Hagerty: A Hidden Gem in the Collector Car Market, Poised for Global Growth

The collector car market has long been a bastion of exclusivity and passion, but its growth potential is now being unlocked by Hagerty—a company that's strategically expanding its footprint through Broad Arrow Auctions. While often overshadowed by its insurance business, Hagerty's recent moves into high-profile global events and its robust financial performance suggest it's an underappreciated growth stock with significant upside. Here's why investors should take notice.

Auction Performance: Metrics of Momentum

Hagerty's Broad Arrow Auctions have consistently delivered strong results, even as the company scales globally. In 2025, its European debut at the Concorso d'Eleganza Villa d'Este generated €31.2 million in sales, with a 78% sell-through rate—a testament to the demand for premium vehicles. The star of the event, a 1948 Ferrari 166 Spyder Corsa, sold for a record €7.54 million, underscoring the allure of high-value, rare collectibles.

In the U.S., flagship events like the Monterey Jet Center Auction and Amelia Auction remain cash cows, with 2024 sales hitting $71.5 million and $61.7 million, respectively. These events boast sell-through rates exceeding 85%, indicating a loyal and affluent clientele. The upcoming 2025 auctions in Las Vegas (October 31–November 2), Zürich (November 1), and Zoute, Belgium (October 10) promise further growth, leveraging partnerships with luxury brands like Wynn Resorts and BMW.

Luxury Market Penetration: A Play for the Ultra-Wealthy

Hagerty's strategy isn't just about selling cars—it's about curating experiences that attract high-net-worth individuals. By anchoring events at iconic venues like the Dolder Grand Hotel in Zürich and the Wynn Las Vegas, Broad Arrow positions itself as a purveyor of prestige. These locations amplify brand visibility and tap into the $20 billion collector car market, which is growing faster than the broader automotive sector.

The company's partnerships with luxury events like the Zoute Concours d'Élégance and Concours at Wynn Las Vegas also create cross-selling opportunities. Attendees are likely to engage with Hagerty's core insurance business, which insures over 1.5 million collector vehicles worldwide. This synergy creates a virtuous cycle: auctions drive brand awareness and customer acquisition for insurance, while the insurance business fuels loyalty and repeat participation in auctions.

Financial Strength: A Foundation for Expansion

Hagerty's Q1 2025 results reveal a company in expansion mode. Revenue surged 18.45% year-over-year to $319.6 million, while net income skyrocketed 233% to $27 million. Free cash flow hit $140.42 million, signaling ample capital to fund global ambitions. The company's long-term goal—to double policies in force by 2030—is within reach, given its ability to cross-sell and its expanding auction network.

Crucially, the stock's valuation hasn't fully priced in this growth. At current levels, Hagerty trades at a P/E ratio of 18.5, below peers like Sotheby's (22.3) despite stronger revenue growth. This suggests the market underestimates the company's ability to monetize its dual revenue streams (insurance and auctions).

Investment Case: Why Now?

Hagerty's undervaluation presents a compelling entry point. The company's global expansion into Europe and Asia-Pacific, paired with its premium event strategy, positions it to capture a larger share of a growing luxury market. Additionally, its 78% sell-through rate at European auctions and $140 million+ in free cash flow demonstrate operational efficiency and scalability.

Investors should also note the low correlation between collector car sales and macroeconomic cycles. Unlike consumer goods, luxury collectibles often thrive in uncertain times, as high-net-worth individuals prioritize discretionary spending on rare assets. This resilience reduces downside risk while offering asymmetric upside.

Risks, But Not Dealbreakers

Hagerty's risks include reliance on luxury demand, regulatory hurdles in new markets, and competition from platforms like RM Sotheby's. However, its track record of high sell-through rates and strategic partnerships (e.g., BMW, Air|Water) mitigates these concerns. The company's financial flexibility also allows it to weather short-term volatility.

Conclusion: A Stock Worth Collecting

Hagerty is more than an insurance provider—it's a curator of luxury experiences and a beneficiary of the booming collector car market. With strong financials, a global expansion playbook, and undervalued stock, it's a rare gem in an asset class that rewards patience and foresight. For investors seeking growth in a niche yet resilient sector, Hagerty's time to shine is now.

Investment Advice: Consider a position in Hagerty for a portfolio seeking exposure to high-margin, luxury-driven growth. Monitor upcoming auction results and policy growth metrics to gauge execution quality. This is a stock poised to outperform as its dual revenue streams and global ambitions gain recognition.