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Why Liquidity Services, Inc. Rose 11% on Tuesday

By Anders Bylund - Mar 29, 2016 at 4:25PM

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The surplus and salvage assets wholesaler took a respectable leap upward based on very little real news.

Having trouble moving a few unsold dozen cars off the lot? Liquidity Services wants to help. Photo: Liquidity Services.

What: Shares of Liquidity Services (LQDT 4.39%) closed 11% higher on Tuesday, having spent the entire day doing a slow climb on very low trading volume.

So what: Sure, Liquidity Services had some news to share. In an SEC filing after the closing bell on Monday night, the company said that it had closed out a $35.7 million credit facility that simply wasn't needed anymore. The filing also noted that a long-anticipated tax refund has started to hit the company's coffers, with $35.1 million received so far.

The company is now essentially debt-free, and should have more than $110 million of cash on hand when the books are closed for the first quarter on March 31.

Other than allowing Liquidity Services to drop that additional credit line, none of this was really game-changing. "The company does not expect the termination of the Facility to have a material effect on its liquidity or financial position," according to the SEC filing.

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.

Now what: Again, that's hardly a market-moving headline. Then again, it doesn't take much to move this microcap stock.

With a market cap of less than $170 million, the stock can sink or soar for no obvious reason at all. Today's 11% move was based on just $1.2 million worth of shares trading hands. A single deep-pocketed trader can drive that action in any direction desired.

These days, those pushed have largely gone south. Liquidity Services has bounced back some 25% from recent 52-week lows, but the stock still sits more than 40% below its year-ago prices.

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Liquidity Services, Inc. Stock Quote
Liquidity Services, Inc.
$14.03 (4.39%) $0.59

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