Hedge Funds Are Buying The Progressive Corporation (PGR)

In this article you are going to find out whether hedge funds think The Progressive Corporation (NYSE:PGR) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

The Progressive Corporation (NYSE:PGR) investors should pay attention to an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that PGR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are a large number of metrics investors use to appraise their stock investments. Some of the less known metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can outpace the market by a healthy margin (see the details here).

Andreas Halvorsen

Andreas Halvorsen of Viking Global

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. Also, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to analyze the recent hedge fund action surrounding The Progressive Corporation (NYSE:PGR).

Hedge fund activity in The Progressive Corporation (NYSE:PGR)

Heading into the second quarter of 2020, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the fourth quarter of 2019. On the other hand, there were a total of 44 hedge funds with a bullish position in PGR a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is PGR A Good Stock To Buy?

The largest stake in The Progressive Corporation (NYSE:PGR) was held by Renaissance Technologies, which reported holding $322.1 million worth of stock at the end of September. It was followed by Viking Global with a $154.2 million position. Other investors bullish on the company included Brave Warrior Capital, Egerton Capital Limited, and AQR Capital Management. In terms of the portfolio weights assigned to each position Steel Canyon Capital allocated the biggest weight to The Progressive Corporation (NYSE:PGR), around 10.2% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, setting aside 9.77 percent of its 13F equity portfolio to PGR.

Now, key money managers were leading the bulls’ herd. Viking Global, managed by Andreas Halvorsen, initiated the largest position in The Progressive Corporation (NYSE:PGR). Viking Global had $154.2 million invested in the company at the end of the quarter. John Armitage’s Egerton Capital Limited also initiated a $110.3 million position during the quarter. The other funds with new positions in the stock are Jonathan Bloomberg’s BloombergSen, Daniel Lascano’s Lomas Capital Management, and Daniel Johnson’s Gillson Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The Progressive Corporation (NYSE:PGR) but similarly valued. We will take a look at Vale SA (NYSE:VALE), The Sherwin-Williams Company (NYSE:SHW), Applied Materials, Inc. (NASDAQ:AMAT), and Pinduoduo Inc. (NASDAQ:PDD). This group of stocks’ market valuations are closest to PGR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VALE 28 1111939 2
SHW 57 1511243 2
AMAT 56 2317608 -16
PDD 28 1671925 -4
Average 42.25 1653179 -4

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.25 hedge funds with bullish positions and the average amount invested in these stocks was $1653 million. That figure was $1506 million in PGR’s case. The Sherwin-Williams Company (NYSE:SHW) is the most popular stock in this table. On the other hand Vale SA (NYSE:VALE) is the least popular one with only 28 bullish hedge fund positions. The Progressive Corporation (NYSE:PGR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but beat the market by 15.6 percentage points. Unfortunately PGR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PGR were disappointed as the stock returned 1.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.