Finance

Are Alarm.Com Holdings, Inc. (ALRM)’s Recent Ownership and Insider Trends a Sign of Things to Come?

Recent insider trends for Alarm.Com Holdings, Inc. (NASDAQ:ALRM) have caught the attention of investors. Insider activity is often a strong indicator of future performance in a stock, and if the data on ALRM is anything to go by, investors should pay attention.

Institutions own 91.79% of Alarm.Com Holdings, Inc. (ALRM)’s shares. The total value of these holdings, in millions, is $1,701. Among active positions in the latest quarter, 103 holders increased their positions by a total of 7.7 million shares, 58 holders decreased the positions by a total of 6.45 million shares, and 31 holders held their positions. This works out to a net increase in ownership of 1.24 million shares, and suggests that institutions are feeling bullish about the stock.

Among new and sold out positions, 53 holders initiated new positions by a total of 4.99 million shares and 14 holders exited their positions by a total of 276789 shares. This nets out to an increase of 4.72 million shares and is a bullish sign for ALRM.

In the last three months, insiders executed a total of 30 trades. 4 of these were buys and 26 were sells. Insider ownership decreased by a total of 3.63 million shares, which suggests that ALRM’s key executives are feeling less optimistic about the outlook for the stock. The data from the past twelve months tells a similar story: insiders executed 15 buys and 76 sells, and ownership decreased by a net of 10.38 million shares.



Short interest, or the number of a stock’s tradable shares currently being shorted, is another metric investors use to get a pulse on sentiment. Alarm.Com Holdings, Inc. (NASDAQ:ALRM)’s short interest is 845800 shares, or 4.18% of the float. This represents a decrease of -23% in the number of shares being shorted compared to the previous reading, and implies that investors felt less pessimistic about the stock during the past two weeks.

Given what the insider ownership patterns are saying, it makes sense to consider the technicals to see if these pieces of information reach the same conclusion about the outlook for ALRM. A composite of 13 technical indicators that includes measures such as moving averages and momentum oscillators suggests that ALRM is a Strong sell, which implies that ALRM is expected to underperform the market based on prior trading patterns.

Conclusion




Institutional ownership trends suggest that the stock is cheap and the insider trading data indicates that insiders are bearish. Technical indicators (also) suggest that Alarm.Com Holdings, Inc. (NASDAQ:ALRM) is overvalued.

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