Is AlarmCom Hldg Inc (ALRM) A Good Stock To Buy?

As industrywide interest jumped, key hedge funds were breaking ground themselves. Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most valuable position in AlarmCom Hldg Inc (NASDAQ:ALRM). Arrowstreet Capital had $3.1 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also made a $0.9 million investment in the stock during the quarter. The other funds with brand new ALRM positions are Joel Greenblatt’s Gotham Asset Management and Israel Englander’s Millennium Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as AlarmCom Hldg Inc (NASDAQ:ALRM) but similarly valued. We will take a look at Bank of N.T. Butterfield & Son Ltd (NYSE:NTB), American Axle & Manufact. Holdings, Inc. (NYSE:AXL), American Woodmark Corporation (NASDAQ:AMWD), and Community Health Systems (NYSE:CYH). This group of stocks’ market caps resemble ALRM’s market cap.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $186 million. That figure was $62 million in ALRM’s case. Community Health Systems (NYSE:CYH) is the most popular stock in this table. On the other hand American Woodmark Corporation (NASDAQ:AMWD) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks AlarmCom Hldg Inc (NASDAQ:ALRM) is even less popular than AMWD. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.