Hagerty, Inc. Insider Sales: Strategic Move or Cause for Concern?

Hagerty, Inc. (NYSE: HGTY), a niche insurer catering to automotive enthusiasts and classic car collectors, has drawn investor attention following recent insider transactions. Director Robert I. Kauffman's sale of shares totaling $259,234 in June 2025 has sparked questions about whether this signals a loss of confidence in the company's prospects or reflects routine wealth management. Against a backdrop of strong financial results and regulatory uncertainty, we dissect the implications of these trades and assess whether HGTY presents a buying opportunity or a red flag.

The Insider Sales: A Pre-Planned Exit or Cause for Alarm?

Kauffman, a 10% shareholder, sold shares indirectly through three transactions between June 25 and 27, 2025, reducing his holdings by ~13,000 shares. Notably, these trades were executed under a Rule 10b5-1 trading plan established in August 2024—a structured, pre-arranged strategy often used to mitigate tax liabilities or diversify holdings. This suggests the sales were not based on material non-public information. However, the timing coincides with Hagerty's Q1 2025 earnings report, which showcased robust growth: revenue surged 18% to $319.6 million, net income tripled to $27 million, and the company raised its 2025 outlook to 12–13% revenue growth and a 30–40% net income increase.

Contextualizing the Sales: Financial Strength vs. Regulatory Headwinds

While Kauffman's sales may appear counterintuitive given Hagerty's strong results, they align with prudent financial planning. The Rule 10b5-1 framework is common among executives seeking to systematically reduce holdings without signaling distress. Additionally, Anthony J. Kuczinski, another director, demonstrated confidence by purchasing 28,630 shares in May 2025 at an average price of $9.59—a vote of faith in the stock's valuation.

However, Hagerty faces a regulatory cloud: the revocation of its Municipal Advisor registration under the Exchange Act. Though the specifics remain undisclosed, such actions often follow compliance issues. While the role's materiality to revenue is unclear, the uncertainty could deter investors until clarity emerges.

Valuation: Is HGTY Overpriced or Undervalued?

Hagerty's forward P/E ratio of ~35 (based on 2025 estimates) reflects high expectations for its niche market dominance. The company's growth is fueled by expanding its collector vehicle insurance and Hagerty Drivers Club membership, along with international expansion plans. Analysts project a 2025 EPS of $0.22, implying a P/E of 49.28 at current prices—a premium compared to peers like Progressive (PGR, P/E ~12).

Bulls argue the premium is justified by Hagerty's 30% annual membership growth and strategic investments in technology (e.g., Duck Creek platform), which could drive efficiency and scalability. Bears, however, highlight the regulatory risk and the stock's sensitivity to macroeconomic downturns, as collector car demand often lags in recessions.

Institutional Sentiment and Technicals

Institutional ownership stands at 20.51%, with the stock trading at $9.86 as of June 24—a 18% rise year-to-date but below its $9.61 200-day moving average. Short interest is low (~1.2% of shares), suggesting limited bearish bets. Technical analysts note resistance at $10.00, with support at $9.20.

The Bottom Line: Hold for Now, Monitor Regulatory Risks

Kauffman's sales, while notable, are consistent with a pre-planned strategy and not indicative of distress. The contrasting insider activity (Kuczinski's purchase) underscores mixed signals. While Hagerty's fundamentals are strong, the regulatory uncertainty and elevated valuation warrant caution.

Recommendation:
- Hold current positions if you're focused on long-term growth.
- Wait for clarity on the Municipal Advisor issue and Q2 results before initiating new buys.
- Consider a gradual entry if the stock dips below $9.50, especially if the regulatory overhang resolves positively.

Hagerty's story remains compelling for niche market leadership, but investors should balance optimism with patience until risks are mitigated.