The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Liquidity Services, Inc. (NASDAQ:LQDT).
Is LQDT a good stock to buy now? The smart money was betting on the stock. The number of bullish hedge fund bets advanced by 5 recently. Liquidity Services, Inc. (NASDAQ:LQDT) was in 14 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 17. Our calculations also showed that LQDT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s take a glance at the new hedge fund action regarding Liquidity Services, Inc. (NASDAQ:LQDT).
Do Hedge Funds Think LQDT Is A Good Stock To Buy Now?
At third quarter’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 56% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in LQDT over the last 21 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in Liquidity Services, Inc. (NASDAQ:LQDT), worth close to $19.9 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $2.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Paul Marshall and Ian Wace’s Marshall Wace LLP and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position AWH Capital allocated the biggest weight to Liquidity Services, Inc. (NASDAQ:LQDT), around 0.29% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to LQDT.
As industrywide interest jumped, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, established the most outsized position in Liquidity Services, Inc. (NASDAQ:LQDT). Millennium Management had $0.6 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $0.3 million position during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Austin Wiggins Hopper’s AWH Capital, and Thomas Bailard’s Bailard Inc.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Liquidity Services, Inc. (NASDAQ:LQDT) but similarly valued. We will take a look at Radiant Logistics, Inc. (NYSE:RLGT), Peoples Financial Services Corp. (NASDAQ:PFIS), Berry Corporation (NASDAQ:BRY), Veritone, Inc. (NASDAQ:VERI), Trilogy Metals Inc. (NYSE:TMQ), CalAmp Corp. (NASDAQ:CAMP), and Hanmi Financial Corp (NASDAQ:HAFC). This group of stocks’ market valuations match LQDT’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.7 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $27 million in LQDT’s case. Radiant Logistics, Inc. (NYSE:RLGT) is the most popular stock in this table. On the other hand Peoples Financial Services Corp. (NASDAQ:PFIS) is the least popular one with only 1 bullish hedge fund positions. Liquidity Services, Inc. (NASDAQ:LQDT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LQDT is 84.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on LQDT as the stock returned 99.7% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.