Donegal Group (NASDAQ: DGICA) is an insurance holding company that offers property and casualty insurance through its subsidiaries. The company is in the spotlight due to the sudden spike in insider trades over the past quarter.
Trades in Detail
Per TipRanks’ Insider Trading Activity tool and Donegal’s SEC filings, the company’s top executives have been selling its stock. Meanwhile, Donegal Mutual (holding about 41% of its Class A common stock and 84% of Class B common stock) has been acquiring DGICA stock. Further, most of these transactions have come in the form of an Informative Buy and Sell (insiders used their own capital to execute these trades).
Net net, DGICA’s top insiders bought shares worth $3.5 million in the last three months. What’s worth mentioning is that DGICA stock, which has mostly traded range-bound in the past couple of years, has gained more than 20% in the last three months.
Now What?
While DGICA stock has positive indicators from insiders, hedge funds have sold its stock during the same period. Per TipRanks’ Hedge Fund Trading Activity tool, Royce & Associates’ Chuck Royce closed his position in DGICA stock.
All of these came when the company was aggressively transforming its business and modernizing its operations and processes to accelerate growth.
During the last quarter’s conference call, Donegal’s CEO, Kevin G. Burke, stated, “we achieved strong net earned premium growth in the quarter, which largely reflected an increase in net premiums written throughout 2021. Underwriting results continue to strengthen as we transform our business and migrate our products and processes to modernized technology platforms.”
Donegal is leveraging technology and is focusing on bringing additional products to spur growth. Its net income increased by 24.8% during the last reported quarter, which is positive.
Bottom Line
Business transformation, new product launches, and positive indications from insiders point to a healthy future. Further, DGICA stock has shown resilience amid the recent selling in the market. However, investors should take caution as inflationary pressure on the business could remain a drag.
Overall, it sports a Neutral Smart Score of 7 out of 10.
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