The Quiet Exodus: Hagerty's Insider Sales and the SPAC Paradox

In the world of publicly traded companies, insider selling is often a silent storm. For Hagerty, Inc. (HGTY), a SPAC-backed insurer known for its vintage car valuation tools, the quiet exodus of shares by its largest insider—director Robert I. Kauffman—has sparked questions about the strategic significance of cumulative divestitures in the post-SPAC era. While these sales are legally permissible under a Rule 10b5-1 trading plan, they raise critical questions about market perception, investor sentiment, and the lingering shadow of SPAC-era underperformance.

The Hagerty Case: A Structured Exit or a Signal?

Kauffman, who holds a 3.56% stake in Hagerty, has sold over 1.38 million shares since January 2025, generating nearly $14.3 million in proceeds. These transactions, executed through his controlled entity Aldel LLC, are part of a pre-arranged trading plan designed to mitigate accusations of market manipulation. Yet the sheer scale—equivalent to 2% of his total holdings—cannot be ignored.

The timing is equally telling. Hagerty's stock has traded in a narrow range of $9.00–$12.00 per share since mid-2024, a period marked by broader market skepticism toward SPACs. Kauffman's sales, while technically neutral, coincide with a sector-wide trend of insider divestitures. For context, SPAC-backed companies have historically underperformed the S&P 500 by 40–60% in the three years post-merger, with insider selling often preceding or following declines in stock value.

The SPAC Paradox: Legal Compliance vs. Market Sentiment

SPACs were heralded as a democratized path to public markets, but their legacy is marred by a pattern of insider wealth extraction. Sponsors typically receive 20% of the target company post-merger, creating incentives to offload shares once lock-up periods expire. Hagerty's situation mirrors this dynamic: Kauffman's trading plan allows him to monetize his stake without overtly signaling pessimism, yet the market interprets it as a lack of conviction.

The broader SPAC market offers a cautionary backdrop. From 2020 to 2022, SPACs averaged a 60% decline in value post-merger, with insider selling exacerbating downward pressure. Regulatory reforms in 2023–2024, including stricter disclosure rules and reduced safe-harbor protections, have somewhat curbed these practices. However, the AXS De-SPAC ETF (DSPC) still languishes at a 70% discount to its 2021 peak, underscoring lingering investor doubts.

Liquidity vs. Fundamentals: A Delicate Balance

Hagerty's fundamentals, however, tell a different story. The company's core business—vehicle valuation tools and insurance—has shown resilience, with recurring revenue streams and a loyal customer base. Its recent foray into electric vehicle (EV) valuation tools has added a growth layer, even as the broader auto insurance sector faces headwinds.

Yet insider selling complicates the narrative. While Kauffman's retained stake of 3.46 million shares suggests continued alignment with shareholders, the cumulative nature of his sales—particularly in a market sensitive to SPAC-related skepticism—could erode confidence. Institutional investors, who dominate SPAC 2.0 deals, now demand not just compliance but demonstrable alignment of interests.

Investment Implications: Proceed with Caution

For Hagerty, the challenge lies in reconciling its operational strengths with the psychological drag of insider divestitures. Investors must weigh three key factors:

1. Liquidity Dynamics: Hagerty's float is relatively small (~97 million shares), meaning even moderate insider sales can amplify volatility. The market may interpret Kauffman's actions as a liquidity play rather than a bearish signal, but the optics matter in a SPAC-sensitive environment.
2. Fundamental Resilience: The company's recurring revenue model and niche market position offer durable advantages. If Hagerty can demonstrate consistent EBITDA growth and expand its EV tools, it may decouple from SPAC-related stigma.
3. Regulatory Evolution: SPAC 2.0's emphasis on transparency and sponsor accountability has improved investor trust. Hagerty's use of a Rule 10b5-1 plan aligns with these reforms, but its success will depend on whether the market perceives the sales as routine or opportunistic.

Conclusion: The Road Ahead

Hagerty's insider selling is a microcosm of the SPAC conundrum: legally sound, strategically neutral, yet psychologically corrosive. For investors, the lesson is clear—SPACs are not a monolith. While Hagerty's fundamentals merit attention, the cumulative effect of insider divestitures demands scrutiny. In a market where sentiment often trumps substance, the quiet exodus of shares by key stakeholders may be the most telling indicator of all.

Investors should approach Hagerty with a dual lens: assess its ability to execute on its growth strategy while monitoring insider behavior as a barometer of confidence. In the SPAC era, the line between liquidity and doubt is perilously thin—and those who navigate it wisely will be best positioned to capitalize.