KINS

Kingstone Companies ($KINS) Director Doubles Down With $177K Purchase After 25% Stock Pullback

05/22/2025 20:34

Kingstone Companies Inc ($KINS) board member Thomas Newgarden purchased 11,000 shares worth approximately $177,247 on May 21, 2025. This acquisition occurred at around $16.11 per share, after the stock had retreated more than 25% from its May 9 peak of $21.67. This isn't an isolated purchase. Newgarden previously demonstrated confidence in November 2024, when he acquired 15,112 shares worth about $195,000 across three consecutive trading days. Following that buying spree, $KINS shares climbed from the $10-13 range to $15-17. This pattern suggests a strategy of buying during what insiders perceive as undervaluation periods. Kingstone, a small property and casualty insurer focused on New York and the Northeast, has demonstrated remarkable growth over the past year. The stock has surged approximately 233% from around $4.80 in June 2024 to current levels around $16. The rally began accelerating in late July 2024, pushing above $18 by February 2025 and briefly exceeding $21 in early May. This price appreciation has been backed by improving fundamentals. Kingstone has achieved six consecutive profitable quarters, with Q1 2025 direct premiums written growing 22.7% year-over-year to $57.2 million. Net income jumped 172.1% to $3.88 million, while earnings per share increased 125% to $0.27. "Kingstone's strength lies in our focused strategy and strong market position in downstate New York," CEO Meryl Golden noted in the recent earnings call. "While many competitors have exited this market, we're capitalizing on growth opportunities in the region." A particularly significant development was Kingstone's April 2025 renewal rights agreement with AmGuard (a Berkshire Hathaway subsidiary) for downstate New York homeowners business. This transaction, involving approximately $70 million in written premiums, takes effect in Q3 2025 and is expected to contribute $25-35 million in additional premiums over the next 12 months. Financially, Kingstone maintains a healthy position. Stockholders' equity reached $82.2 million as of March 31, 2025, up from $66.7 million year-over-year. The company maintains a conservative debt-to-equity ratio of just 6.53% with $37.49 million in cash on hand. Return on equity stands at an impressive 35.29%, significantly outperforming industry averages. Despite this strong growth and profitability, Kingstone's valuation remains attractive. The stock trades at a trailing P/E ratio of approximately 9.6-9.8x, below the insurance industry average. Its forward P/E of about 7.47x reflects expectations for continued earnings improvement. This relative undervaluation likely influenced Newgarden's recent purchase decision. The company has provided 2025 guidance projecting 15-25% growth in core business direct premiums written and a net combined ratio between 81-85%. Net income per share is expected between $1.75-$2.15, implying a forward P/E of 7.4-9.1x at current prices. However, every investment carries risks. Kingstone's current ratio of 0.71 (below 1.0) suggests careful liquidity management is needed. The company's concentration in the New York market creates geographic risk exposure. The March 31, 2025 announcement of CFO Jennifer Gravelle's resignation also introduces short-term uncertainty. "The New York homeowners insurance market has been challenging for years, particularly in downstate regions," explains an insurance industry analyst. "However, as many competitors have withdrawn, remaining carriers have opportunities for rate increases and market share expansion. Kingstone appears well-positioned in this environment." Considering the insider trading patterns, strong performance improvements, strategic expansion, and attractive valuation, Kingstone presents an interesting small-cap opportunity for investors. The recent share purchase by a board member following the price correction suggests management confidence in the company's long-term value and growth prospects. Insiders typically possess more information than the market, and their capital commitments often signal positive expectations. Investors should nonetheless be mindful of the volatility and liquidity risks inherent in small-cap stocks. With a market capitalization of approximately $225 million, Kingstone is relatively small compared to major insurers, which can translate to greater price fluctuations and occasionally lower trading volumes.

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