Thursday, October 29, 2020

A Small Cap Equity holding: Holdings, Inc. (ALRM, $60.40): "Investors Might be Alarmed by’s Q3 Earnings" by: Graham Pedersen, AIM Student at Marquette University Holdings, Inc. (ALRM, $60.40): "Investors Might be Alarmed by’s Q3 Earnings"

By: Graham Pedersen, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


• Holdings, Inc. (NASDAQ:ALRM) is a US based technology company that provides cloud based software platform solutions for smart residential and commercial properties in the United States and internationally. The company offers interactive security solutions to control and monitor their security systems as well as connected security devices. 

• Selected by Johnson Controls as its Global Interactive Services Platform. 

•'s key feature of the MobileTech application, On My Way, was voted the 2020 CE Pro BEST Product award winner for the Tools, Testing and Calibration category. 

• ALRM now offers award-winning Smart Water Valve+Meter to service providers. 

• Several hedge funds have recently bought and sold shares of ALRM. 

Key points: ADT International, a Johnson Controls company, has chosen as its primary provider of Digital Services in 13 countries in Asia, Europe, and Latin America. The companies will collaborate on the consumer adoption of's services and business growth in these markets through this expanded partnership.

On My Way modernizes service appointment scheduling and consumer preferences. It uses the mobile devices of technicians to provide useful guidance to service and installation appointments, sends customers more accurate arrival time email updates, and allows service providers to assess their employee's performance. 

Introduced earlier this year at the Consumer Electronics Show (CES), the award-winning tool is an inexpensive Z-Wave water shut-off valve that integrates high-quality plumbing hardware with innovative technology. The Smart Water Valve+Meter intelligently reacts to large leaks, tiny drips, and leaky appliances that cause billions of dollars in property damage every year. Intelligence and insights are leveraged through deep integration with the platform to help minimize the risk of losses from water emergencies while also enhancing water conservation efforts.

In the 2nd quarter, Vanguard Group Inc. raised its stake in by 16.9%. After purchasing an additional 674,339 shares during the quarter, Vanguard Group Inc. now holds 4,665,265 shares of the software manufacturer's stock valued at $302,356,000. During the first quarter, Capital World Investors increased its holdings in shares by 27.3%. After purchasing an additional 687,300 shares in the last quarter, Capital World Investors now owns 3,208,000 software manufacturer shares worth $124,823,000. During the second quarter, William Blair Investment Management LLC increased its stake in by 343.7%. After acquiring an additional 1,733,703 shares during the last quarter, William Blair Investment Management LLC now owns 2,238,155 shares of the software manufacturer's stock valued at $145,055,000. Institutional investors and hedge funds own 95.06% of the company's stock.

What has the stock done lately?

After the sharp fall from the 52-week high of $74.66 in July to $53.75 in late September, the share price has seen a steady increase during the last month's recovery. This change resulted in an 11.83% loss over the past three months and a 6.37% gain over the past month. The stock's 50-day moving average is $57.72, and its 200-day moving average is $56.52. 

Past Year Performance: has a 52- week low of $32.00 and a 52- week high of $74.66. The stock has incurred a YTD gain of 39.12% with a 52-week beta of 0.60. ALRM was nearly moving in tandem with the Russell 2000 (Figure 1), especially between March and June, during the market collapse. During the months of June and July, ALRM performed significantly better than the index. Over the past year, ALRM has outperformed the benchmark, generating a 52-week return of 22.53%, compared to that of the benchmark at 2.98%. Q3 earnings for 2020 will be announced on Nov. 5th, 2020. 

Source: FactSet

My Takeaway

Along with the market, experienced a pull-back earlier this year in response to Covid-19, albeit the stock has made a strong recovery, providing investors with a positive return. Several equities analysts have weighed in on the company and altered their price targets and "buy" / "sell" ratings. With a majority of the analysts raising their price target and upgrading ALRM from a "hold" rating to a "buy" rating, the stock currently has a consensus rating of "Buy" and a consensus price target of $63.50. With constant technological innovation of their cloud-based software platform solutions, I believe ALRM represents a hold in the AIM small-cap equity fund. 

Source: FactSet