Exploring Alarm.com Holdings, Inc. (ALRM) Investor Profile: Who’s Buying and Why?

You're looking at Alarm.com Holdings, Inc. (ALRM) and wondering who is defintely buying into the smart property ecosystem, and more importantly, why the institutional money is sticking around despite recent insider selling. The short answer is that the big players see a reliable subscription model (SaaS) that keeps delivering: institutional investors and hedge funds own a massive chunk-about 91.74% of the stock-with giants like BlackRock, Inc. holding over 9.44 million shares as of the latest filings. This conviction comes even as Director Daniel Kerzner recently sold approximately $1.51 million in shares in November 2025. The core of the investment thesis is the recurring revenue stream, which is why the company's full-year 2025 guidance, raised following the Q3 2025 report, projects total revenue to hit a solid $1.00 billion, with non-GAAP adjusted EBITDA expected to be $199.0 million. So, is this a smart money endorsement of the company's long-term platform growth, or are there underlying risks the big funds are overlooking? Let's dive into the investor breakdown to see what they are buying.

Who Invests in Alarm.com Holdings, Inc. (ALRM) and Why?

You want to know who is betting on Alarm.com Holdings, Inc. (ALRM) and what their thesis is. The direct takeaway is that this is overwhelmingly an institutionally-held growth stock, not a retail favorite, with major players focused on the long-term, predictable Software-as-a-Service (SaaS) revenue stream, not dividends.

The ownership structure tells a clear story: Alarm.com Holdings, Inc. is a playground for large money managers. Institutional investors and hedge funds own a massive slice of the company, holding between 91.74% and 97.03% of the stock. This high percentage means the stock price is largely driven by the trading decisions of these large firms, not individual retail traders.

Here's the quick math on who holds the power:

• Institutional Investors (e.g., mutual funds, pension funds, hedge funds): ~91.74% of shares.
• Insiders (Executives and Directors): ~5.35% of shares.
• Retail Investors: The remaining small percentage.

The largest shareholders are the titans of passive and active investing. For example, BlackRock, Inc. is the single largest institutional shareholder, holding approximately 9.4 million shares, which represents an ownership stake of about 18.88% of the total shares outstanding. Vanguard Group Inc. is another major holder, with roughly 6.3 million shares, or a 12.79% stake. When you see names like BlackRock and Vanguard at the top, you know index and large-cap growth strategies are defintely at play.

Investment Motivations: SaaS, Growth, and Cash

Investors are attracted to Alarm.com Holdings, Inc. for three primary reasons: its stable, recurring revenue model, its clear growth trajectory in smart property technology, and its strong balance sheet-not for income. The company does not pay a dividend; its Dividend Payout Ratio for the period ending June 2025 was 0.00.

The core motivation is the high-margin, sticky SaaS and license revenue. For the full year 2025, management expects this segment to bring in between $685.2 million and $685.4 million, out of a total expected revenue of $1.00 billion. That recurring revenue shields the business from economic volatility better than pure hardware sales, which is why institutions pay a premium for it.

The growth story is also compelling. The third quarter of 2025 saw SaaS and license revenue increase by 10.1% year-over-year, reaching $175.4 million. This growth is fueled by strategic moves into new areas, like the acquisition of Bridge to Renewables by its subsidiary EnergyHub, expanding its managed charging solutions for electric vehicles (EVs). This shows investors a clear path to future expansion beyond just home security.

Finally, the financial position is solid. As of September 30, 2025, the company reported total cash and cash equivalents of $1.07 billion. That cash hoard gives the company flexibility for future acquisitions or share buybacks, which is a major plus for growth-focused funds. You can read more about the company's foundation and business model here: Alarm.com Holdings, Inc. (ALRM): History, Ownership, Mission, How It Works & Makes Money.

Investment Strategies: Long-Term Growth and Passive Indexing

Given the ownership profile and lack of a dividend, the typical investment strategies for Alarm.com Holdings, Inc. are centered on long-term appreciation.

The dominant strategy is Growth Investing. These investors prioritize companies that reinvest earnings back into the business to fuel expansion, rather than paying out dividends. They are buying the future earnings potential of the company's cloud-based platform for connected properties. They are betting that the 10.1% SaaS revenue growth seen in Q3 2025 will continue, leading to a higher stock price over several years. Short-term trading is less common because the stock lacks the high volatility or news catalysts of a pure meme stock, though hedge funds will still trade around earnings.

Another key strategy is Passive Indexing. Since Alarm.com Holdings, Inc. is part of indices like the S&P SmallCap 600 (implied by iShares Core S&P Small-Cap ETF being a top holder), index funds and exchange-traded funds (ETFs) are forced to buy and hold the stock to match the index's performance. This creates a stable, long-term demand floor for the shares, regardless of the company's day-to-day news flow. Institutional ownership is a sign of stability, but also means you need to watch their quarterly 13F filings for any major shifts.

Finance: Monitor BlackRock and Vanguard's next 13F filings for any significant changes in their long-term holdings.

Institutional Ownership and Major Shareholders of Alarm.com Holdings, Inc. (ALRM)

If you're looking at Alarm.com Holdings, Inc. (ALRM), the first thing to understand is that it's not a stock driven by retail traders; it's an institutional darling. As of the most recent filings, institutional investors and hedge funds control a massive portion of the company's stock, with ownership hovering around 91.74% to 96.69% of the total shares outstanding. This level of concentration means the big players-the mutual funds and pension funds-are the ones setting the tone for the stock's valuation and governance.

The core of the investor base is made up of some of the largest asset managers in the world. These firms are typically passive investors, meaning they track an index, but their sheer size gives them immense influence. Here is a snapshot of the top institutional holders, using the most recent available data from the third quarter of 2025 (Q3 2025) filings:

Here's the quick math: BlackRock, Inc. and Vanguard Group Inc. alone hold over 15.6 million shares, representing a substantial block of the company. That's a lot of conviction in the long-term Software-as-a-Service (SaaS) model. You can dig deeper into that model and its financial stability by reading Breaking Down Alarm.com Holdings, Inc. (ALRM) Financial Health: Key Insights for Investors.

Recent Shifts in Institutional Ownership

In the third quarter of 2025, the institutional sentiment was balanced, but slightly leaning toward selling. There were 154 institutions that increased their positions in ALRM, but 157 that decreased them. Overall, the total institutional shares held saw a net decrease of approximately -1.05% in the most recent quarter. This tells you that while the stock saw a strong Q3 2025 revenue beat-total revenue hit $256.4 million-some large investors took profits or rebalanced their portfolios.

The buying activity was not uniform. For example, Morgan Stanley increased its stake by over 125,386 shares, while Disciplined Growth Investors Inc /mn significantly reduced its position by 576,431 shares, based on the 9/30/2025 filings. This mixed activity is defintely a sign of a stock in transition, where some value-focused funds are trimming while others see the recent acquisition of companies like CHeKT, Inc. as a new growth catalyst.

• Net Change: Institutional shares decreased by about 610,000 in the last reported quarter.
• Buyers vs. Sellers: The number of funds buying was nearly equal to the number of funds selling.
• Insider Activity: This mixed institutional signal was coupled with an insider sale in November 2025, where a director sold 20,004 shares for over $1 million.

The Role of Large Investors in ALRM's Strategy

With institutional ownership so high, these large holders are the primary influence on Alarm.com's corporate governance and long-term strategy. They are not just passive bookkeepers; their investment thesis is built on the company's recurring Software-as-a-Service (SaaS) revenue model and its strategic acquisitions. The company's focus on aggressive Research and Development (R&D) spending, which at times has outpaced revenue growth, is a direct result of management seeking to satisfy the growth expectations of these institutional investors.

Institutional investors demand a clear path to margin expansion and continued market leadership in the connected property space. If the company's full-year 2025 guidance, which projects total revenue of approximately $1.00 billion, does not translate into strong earnings per share (EPS)-analysts expect a consensus of $1.64 EPS for the fiscal year-you could see activist investors step in. The institutional base essentially acts as a powerful, silent partner, pushing the company to innovate through acquisitions like EnergyHub and OpenEye to maintain its competitive edge against larger tech rivals.

Their sheer size provides stock price stability, but their collective selling can also exacerbate downward pressure. The stock's decline of 18.76% in the year leading up to November 2025, despite strong underlying business performance, shows that institutional sentiment is the biggest driver.

Key Investors and Their Impact on Alarm.com Holdings, Inc. (ALRM)

You need to know who is driving the bus, and for Alarm.com Holdings, Inc. (ALRM), the answer is overwhelmingly institutional money. These large funds own a massive slice of the company, but recent moves show a clear divergence in sentiment that you need to watch closely.

Institutional investors and hedge funds collectively own about 91.74% of the company's stock, which is a huge percentage. This high concentration means the stock's price movements are defintely more sensitive to the collective decisions of a few dozen major players than to individual retail investors. When a big fund sells, the stock feels it.

The core investment thesis for these funds centers on Alarm.com's sticky, recurring Software-as-a-Service (SaaS) revenue model. The company's full-year 2025 guidance projects total revenue to hit $1.00 billion, with non-GAAP adjusted net income expected to be $140.5 million, proving the model is working, even if growth has slowed.

The Anchor Investors: Who Holds the Biggest Stakes

When you look at the 13F filings, a few names stand out as the bedrock of Alarm.com's ownership structure. These are the long-term holders whose positions signal a belief in the platform's enduring value in the connected property space. Vanguard Group Inc. is the single largest institutional holder, with a massive stake of over 6.2 million shares, valued at approximately $330.84 million as of November 2025. This is a passive, index-driven investment, but its sheer size anchors the stock.

Another significant, more active player is Brown Capital Management LLC, which holds over 1.1 million shares, valued at about $59.83 million. While these large, passive holdings provide stability, the real impact often comes from the smaller, more agile funds or from sudden, large-scale liquidations.

Here's a quick look at the scale of the top holdings:

Recent Investor Moves: Selling Pressure and Sentiment Shift

The near-term risk you need to map is the recent selling pressure from both institutional and insider groups. This isn't just noise; it's a signal that some big money managers are taking profits or re-evaluating the growth story. For instance, Q4-2025 filings revealed a significant institutional exodus:

• William Blair Investment Management liquidated its entire position, unloading over 560,000 shares.
• Morgan Stanley sold more than 350,000 shares, a 25% reduction in their stake.

To be fair, some smaller funds are buying in, like Hantz Financial Services Inc., which increased its position by a huge 2,637.9% in the third quarter of 2025, but the dollar value of these new positions is small-Hantz's stake is only valued at about $42,000. The large-scale selling is what moves the needle.

We also saw a notable insider sale in November 2025. Daniel Kerzner, the President of Platforms Business, sold a total of 30,004 shares over two days (November 12-13, 2025), netting about $1.51 million. While he still owns 52,000 shares, this kind of executive selling, even after a strong Q3 2025 earnings beat, can dampen investor enthusiasm. The market is clearly struggling to see significant future growth, which is why the consensus analyst rating is a 'Hold' with a price target of $64.67. This is a mature tech company, not a hyper-growth stock.

Investor Influence: The Growth vs. Value Debate

The influence of these investors is less about activism and more about valuation pressure. Alarm.com has a strong balance sheet, with cash and cash equivalents at $1.07 billion as of September 30, 2025, but revenue growth has slowed to the mid-single digits. The recent selling suggests that funds previously treating it as a high-growth SaaS stock are now re-categorizing it as a slower-growth, profitable value play.

What this estimate hides is the potential for strategic acquisitions, which the company's large cash hoard enables. The company recently acquired Bridge to Renewables to bolster its EnergyHub offerings, showing a commitment to new growth vectors. For more on the long-term vision, you should review the Mission Statement, Vision, & Core Values of Alarm.com Holdings, Inc. (ALRM).

The high institutional ownership means any positive news-like a large new contract or a successful product launch-can lead to a sharp upward move as funds quickly re-allocate. Conversely, a miss on the raised full-year 2025 EPS guidance of $2.53 could trigger another wave of selling. The funds are the market here.

Market Impact and Investor Sentiment

You're looking at Alarm.com Holdings, Inc. (ALRM) and wondering why the stock price is down nearly 19% from a year ago, sitting near $50.30 per share as of November 2025, despite the company beating its third-quarter earnings estimates. The simple answer is that investor sentiment is deeply mixed, leaning toward cautious realism because of decelerating growth and fierce competition.

Honesty, a quick look at the major institutional moves-the big money-shows a clear division. While institutional investors still own a massive 91.74% of the company, the recent activity signals a low-confidence environment. For example, in the latter half of 2025, we saw significant funds like Brown Capital Management Llc cut their position by 576,431 shares and Disciplined Growth Investors Inc. /Mn reduce their stake by 159,729 shares. It's hard to ignore when a fund like William Blair Investment Management liquidates its entire position of over 560,000 shares. They are either taking profit or cutting losses, and that kind of selling pressure weighs on the stock.

But it's not all selling. The largest shareholders, BlackRock, Inc. and Vanguard Group Inc., are still holding the line, with BlackRock, Inc. actually increasing its stake by 42,379 shares as of September 30, 2025. Plus, some smaller, conviction-driven funds are piling in. LSV Asset Management, for instance, boosted its position by a whopping 160.0% to 61,100 shares, valued at about $3.24 million. This tells me that while the market is worried about the macro picture and competition, a core group of investors still believes in the long-term, recurring Software-as-a-Service (SaaS) revenue model. You can dive deeper into the recurring revenue strength in Breaking Down Alarm.com Holdings, Inc. (ALRM) Financial Health: Key Insights for Investors.

Recent Market Reactions and Insider Signals

The stock market's reaction to the company's Q3 2025 results was muted, even though Alarm.com Holdings, Inc. delivered a beat. The company reported revenue of $256.4 million, which was up 6.6% year-over-year and above the analyst consensus of $251.14 million. Non-GAAP adjusted earnings per share (EPS) came in at $0.76, significantly higher than the expected $0.62. Still, the stock price didn't jump. Why? Because the market is forward-looking, and the growth rate is slowing down from its double-digit past.

A key signal that often trumps earnings is insider activity. Director Daniel Kerzner sold a total of 30,004 shares in November 2025, netting approximately $1.51 million. This kind of insider selling, especially right after an earnings beat, sends a defintely negative signal to the market. It suggests that even those closest to the company see the current valuation as a good exit point.

Here's the quick math on the major institutional moves from Q3 2025 filings:

Analyst Perspectives on Key Investor Impact

The analyst community is largely on the fence, reflecting the mixed institutional sentiment. The consensus rating is a straight-up 'Hold', with an average price target of $64.67. This target suggests a potential upside of around 28% from the current trading price, but the 'Hold' rating means they aren't pounding the table for a strong buy.

Analysts see two main drivers for the company's future, both of which are tied to the conviction of the long-term holders:

• SaaS Resilience: The raised full-year 2025 guidance, projecting total revenue of approximately $1.00 billion and an EPS of $2.53, reinforces the strength of the recurring SaaS and license revenue.
• Product Innovation: The launch of new AI-powered products, like the ADC-V730 Wi-Fi spotlight camera, and the acquisition of CHeKT, Inc., a remote video monitoring provider, are viewed as smart moves to defend market share and bolster the recurring revenue base against rivals.

The core issue is that the big investors who are selling are likely reacting to the single biggest risk: the threat of larger technology players entering the smart home security market. The analysts know this, so even with a raised guidance for 2025, they are waiting for a clear signal that Alarm.com Holdings, Inc. can sustain its growth trajectory beyond this fiscal year. The next step for you is to monitor the Q4 2025 institutional filings closely to see if the recent selling pressure continues into the new year.