Hagerty, Inc.: Navigating Insider Sales and Valuation Crossroads

Hagerty, Inc. (NYSE: HGTY) has emerged as a leader in niche insurance markets, specializing in collector vehicles and enthusiast communities. Yet beneath its strong fundamentals lies a complex interplay of insider selling, regulatory uncertainty, and elevated valuation metrics. Investors now face a critical question: Does Hagerty's robust growth story outweigh its risks, or does the combination of strategic insider sales and high multiples warrant caution?

The Insider Selling Dynamic: Structure vs. Sentiment

Director Robert I. Kauffman's sustained selling activity since March 2025 has drawn significant attention. To date, he has offloaded over 432,000 shares, netting approximately $4.2 million, with the most recent transaction on June 27, 2025, involving 7,432 shares at $10.12. These sales were executed under a pre-existing Rule 10b5-1 trading plan, adopted in August 2024. Such plans are typically used to diversify holdings or manage taxes without implying distress, as they insulate sellers from market timing concerns.

However, the sheer volume of sales—~0.5% of his total holdings—has raised eyebrows. This contrasts sharply with Anthony J. Kuczinski, another director who purchased 28,630 shares in May 2025 at $9.59. The mixed signals underscore a divergence in executive confidence, a critical nuance for investors to parse. While Kauffman's sales may reflect personal financial planning, the cumulative effect could signal a strategic rebalancing of his portfolio—a move that, while legal, may erode investor sentiment.

Financial Fortitude Amid Elevated Valuations

Hagerty's Q1 2025 results demonstrate why its stock has garnered attention. Revenue surged 18% to $319.6 million, while net income tripled to $27 million, fueled by its Hagerty Drivers Club membership growth and cross-selling opportunities. The company now projects 12–13% revenue growth and a 30–40% net income rise for 2025, driven by tech investments like the Duck Creek platform, which enhances underwriting efficiency.

Yet these positives clash with valuation headwinds. At a forward P/E of 35 and a trailing P/E of 50.45, Hagerty trades at a premium to peers like Progressive (PGR), which trades at a P/E of ~12. This disconnect suggests investors are pricing in substantial future growth—a bet that hinges on sustained membership expansion and regulatory clarity.

Regulatory Clouds and Technical Barriers

The revocation of Hagerty's Municipal Advisor registration—while not directly tied to its core insurance business—adds an overhang. The SEC's action, though unexplained, may reflect compliance issues, which could deter institutional buyers until resolved.

Technically, the stock faces resistance at $10.00, its June high, while support rests at $9.20, near its 50-day moving average. Low short interest (1.2%) suggests limited bearish bets, but the recent dip to $10.09 highlights vulnerability to macroeconomic headwinds, such as a potential slowdown in collector car demand during an economic downturn.

Investment Considerations: Balancing Growth and Risk

For bulls: Hagerty's 30% annual membership growth, niche dominance, and tech-driven operational improvements justify optimism. The Drivers Club's 95% retention rate and cross-selling to adjacent markets (e.g., classic car financing) create a moat few competitors can match.

For bears: The $0.22 2025 EPS estimate implies a P/E of 49.28 at current prices—a valuation that demands flawless execution. Regulatory risks, a pricey multiple, and the potential for economic sensitivity (collector car demand often wanes in recessions) could cap upside.

Strategic Recommendations

1. Hold Positions for Long-Term Investors: If you believe Hagerty can sustain its growth trajectory and resolve regulatory concerns, maintaining exposure makes sense. The $9.50–$10.00 range offers a reasonable risk-reward balance.
2. Wait for Clarity: Avoid new purchases until the Municipal Advisor issue is resolved and Q2 results are reported.
3. Consider Gradual Entry Below $9.50: A dip to this level—near the 50-day average—could present an opportunity, particularly if the regulatory overhang lifts.

Final Analysis

Hagerty's story is one of high-potential growth colliding with high-stakes risks. While its financials and strategic moves justify optimism, the valuation premium, regulatory uncertainty, and mixed insider signals create a cautious backdrop. Investors must weigh whether the company's niche leadership and innovation can outpace its challenges—or if the stock's current price already reflects too much optimism.

For now, Hagerty remains a "hold", best suited for those willing to stomach volatility for long-term rewards. Those seeking safer bets may prefer to wait for clearer skies—or lower prices—to board this high-octane ride.