Insiders Now Seeing Red With ADT At New 52-Week Low

In trading on Thursday, shares of ADT Corp (ADT) touched a new 52-week low of $28.54/share. That's a $21.83 share price drop, or -43.34% decline from the 52-week high of $50.37 set back on 03/14/2013. Large percentage drops always require that the stock post even larger percentage gains from the low in order to recover the old price point, and for ADT that means the stock would have to gain 76.49% to get back to the 52-week high. For a move like that, ADT Corp would need fundamental strength at the business level.

Here's a rhetorical question: Who knows more about fundamentals at the business level than the company's own insiders? So let's take a look to see whether any company insiders were taking the other side of the trade as ADT shares were being sold down to this new 52-week low, focusing on the most recent trailing six month period. As summarized by the table below, ADT has seen 8 different instances of insiders buying over the past six months.

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Purchased Insider Title Shares Price/Share Value
02/03/2014 Donald A. Boerema Chief Corp. Dev. Officer 500 $29.47 $14,734.95
02/03/2014 Michael S. Geltzeiler Chief Financial Officer 10,000 $29.59 $295,943.88
02/03/2014 Richard J. Daly Director 3,000 $30.21 $90,637.00
02/03/2014 Thomas J. Colligan Director 3,000 $30.25 $90,741.00
02/04/2014 Shawn L. Lucht SVP, Chief Customer Officer 2,500 $29.15 $72,863.20
02/05/2014 Luis J. Orbegoso President, Small Business 1,000 $29.90 $29,896.10
02/03/2014 Alan Ferber President, Residential 1,000 $29.81 $29,810.00
02/10/2014 Donald A. Boerema Chief Corp. Dev. Officer 500 $31.22 $15,609.50
02/18/2014 Kathleen McLean SVP, Chief Information Officer 2,500 $31.40 $78,487.90

In the short run, while the new 52-week low suggests the stock is at the cheapest price and perhaps therefore the best bargain it has been over the last 52 weeks, the low print also means anyone who has purchased the stock over that timeframe is staring at an unrealized loss. Oftentimes, that factor drives a stock's technical analysis metrics by creating overhead resistance, with investors who bought higher now anxious to reverse their trade once they are back to breakeven. The chart below shows where ADT has traded over the past year, with the 50-day and 200-day moving averages included.

ADT Corp Moving Averages Chart

Time will tell whether the insider purchases foretell a future rebound for ADT shares, which are presently showing a last trade of $28.55/share, slightly above the new 52-week low.

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