Is Rentech, Inc. (RTK) Going to Burn These Hedge Funds?

Is Rentech, Inc. (NYSEAMEX:RTK) a good investment?

In the 21st century investor’s toolkit, there are many indicators shareholders can use to monitor publicly traded companies. A pair of the best are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top money managers can trounce the broader indices by a superb amount (see just how much).

Just as key, optimistic insider trading sentiment is a second way to analyze the financial markets. As the old adage goes: there are plenty of stimuli for a bullish insider to sell shares of his or her company, but only one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” understand what to do (learn more here).

Keeping this in mind, we’re going to discuss the recent info about Rentech, Inc. (NYSEAMEX:RTK).

What does the smart money think about Rentech, Inc. (NYSEAMEX:RTK)?

At Q2’s end, a total of 16 of the hedge funds we track were bullish in this stock, a change of 7% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly.

When using filings from the hedgies we track, Park West Asset Management, managed by Peter S. Park, holds the largest position in Rentech, Inc. (NYSEAMEX:RTK). Park West Asset Management has a $34.4 million position in the stock, comprising 4.1% of its 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $18.7 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedgies with similar optimism include John W. Rogers’s Ariel Investments, Bart Baum’s Ionic Capital Management and Christopher Pucillo’s Solus Alternative Asset Management.

As industrywide interest increased, certain bigger names were breaking ground themselves. Park West Asset Management, managed by Peter S. Park, created the most outsized position in Rentech, Inc. (NYSEAMEX:RTK). Park West Asset Management had 34.4 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $18.7 million investment in the stock during the quarter. The following funds were also among the new RTK investors: John W. Rogers’s Ariel Investments, Bart Baum’s Ionic Capital Management, and Christopher Pucillo’s Solus Alternative Asset Management.

How are insiders trading Rentech, Inc. (NYSEAMEX:RTK)?

Insider buying is most useful when the primary stock in question has experienced transactions within the past half-year. Over the latest six-month time period, Rentech, Inc. (NYSEAMEX:RTK) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators 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 are closest to RTK’s market cap.

Using the results demonstrated by the previously mentioned analyses, average investors should always track hedge fund and insider trading sentiment, and Rentech, Inc. (NYSEAMEX:RTK) applies perfectly to this mantra.

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