Smart Money Cautiously Optimistic of Liquidity Services, Inc. (LQDT)

Between June 25 and October 30, the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Liquidity Services, Inc. (NASDAQ:LQDT) and how the stock was traded by hedge funds of late.

Liquidity Services, Inc. (NASDAQ:LQDT) has seen an increase in hedge fund sentiment in recent months. Liquidity Services, Inc. was in 17 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with Liquidity Services, Inc. positions at the end of the previous quarter. At the end of this article we will also compare Liquidity Services, Inc. to other stocks including Attunity Ltd (NASDAQ:ATTU), Atlas Financial Holdings Inc (NASDAQ:AFH), and Miller Industries, Inc. (NYSE:MLR) to get a better sense of its popularity.

In the eyes of most investors, hedge funds are assumed to be slow, outdated financial vehicles of the past. While there are more than 8,000 funds with their doors open today, we choose to focus on the bigwigs of this group, around 700 funds. These investment experts shepherd most of the hedge fund industry’s total asset base, and by tracking their unrivaled investments, Insider Monkey has determined various investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, let’s take a look at the key action surrounding Liquidity Services, Inc. (NASDAQ:LQDT).

How are hedge funds trading Liquidity Services, Inc. (NASDAQ:LQDT)?

Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 6% rise from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or had already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies holds the most valuable position in Liquidity Services, Inc. (NASDAQ:LQDT). Renaissance Technologies has a $5 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is Roumell Asset Management, led by Jim Roumell, holding a $2.7 million position; 5.4% of its 13F portfolio is allocated to the stock. Other professional investment firms that are bullish contain Paul Marshall and Ian Wace’s Marshall Wace LLP, D E Shaw, and Israel Englander’s Millennium Management.