Brown Capital Management, an investment management company, released its “The Brown Capital Management Small Company Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. The Small Company Fund returned 8.48% in the quarter, roughly in line with the Russell 2000 Growth index’s 8.41% return. The Fund has only gained 1.80% year to date, far behind the benchmark’s return of 13.22%, despite this quarter representing a minor move toward a fundamentally driven market. In addition, check the fund’s top five holdings to know its best picks in 2024.
The Brown Capital Management Small Company Fund highlighted stocks like Alarm.com Holdings, Inc. (NASDAQ:ALRM), in the third quarter 2024 investor letter. Alarm.com Holdings, Inc. (NASDAQ:ALRM) is a company that offers various Internet of Things (IoT) and solutions. The one-month return of Alarm.com Holdings, Inc. (NASDAQ:ALRM) was 3.26%, and its shares gained 3.41% of their value over the last 52 weeks. On December 19, 2024, Alarm.com Holdings, Inc. (NASDAQ:ALRM) stock closed at $64.35 per share with a market capitalization of $3.181 billion.
The Brown Capital Management Small Company Fund stated the following regarding Alarm.com Holdings, Inc. (NASDAQ:ALRM) in its Q3 2024 investor letter:
“Alarm.com Holdings, Inc. (NASDAQ:ALRM) is a provider of residential and commercial security systems. The company provides interactive alarm systems including sensors and video cameras that can be monitored and operated from a panel on-site or remotely from mobile devices. Alarm.com also offers productivity tools for the alarm dealers who sell and install the company’s products. There are roughly 29 million professionally monitored residential alarm systems in the U.S., 8 million of whom use Alarm.com, resulting in a 28% market share. The company receives a monthly subscription fee from customers for the system, as well as additional fees for the use of video cameras and other premium features. Alarm.com continues to develop new products and is introducing artificial intelligence (AI)-powered capabilities to provide contextual information about alarm-related events, which can optimize responses. For example, a camera can identify movement as human vs. animal, or distinguish a homeowner’s car in the driveway from an unknown car, thereby minimizing false alarms. The company’s growth initiatives include increasing the adoption of video cameras, as well as value-added video-AI capabilities.
During the quarter, Alarm.com reported revenue that was above expectations and raised revenue guidance for the upcoming quarter and for the full year. SaaS and license revenue increased 11% but was partially offset by hardware revenue which declined by 7%. However, profitability expectations were decreased primarily due to the company recently undertaking a debt offering. Having already established a leadership position in the U.S. residential alarm market, Alarm.com has been increasing its penetration into other growth areas that now account for over 25% of its revenue. These include the U.S. commercial alarm market, EnergyHub (smart thermostat/connected home) applications, as well as initiatives in international markets. Alarm.com remains the dominant provider in the interactive security market, and we believe its continued strength and innovation can support its growth for years into the future.”
A view of a control room with video screens monitoring multiple sites through intelligent automation.
Alarm.com Holdings, Inc. (NASDAQ:ALRM) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Alarm.com Holdings, Inc. (NASDAQ:ALRM) at the end of the third quarter which was 31 in the previous quarter. While we acknowledge the potential of Alarm.com Holdings, Inc. (NASDAQ:ALRM) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Alarm.com Holdings, Inc. (NASDAQ:ALRM) and shared Polen U.S. Small Company Growth Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.