Hi this is my first post. I've enjoyed the enthusiasm on this list. Been lurking around here for the past week or so.
Rentech is losing $4 million a year.
It has no cash, or any kind of capitalization to fall back on.
Who knows how well RNTK's noncore businesses will fare. The company won't release details.
And in my opinion, Texaco won't come through with anything more than $4 million a year to RNTK. Not an equity stake, not a multimillion deal, just enough to keep it afloat. That is reassuring, but not euphoric.
SLHO is a RNTK look-alike, but much better financially and already has four deals (one announced today).
The only way to value RNTK is relative to SLH Corp SLHO. SLHO is trading at a market cap of $250 million, with cash, decent balance sheet, income from selling real-estate assets, and most importanltly four licensing or joint development deals. RNTK has none of these. That is why RNTK is trading at a $40 million market cap.
Before investing in Rentech, we should try to find a logical way in which it is to emulate SLHO. Does anyone see THIS happening anytime soon? I don't. It will happen, but eventually. This stock is not a sharp gainer; it is a longer term, but highly speculative, buy. This stock will make big money for people, if it is still around, in the middle of the next decade. Not now. It could go up to $10 by the end of next year, but I don't see it going higher than that until the technology is proven on a large scale. That is going to happen at the earliest in the year 2002 in Qatar with Sasol (SASOY).
While RNTK could trade back in the pennies in the short term, I don't believe RNTK will go bankrupt even if it fails to agree with TX on an agreement. O&G companies like to spread the risk around. $4 million a year is not a lot for multibillion $ companies. Beta or VHX? Let's hope RNTK turns out to be the right one.
I don't see RNTK generating more than $100 million in revenues until the year 2004 at the earliest. That's a long time to wait it out.
I've bough some to play with at $1 3/4. I would be a big buyer at under $1. This may happen when it turns out there is no announcement at the Oct 29 meeting.
The meeting will have a lot of good information about the economics of the business. As for an announcement, well that could or could not happen. I think public exposure to the "real" Wall Street is good in itself. There are maybe 5 analysts in the U.S. that probably have heard of this technolgy, and maybe 2 that understand it well. Wall Street will need a few days to digest this information. I don't think anyone will be calling their traders on cell phones in the bathroom or in coatcheck to buy RNTK. Let's hope I'm wrong though. I'm as much in favor as a price jump as the next guy.
Morgan Stanely, evidently seeing that Salomon made money underwriting a secondary with SLHO, is no doubt keeping an eye on RNTK. If RNTK reaches $5 and stays there, don't be surprised if there is a secondary offering and reverse stock split, like what similarly occured wtih SLHO earlier this year.
But RNTK will not reach $5 and stay at $5 unless it has deals and has better positioning for the future. Hopefully Texaco will help make this work. Has anyone called Texaco and asked them what they think of this?
Hope that wasn't too much rambling. Could resist. Had to pay the $75 smackers and join the frey, if that is how you spell it.
And I think I will close my eyes and buy a few shares of BCMD. They announced today that thay hired five people each with decades of experience. They wouldn't be hiring five experienced people if there was nothing to mine, right? Who knows, I know nothing about gold, but I have heard of Bre-X.
Schopenhauer |
