Rentech
Ticker: RTK

On Friday, November 21, 2008 we recommended going long Rentech (Ticker: RTK) at .50 cents. Over the weekend President Elect Obama reaffirmed his support for alternative energy that includes Rentech’s technology of converting biomass, natural gas, and coal into liquid fuels ranging from jet fuel to diesel gasoline.

Since our recommendation Rentech’s stock has jumped 20 percent to .60 and we continue to see significant upside from these current levels.

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For an Aggressive short-term trade we like Rentech at this current level. Rentech will release 2008 financial statements in the middle of December and rumor has it these numbers will be very positive.

As of Friday, November 21, 2008 Rentech’s stock price has been down significantly along with everyone else:
15 days down –43%
45 days down –62%
65 days down –79%

Keep in mind the last time Rentech hit .46 cents a share was October 27, 2008 and the stock proceeded to rally .43 cents to .87 cents. An 89 percent rally in 7 days. Since March of this year a 40 to 80 percent fluctuation in price has been common and we look for this type of volatility to continue. Rentech could easily exceed a $1.20 per share before year-end based on a number of reasons.

Rentech’s management is currently in a pickle. The stock has dropped significantly and the officers of the company need results ASAP if they want to be able to justify their year-end bonuses. In addition, all stock options are underwater including those belonging to the board of directors. As we have seen in the past, Rentech actively manages their stock price by issuing press reports before they release their latest financial numbers. Only to be followed with additional press releases over the next week or two, all in an attempt to move the stock price. One news release could easily move Rentech’s stock price .50-.60 cents like it has done so many times in the past. Two or more press releases could be very significant.

Press releases for Rentech's alternative energy segment could focus on:
* Technology licensing partnerships = Revenue increase
* Revenue and cost sharing relationships = Revenue increase and cost decrease
* New business strategies and directions = Shareholder assurance
* New product sales revenue generated by their Product Demonstration Unit -PDU- leading the way to future business opportunities as companies discover value in Rentech’s numerous gas to liquid products = Revenue increase and shareholder assurance
* Continued process improvements at their Product Demonstration Unit -PDU- facility in Commerce City, CO = Shareholder assurance

Rentech recently reaffirmed EBITDA guidance for their fertilizer plant and there’s a good chance Rentech will post a net income, something they haven’t done in years. Moving from a net loss to a net income would be a significant event and I think the street HAS NOT priced this into the stock. Last quarter Rentech completed their Product Demonstration Unit -PDU- that converts natural gas into various petroleum based products like jet fuel and diesel gasoline. The completion of the PDU means a reduction in expenses. Combine reduced expenses with record fertilizer sales revenue, coming from greater demand for corn that is used in the production of ethanol based fuel, could translate to a positive earnings per share. Management needs a homerun if they want to justify year-end bonuses; there’s an incentive for them to be aggressive. Shareholders are less likely to be pissed off when they hear about seven figure total compensation packages when the stock is trading at $3.15 versus .50 cents a share. Again, management has a strong incentive to move this stock and all stock options are currently underwater.

Press releases for Rentech's fertilizer segment could focus on:
* Record fertilizer sales revenue growth for fiscal year 2008
* Very favorable EBITDA guidance for 2009
* Favorable asset valuation discussion of their fertilizer plant

Rentech’s fertilizer plant, Rentech Energy Midwest Corporation -REMC- located in Dubuque Ill, is an extremely valuable asset that generates a tremendous amount of cash. The value of this plant alone creates a support at current levels helping to reduce downside risk. Rentech currently has 166 million shares outstanding and their fertilizer plant alone is valued between 120-210 million. A quick back of the envelope calculation, 122/166 and 210/166, suggests a stock price between .73 to $1.27.

As reported at Mutual Fund Facts About Individual Stocks -MFFAIS- the overall number of institutional owners has recently increased 20 percent from 81 to its current level of 97. This is very positive.
Institutions adding to an already existing position include:
Goldman Sachs added 825,221 shares
Vanguard Group added 5,662,885 shares
Barclays Global Investors added 1,918,971 shares
Credit Suisse added shares
Putnam added shares
Oppenheimer added shares
Northern Trust added shares
Bank of New York Mellon added shares
Bank of America added shares
Wells Fargo added shares

There’s a large short position, I believe 8-9 million shares and it’s probably a safe assumption that these sellers are in the money since Rentech is currently near 52-week lows. If Rentech’s stock price does move quickly, press releases and an overall market rally, we could see short sellers add to the buying as they lock in profits. This 1-2 combo could move Rentech’s stock price in excess of .40 cents a share.

Because of a crisis in confidence the major indices, DJIA and S&P 500, have seen a record setting retreat in the last 30 days, especially in the last 7, and the market is due for a 1,200-point rally. This alone could move Rentech’s stock price .30 cents a share.

What you have to past the whole thing? You couldn't just post a link?

TIM These are exsiting time's i'd like to know the long turm winners of the future... wishfull thinking, like have are fingers in more than one pye, what are the top 25 blue chips to watch for as such.?

long term winners? r u serious? i'm up 195% in the last year and u think i give a flying crap about anything longterm?

huh, actually read that Rentek post. Looks like if this spammer can actually do his job it could make for a nice short at his $1.20 pumping goal.

Rentech will be an excellent short at $1.20 even better at $1.60, always has been. From now until a week or so after earnings release management should start creating an excellent buzz. Look at the various news releases before and after the last earnings report.

You guys like crap penny stocks run by crap management with crap business models who play games with there share price and are more concerned about their own personal wealth than that of the shareholder? Then here you go. Successfully shorting Rentech is done after the significant pops. Play both sides of the trade.

RTK is too boring

Your links aren't working correctly.

http://timothysykes.com/2008/11/24/25-stocks-to...

The links are working just fine - you just have the wrong link.

lol

all smoke and mirrors? i guess you're right, if all my trades are the smoke and my detailed blog posts and instructinal DVDs and realtime alerts as to how to do them yourself are the mirrors