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Hedge Funds Aren’t Crazy About Rentech Nitrogen Partners LP (RNF) Anymore

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Rentech Nitrogen Partners LP (NYSE:RNF) was in 5 hedge funds’ portfolio at the end of March. RNF shareholders have witnessed a decrease in support from the world’s most elite money managers of late. There were 7 hedge funds in our database with RNF holdings at the end of the previous quarter.


In the eyes of most market participants, hedge funds are assumed to be underperforming, old financial tools of the past. While there are more than 8000 funds in operation at the moment, we hone in on the leaders of this group, close to 450 funds. It is widely believed that this group has its hands on the majority of the hedge fund industry’s total asset base, and by paying attention to their highest performing equity investments, we have determined a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as beneficial, optimistic insider trading activity is another way to break down the stock market universe. Obviously, there are a variety of incentives for an executive to downsize shares of his or her company, but just one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the valuable potential of this strategy if “monkeys” know what to do (learn more here).

Consequently, it’s important to take a look at the recent action regarding Rentech Nitrogen Partners LP (NYSE:RNF).

What does the smart money think about Rentech Nitrogen Partners LP (NYSE:RNF)?

Heading into Q2, a total of 5 of the hedge funds we track held long positions in this stock, a change of -29% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes significantly.

When looking at the hedgies we track, Renaissance Technologies, managed by Jim Simons, holds the largest position in Rentech Nitrogen Partners LP (NYSE:RNF). Renaissance Technologies has a $8.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which held a $1.8 million call position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include Matthew Hulsizer’s PEAK6 Capital Management, Joseph A. Jolson’s Harvest Capital Strategies and Ken Griffin’s Citadel Investment Group.

Judging by the fact that Rentech Nitrogen Partners LP (NYSE:RNF) has faced declining sentiment from hedge fund managers, it’s easy to see that there was a specific group of hedgies who sold off their entire stakes at the end of the first quarter. At the top of the heap, John Bader’s Halcyon Asset Management dropped the largest position of all the hedgies we track, worth about $0.8 million in stock.. Andy Redleaf’s fund, Whitebox Advisors, also dumped its stock, about $0.5 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 2 funds at the end of the first quarter.

How are insiders trading Rentech Nitrogen Partners LP (NYSE:RNF)?

Insider purchases made by high-level executives is best served when the company in question has seen transactions within the past 180 days. Over the latest six-month time period, Rentech Nitrogen Partners LP (NYSE:RNF) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Rentech Nitrogen Partners LP (NYSE:RNF). These stocks are Terra Nitrogen Company, L.P. (NYSE:TNH), Scotts Miracle-Gro Co (NYSE:SMG), American Vanguard Corp. (NYSE:AVD), CVR Partners LP (NYSE:UAN), and Intrepid Potash, Inc. (NYSE:IPI). This group of stocks belong to the agricultural chemicals industry and their market caps resemble RNF’s market cap.

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