Read This Before Buying Alarm.com Holdings, Inc. (NASDAQ:ALRM) Shares

We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Alarm.com Holdings, Inc. (NASDAQ:ALRM).

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company‚Äôs stock when the firm is about to reveal new agreements with customers and suppliers’.

View our latest analysis for Alarm.com Holdings

The Last 12 Months Of Insider Transactions At Alarm.com Holdings

In the last twelve months, the biggest single sale by an insider was when the President, Stephen Trundle, sold US$147k worth of shares at a price of US$64.63 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It’s of some comfort that this sale was conducted at a price well above the current share price, which is US$43.11. So it is hard to draw any strong conclusion from it.

Insiders in Alarm.com Holdings didn’t buy any shares in the last year. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

NasdaqGS:ALRM Recent Insider Trading, January 8th 2020
NasdaqGS:ALRM Recent Insider Trading, January 8th 2020

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Alarm.com Holdings insiders own about US$161m worth of shares (which is 7.7% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Alarm.com Holdings Insiders?

It doesn’t really mean much that no insider has traded Alarm.com Holdings shares in the last quarter. It’s great to see high levels of insider ownership, but looking back at the last year, we don’t gain confidence from the Alarm.com Holdings insiders selling. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Alarm.com Holdings.

But note: Alarm.com Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.