Is PGR A Good Stock To Buy Now?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of The Progressive Corporation (NYSE:PGR) based on that data.

Is PGR a good stock to buy now? The Progressive Corporation (NYSE:PGR) investors should be aware of a decrease in activity from the world’s largest hedge funds recently. The Progressive Corporation (NYSE:PGR) was in 47 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 53. Our calculations also showed that PGR isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Cliff Asness of AQR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this cannabis tech stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to view the key hedge fund action surrounding The Progressive Corporation (NYSE:PGR).

Do Hedge Funds Think PGR Is A Good Stock To Buy Now?

At the end of September, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the second quarter of 2020. On the other hand, there were a total of 53 hedge funds with a bullish position in PGR a year ago. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Is PGR A Good Stock To Buy?

Among these funds, GQG Partners held the most valuable stake in The Progressive Corporation (NYSE:PGR), which was worth $317.6 million at the end of the third quarter. On the second spot was Egerton Capital Limited which amassed $242.8 million worth of shares. Brave Warrior Capital, Renaissance Technologies, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Abrams Bison Investments allocated the biggest weight to The Progressive Corporation (NYSE:PGR), around 10.9% of its 13F portfolio. Steel Canyon Capital is also relatively very bullish on the stock, dishing out 8.78 percent of its 13F equity portfolio to PGR.

Seeing as The Progressive Corporation (NYSE:PGR) has experienced declining sentiment from hedge fund managers, it’s safe to say that there were a few fund managers that decided to sell off their positions entirely in the third quarter. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the biggest investment of all the hedgies watched by Insider Monkey, valued at about $61.5 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also sold off its stock, about $27 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to The Progressive Corporation (NYSE:PGR). We will take a look at Humana Inc (NYSE:HUM), Boston Scientific Corporation (NYSE:BSX), Norfolk Southern Corp. (NYSE:NSC), General Electric Company (NYSE:GE), Moody’s Corporation (NYSE:MCO), America Movil SAB de CV (NYSE:AMX), and Applied Materials, Inc. (NASDAQ:AMAT). This group of stocks’ market values match PGR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HUM 61 4804339 -12
BSX 61 2536996 -5
NSC 47 715468 0
GE 45 2747958 -12
MCO 60 11434920 -1
AMX 15 132210 4
AMAT 59 2498740 1
Average 49.7 3552947 -3.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 49.7 hedge funds with bullish positions and the average amount invested in these stocks was $3553 million. That figure was $1692 million in PGR’s case. Humana Inc (NYSE:HUM) is the most popular stock in this table. On the other hand America Movil SAB de CV (NYSE:AMX) is the least popular one with only 15 bullish hedge fund positions. The Progressive Corporation (NYSE:PGR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PGR is 63.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately PGR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PGR investors were disappointed as the stock returned -1.8% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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