Is ADT Inc (ADT) A Good Stock To Buy Now?

Ariel Investments, an investment management firm, published its “Ariel Fund”, “Ariel Appreciation Fund”, “Ariel Focus Fund”, “Ariel International Fund”, and “Ariel Global Fund” second-quarter 2021 investor letter – a copy of which can be downloaded here. A return of 5.52% was recorded by Ariel Fund for the second quarter of 2021, 4.8% by Ariel Appreciation Fund, 4.0% by  Ariel Focus Fund, 5.3% by Ariel International Fund, and 6.2% by Ariel Global Fund for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

In the Q2 2021 Investor Letter, the fund highlighted a few stocks and ADT Inc. (NYSE:ADT) is one of them. ADT Inc. (NYSE:ADT) is a security systems services company. In the last three months, ADT Inc. (NYSE:ADT) stock lost 26%. Here is what the fund said:

“During the quarter, we initiated a position in ADT, Inc. (ADT) in Ariel Fund and Ariel Appreciation Fund. Buying the same position across both strategies is rare but shows our enthusiasm for the name. Here, we have a 140-year old company that has been in and out of public ownership and as a result, everyone has looked right past it. In our view, ADT’s brand and national presence in the security industry is unmatched, resulting in leading market share, a high recurring revenue base and attractive free cash flow generation. While some are concerned do-it-yourself competition will erode the installation and technology-driven moat around the business, we believe the company is well-positioned to benefit from the secular growth of smart home adoption along with strategic partnerships with companies including Google.”

Photo by Austin Distel on Unsplash

In July, we published an article revealing that ADT Inc. (NYSE:ADT) was one of the 15 best security stocks to buy now.

In Q1 2021, the number of bullish hedge fund positions on ADT Inc. (NYSE:ADT) stock decreased by about 33% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in ADT’s growth potential. Our calculations showed that ADT Inc. (NYSE:ADT) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.

Disclosure: None. This article is originally published at Insider Monkey.



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