Insiders Are Buying Donegal Group

Sep. 1.13 | About: Donegal Group, (DGICA)

In this article, I will feature one insurance company that has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.

  2. The stock is sold by no insiders in the month of intensive purchasing.

  3. At least two purchasers increase their holdings by more than 10%.

Donegal Group (NASDAQ:DGICA) is an insurance holding company that offers property and casualty insurance through its wholly owned insurance subsidiaries and through a pooling agreement with Donegal Mutual Insurance Company. The insurance operations, rated A (Excellent) by A.M. Best Company, market full lines of personal and commercial insurance products through a network of independent insurance agencies in 22 states.

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Insider buying during the last 30 days

  • Robert Shenk purchased 2,527 shares on August 28 and currently holds 20,620 shares or less than 0.1% of the company. Robert Shenk is Senior Vice President. Robert Shenk increased his holdings by 14.0% in August.
  • Donegal Mutual Insurance Company purchased 5,500 shares on August 28 and currently holds 11,978,492 shares or 46.1% of the company. Donegal Mutual Insurance Company increased its holdings by less than 0.1% in August.
  • Jeffrey Miller purchased 5,050 shares on August 27 and currently holds 28,167 shares or 0.1% of the company. Jeffrey Miller is Senior Vice President and Chief Financial Officer. Jeffrey Miller increased his holdings by 21.8% in August.
  • Kevin Kraft purchased 500 shares on August 23 and currently holds 6,036 shares or less than 0.1% of the company. Kevin Kraft serves as a director of the company. Kevin Kraft increased his holdings by 9.0% in August.
  • Daniel Wagner purchased 1,240 shares on August 27 and currently holds 38,342 shares or 0.1% of the company. Daniel Wagner is Senior Vice President and Treasurer. Daniel Wagner increased his holdings by 3.3% in August.

Insider buying by calendar month

Here is a table of Donegal's insider-trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
August 2013 16,800 0
July 2013 3,300 0
June 2013 0 0
May 2013 3,053 0
April 2013 0 0
March 2013 7,953 0
February 2013 2,217 0
January 2013 1,917 0
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There have been 35,294 shares purchased and there have been zero shares sold by the insiders this year.

Financials

Donegal reported the second-quarter financial results on July 26 with the following highlights:

Revenue $135.5 million
Net income $2.6 million
Book value $14.84 per share
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Competition

Donegal's peer group consists of the following:

American Equity Investment Life Holding Company (NYSE:AEL), Amerisafe (NASDAQ:AMSF), Baldwin & Lyons (NASDAQ:BWINB), Citizens (NYSE:CIA), eHealth (NASDAQ:EHTH), EMC Insurance Group (NASDAQ:EMCI), Employers Holdings (NYSE:EIG), FBL Financial Group (NYSE:FFG), Horace Mann Educators Corporation (NYSE:HMN), Infinity Property and Casualty Corporation (NASDAQ:IPCC), Kansas City Life Insurance Company (OTCQX:KCLI), Meadowbrook Insurance Group (NYSE:MIG), MGIC Investment Corporation (NYSE:MTG), National Financial Partners Corp. (NYSE:NFP), National Interstate Corporation (NASDAQ:NATL), National Western Life Insurance Company (NASDAQ:NWLI), Navigators Group (NASDAQ:NAVG), Radian Group (NYSE:RDN), Safety Insurance Group (NASDAQ:SAFT), State Auto Financial Corporation (NASDAQ:STFC), Stewart Information Services Corporation (NYSE:STC), Tower Group International (NASDAQ:TWGP), Triple-S Management Corporation (NYSE:GTS), United Fire Group (NASDAQ:UFCS), and Universal American Corp. (NYSE:UAM).

Here is a table comparing Donegal against the peer group.

Donegal Peer average
P/E 15.83 20.87
P/B 90.84% 118.16%
Dividend yield 3.78% 1.46%
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Donegal beats the peer group with all three of these metrics (P/E, P/B and dividend yield).

Conclusion

There have been five different insiders buying Donegal and there have not been any insiders selling Donegal during the last 30 days. Two out of these five insiders increased their holdings by more than 10%.

There are zero analyst buy ratings, one neutral rating and zero sell ratings with an average target price of $15.00. Donegal is trading at a P/E ratio of 15.83 and a forward P/E ratio of 12.72. Donegal has a book value of $14.84 per share and the stock has a dividend yield of 3.78%. I believe the stock could be a good pick below the book value based on the intensive insider buying.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in DGICA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.