Hagerty, Inc.: Navigating Insider Sales and Regulatory Uncertainty Amid Strong Financials

Hagerty, Inc. (NYSE: HGTY), a specialty insurer catering to automotive enthusiasts and collectors, has drawn attention recently due to significant insider selling by its director, Robert I. Kauffman, alongside the revocation of its Municipal Advisor registration. While the company's first-quarter 2025 results defied expectations, these developments create a complex backdrop for investors weighing the stock's valuation and future prospects. This analysis examines the implications of these events on investor confidence and market sentiment.

Insider Selling: A Pre-Planned Move or Cause for Concern?
Director Robert I. Kauffman executed three sales of Hagerty's Class A Common Stock between June 11–13, 2025, totaling $201,334 in proceeds. These transactions were conducted via a Rule 10b5-1 trading plan established in August 2024, explicitly stating they were not based on material non-public information. Critics might argue that the timing—occurring during a period of strong financial results—raises questions about the director's confidence in the stock's trajectory. Proponents, however, note that such plans are often used to diversify holdings or meet financial obligations without signaling distress.

The critical nuance lies in the distinction between strategic selling and opportunistic dumping. Since the sales were pre-arranged, they likely reflect Kauffman's personal financial planning rather than a sudden loss of faith in Hagerty's prospects. However, the cumulative effect of these sales—reducing his indirect holdings by ~13,000 shares—could still influence investor psychology, particularly if other insiders follow suit.

Financial Fortitude Amid Regulatory Headwinds
Hagerty's Q1 2025 results underscore its operational resilience. Revenue surged to $319.6 million (vs. a $259.17 million estimate), while net income nearly tripled year-over-year to $27 million. The company's adjusted EBITDA rose 45% to $40 million, and its 2025 targets—12–13% revenue growth and a 30–40% net income increase—suggest confidence in its growth trajectory. Key initiatives like international expansion, new product launches, and a cloud-based insurance platform aim to solidify its leadership in the collector vehicle market.

Yet, the revocation of its Municipal Advisor registration under the Exchange Act introduces regulatory uncertainty. While the Federal Register mention lacks specifics, such actions typically follow compliance failures or violations. If Hagerty's municipal advisory services were a material revenue stream, this revocation could disrupt operations or incur fines. However, given the limited data provided, the long-term impact remains speculative. Investors should monitor whether this issue triggers broader scrutiny of the company's regulatory compliance.

Valuation Considerations
Hagerty's valuation hinges on its ability to execute its growth roadmap while navigating regulatory challenges. Its forward P/E ratio of ~35 (based on 2025 estimates) reflects optimism about its niche market dominance and expansion plans. However, the stock's recent price action—up 18% year-to-date as of June 2025—may already price in some of these expectations. The insider sales, though not alarming in isolation, could pressure the stock if the regulatory cloud persists or earnings momentum falters.

Investment Recommendation
Hagerty presents a mixed picture for investors. On one hand, its financial performance and strategic initiatives justify optimism about long-term growth. On the other, the regulatory revocation and insider selling introduce cautionary signals. For now, a neutral stance appears prudent:

• Hold: Investors with a long-term horizon may retain positions, betting on Hagerty's market leadership and execution of its 2030 goals (e.g., doubling policies in force to 3 million).
• Wait-and-See Approach: New investors should await clarity on the regulatory issue and potential Q2 2025 results before committing capital.

Conclusion
Hagerty, Inc. remains a compelling story in the specialty insurance sector, but its recent developments require careful parsing. While the insider sales are unlikely to signal an imminent collapse, the regulatory revocation demands scrutiny. Investors should prioritize fundamentals over short-term noise: a stock trading at 35x forward earnings requires consistent outperformance to justify its valuation. Until the regulatory overhang lifts and the company delivers on its ambitious targets, patience—not speculation—should guide decisions.

Final Note: Monitor Hagerty's SEC filings and quarterly updates for further clarity on the Municipal Advisor revocation's implications.