After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Rentech, Inc. (NASDAQ:RTK).
Is Rentech, Inc. (NASDAQ:RTK) an exceptional investment now? The best stock pickers are getting less optimistic. The number of long hedge fund positions was trimmed by one in recent months. Rentech, Inc. (NASDAQ:RTK) was in 9 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with Rentech, Inc. (NASDAQ:RTK) positions at the end of the previous quarter. At the end of this article, we will also compare Rentech, Inc. (NASDAQ:RTK) to other stocks, including Computer Task Group, Inc. (NASDAQ:CTG), China Digital TV Holding Co., Ltd.(ADR) (NYSE:STV), and Premier Financial Bancorp, Inc. (NASDAQ:PFBI) to get a better sense of its popularity.
To most market participants, hedge funds are assumed to be worthless, old investment vehicles of yesteryear. While there are over 8000 funds trading today, Hedge fund experts at Insider Monkey look at the upper echelon of this club, approximately 700 funds. Most estimates calculate that this group of people direct the majority of all hedge funds’ total capital, and by tracking their best investments, Insider Monkey has identified many investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, let’s take a look at the fresh action surrounding Rentech, Inc. (NASDAQ:RTK).
What does the smart money think about Rentech, Inc. (NASDAQ:RTK)?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long in this stock, a drop of 10% from the previous quarter. Nevertheless, several funds held large stakes in Rentech heading into the fourth quarter.
According to publicly available hedge fund holdings data compiled by Insider Monkey, Glenn W. Welling’s Engaged Capital had the biggest position in Rentech, Inc. (NASDAQ:RTK), worth close to $5.8 million, corresponding to 3.3% of its total 13F portfolio. The second most bullish hedge fund manager is Trishield Capital Management, managed by Jeff Buick, which held a $3.2 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Other peers that hold long positions comprise Jim Simons’ Renaissance Technologies, Richard L. Haydon’s Yield Capital Partners (Y/Cap Management) and Israel Englander’s Millennium Management.
Because Rentech, Inc. (NASDAQ:RTK) has faced declining sentiment from hedge fund managers, logic holds that there lies a certain “tier” of hedge funds that elected to cut their full holdings heading into Q4. At the top of the heap, Alexander Mitchell’s Scopus Asset Management sold off the biggest investment of the “upper crust” of funds tracked by Insider Monkey, comprising about $0.8 million in stock, and Bernard Selz of Selz Capital was right behind this move, as the fund unloaded about $0.3 million worth of shares. These transactions are important to note, as aggregate hedge fund interest was cut by 1 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to Rentech, Inc. (NASDAQ:RTK). We will take a look at Computer Task Group, Inc. (NASDAQ:CTG), China Digital TV Holding Co., Ltd.(ADR) (NYSE:STV), Premier Financial Bancorp, Inc. (NASDAQ:PFBI), and Ooma Inc (NYSE:OOMA). This group of stocks’ market values match Rentech, Inc. (NASDAQ:RTK)’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. Computer Task Group, Inc. (NASDAQ:CTG) is the most popular stock in this table, but Rentech is not far behind. Moreover, there was a small change in sentiment from hedge funds, which could be a signal that the stock has not yet realized its full potential and may be worth a more complex analysis.