies we monitor, comprising close to $7.9 million in stock., and Brett Hendrickson of Nokomis Capital was right behind this move, as the fund cut about $5.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 7 funds in Q1.

What do corporate executives and insiders think about Rentech, Inc. (NYSEAMEX:RTK)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has experienced transactions within the past half-year. Over the latest 180-day time frame, Rentech, Inc. (NYSEAMEX:RTK) has seen zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Rentech, Inc. (NYSEAMEX:RTK). These stocks are A. Schulman Inc (NASDAQ:SHLM), LSB Industries, Inc. (NYSE:LXU), Landec Corporation (NASDAQ:LNDC), Solazyme Inc (NASDAQ:SZYM), and FutureFuel Corp. (NYSE:FF). This group of stocks are in the chemicals – major diversified industry and their market caps match RTK’s market cap.

With the returns shown by the aforementioned research, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Rentech, Inc. (NYSEAMEX:RTK) applies perfectly to this mantra.

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