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The ADT Corp

Billionaires bet on ADT

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Wednesday, March 20, 2013

I’ve been writing here about the sunny outlook for The ADT Corp. stock since the newly independent company began publicly trading last fall after spinning off from Tyco International. But don’t just take my word for it—apparently 10 billionaires also think ADT is a good investment.

Gurufocus.com, a web site that's oriented toward value investing, noted this week that 10 billionaire investors have all recently invested in Boca Raton, Fla.-based ADT.

Here’s more from what Gurufocus had to say:

ADT got the attention of Investor Gurus Julian Robertson, John Burbank, Dodge & Cox, George Soros, Jean-Marie Eveillard, John Keeley, Mario Gabelli, Steven Cohen, James Barrow, and Paul Tudor Jones--all bought ADT shares for the first time on Dec. 31, 2012, at $48 per share, with a change from average of 14%. Current share price is $49.43. Top buyer Dodge & Cox bought 6,810,838 ADT shares, followed by Jean-Marie Eveillard who bought 1,526,071 shares. At the low-end, Guru Paul Tudor Jones bought new holdings of 10,000 ADT shares. See detailed Guru Trade info here.

A leading provider of electronic security, detection, and monitoring for home and business, ADT features interactive and automated products and services for active people with increasingly mobile lifestyles. The Florida company employs approximately 16,000 people at 200 locations, and serves six million customers. This week ADT announced that its Board of Directors had declared a quarterly cash dividend of $0.125 per share of common stock, to be paid on May 15, 2013 to stockholders of record as of the close of business on April 24, 2013.

… GuruFocus performed a thorough financial and performance checkup on ADT and found only one warning sign. The ADT price of $49.43 is close to its one-year high of $49.46.

 

ADT sued over early termination fees

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Wednesday, March 6, 2013

Early termination fees are pretty much standard in the security industry but now The ADT Corp. is facing a lawsuit over them, I’ve learned.

Earlier this week two law firms announced the filing of a class action lawsuit in federal court in California on behalf of ADT Home Monitoring Services customers regarding early termination fees, also termed early cancellation fees.

The law offices of Bursor & Fisher and of Jana Eisinger contend in a news release that the fees are illegal and the “lynchpin of ADT's ‘never let them go’ strategy.”

The attorneys are urging consumers who believe they were wronged to contact them.

Here’s more from the March 4 release:
 

The proposed class consists of two groups of consumers: (1) all current or former consumer subscribers of ADT who have been charged an early termination fee or are subject to being charged an early termination fee (also called an Early Termination Fee or Early Cancellation Fee, collectively "ETF", and comprising the "ETF class"); and (2) all current or former consumer subscribers of ADT whose rates were increased or are subject to increase by ADT without prior notice while in the initial contract period or during subsequent contractual extensions.

This class action is intended to redress ADT's wrongful practice of imposing early termination fees, the lynchpin of ADT's "never let them go" strategy. Early termination fees are unlawful penalties used simply as an anti-competitive device and do not compensate ADT for any true costs of breach. These penalties, which are unilaterally imposed by ADT - even when ADT fails to perform the services promised - also violate the consumer protection statutes of California and Illinois and similar laws nationwide.

The early termination penalty is extracted under circumstances which cannot be justified, when ADT has failed to perform the very services that form the basis of ADT's obligation. The penalty is also extracted from customers who contracted with ADT to simply monitor a system that was previously installed, requiring no equipment to be installed and resulting in a windfall to ADT upon termination. By charging the early termination fee ADT gets paid for years of monitoring without doing any monitoring to earn those fees.

In addition, Plaintiffs seek redress for ADT's pattern of unilaterally increasing alarm monitoring fees while consumers are under contract for lesser fees. These increases are implemented without adequate prior notice and without providing the appropriate and required disclosures necessary to ensure that customers consent to these increases in advance. ADT relies on small boilerplate text neither signed nor highlighted for customers to claim its "right" to unilaterally increase fees.

I contacted ADT and Sarah Cohn, ADT director of media relations, who responded that the company has a policy of not commenting on pending litigation. She noted however, that “termination fees are common in the industry when a company absorbs the upfront cost of the installation.”

I’ve also reached out to the lawyers involved to find out why they’re targeting ADT. Stay posted!