investing – Page 8 – Dearest Leader

RTK Good but Not Good Enough

Rentech, Inc (NYSE: RTK) announced revenue of $24.7 million compared to $74.6 million for the prior year. This is a net income for the year of $3 million or $0.02/share. Not too bad, but the street was not amused. We entered a trade on this one at $1.54 at the end of November. Today we were stopped out at $1.59.

Rentech is a clean energy company that has been around for a very long time . They’re testing some interesting technology and seem to have a fairly repeatable process. We’re still undecided about getting back in. The debt-to-equity ratio is a little high but this still might be a good short term play with a tight sell stop. There is support near 1.44 and 1.38 which might prove to be a good entry point in the future. It’s also still above its 21 day SMA which is a good sign for now.

It isn't easy funding Green

Cleantech has been on a roll lately. Venture capital in the sector is up 46% to $965 Million. The US Department of Energy announced $3.4 Billion in grants for smart-grid programs. There are also $2.4 Billion in grants for plug-in electric-vehicle battery manufacturing. One would think that this is absolutely great for green.

A123 Systems and Detroit Edison managed to land $5 Million for battery research. There was quite a jump up in price from $14.97 all the way to $17.49 at its highest.

The Cleantech revolution has left some out in the cold. Evergreen Solar recently got beat down prior to earnings and is going to shut down their manufacturing facilities in Massachusetts. Guess where the new jobs will be located? China. Nevermind the fact that they received $58 million from the state taxpayers, and a portion of that was funded by the bail out–I mean Economic Stimulus Plan.

Green has a different ROI than IT. Some are predicting 15-18 years to get a return, while IT is geared to provide a return in 5-7 years. What we are seeing is a trend to invest in IT driven green initiatives such as the smart grid or to get into other green investments later in the life of the company. Solar manufacturing is suffering right now because of an over supply with low demand. If you’re starting a green energy company the safest place to find funding will be in software that contributes to the green economy.

Hot Topic is Not so Hot

Hot Topic is on fire and not in a good way. It’s burning like Timothy Geithner’s behind at a Congressional hearing. Earnings are down 21%, margins are shrinking, and Marilyn Manson has not had a hit album in years. Citi says to reduce your expectations and expect a target price of around $5, down from $7. Analysts are saying that the women’s clothing line will under sell through 1Q10. Their Twilight line of products didn’t create enough buzz to satisfy the analysts. That’s a very bad sign of things to come.

The stock plummeted from slightly below $7 all the way to $5.57 today. We arrived late to the game today and SHORTED this one at $5.64 and our T-Stop executed at $5.60. HOTT went up to about $5.80 from there and did its usual flat line (how goth). HOTT Feb 10 5 PUTs (UHONA) are at Ask $0.45 right now. If you believe the analysts this could be a good play for a bad Christmas earnings season. We’re going to stay away from HOTT until Q4 earnings and then SHORT them again.

Not a real big win today, but we had our shot at kicking the emo kid while he was down.

LDK Solar Up and Away

LDK Solar had a nice bump up 20% today. They have plans to sell a 15% ownership stake in its 15,000 metric ton (MT) annualized capacity polysilicon plant in Xinyu City. China. Jiangxi International Trust and Investment Co., Ltd. has agreed to purchase this interest for approximately RMB1.5 billion (equivalent to approximately US$219 million). The cash infusion was one factor that seemed to help their stock price for the day. There were several entry opportunities for a day trade as this only kept going up today. Instead of buying LONG I decided to sell several $7 PUT options hoping to enter on the lunch time pull back, but LDK kept going up. Options expire in 2 days so this play wasn’t the best, but there’s no downside in it which is what we’re looking for.