Why Shares of Rentech, Inc. Jumped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Rentech  jumped 13% today after getting an important strategic investment.

So what:Blackstone Group LP's credit arm called GSO Capital Partners LP is investing $100 million in convertible preferred stock and $50 million in a term loan. In return, Blackstone will get two seats on the board of directors.  

Now what: The money is going to be used to grow the wood fibre processing business, where management is hoping to find a new growth market. The good news is that the capital will allow expansion but it also comes with the dilution option if the business does grow profitably. All in all, it's a good move for Rentech and it'll be important to see how the wood fibre business progresses over the next few years because management is making a big bet on this market.

Boost your 2014 returns with The Motley Fool's top stock
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

The article Why Shares of Rentech, Inc. Jumped Today originally appeared on Fool.com.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story