Is Progressive Corporation (PGR) A Good Stock To Buy?

Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on small companies, which makes it hard for an individual investor to pin down a ‘winner’ within the small-cap collection of stocks. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and unlimited resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Is Progressive Corporation (NYSE:PGR) going to take off soon? Prominent investors are getting less optimistic. The number of long hedge fund bets were trimmed by 1 lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Baxter International Inc. (NYSE:BAX), T. Rowe Price Group, Inc. (NASDAQ:TROW), and St. Jude Medical, Inc. (NYSE:STJ) to gather more data points.

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In the eyes of most stock holders, hedge funds are viewed as slow, old financial tools of yesteryear. While there are greater than 8000 funds with their doors open at present, Hedge fund experts at Insider Monkey choose to focus on the moguls of this group, approximately 700 funds. These hedge fund managers orchestrate most of the smart money’s total asset base, and by observing their highest performing picks, Insider Monkey has discovered a few investment strategies that have historically outstripped the broader indices. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, let’s check out the new action regarding Progressive Corporation (NYSE:PGR).

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

At the end of Q3, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 4% from the second quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund holdings data compiled by Insider Monkey, Richard S. Pzena’s Pzena Investment Management had the largest position in Progressive Corporation (NYSE:PGR), worth close to $86.4 million, comprising 0.6% of its total 13F portfolio. Coming in second is Tourbillon Capital Partners, led by Jason Karp, holding a $62.5 million call position; 1.6% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions encompass David Harding’s Winton Capital Management, Jason Karp’s Tourbillon Capital Partners and Phill Gross and Robert Atchinson’s Adage Capital Management.

Seeing as The Progressive Corporation (NYSE:PGR) has witnessed falling interest from the smart money, we can see that there were a few fund managers that elected to cut their entire stakes heading into Q4. Interestingly, Clint Carlson’s Carlson Capital dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, valued at close to $12.9 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dumped its stock, about $5.5 million worth. These moves are important to note, as total hedge fund interest fell by 1 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to The Progressive Corporation (NYSE:PGR). We will take a look at Baxter International Inc. (NYSE:BAX), T. Rowe Price Group, Inc. (NASDAQ:TROW), St. Jude Medical, Inc. (NYSE:STJ), and Analog Devices, Inc. (NASDAQ:ADI). This group of stocks’ market values are similar to Progressive Corporation (NYSE:PGR)’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BAX 51 5366495 12
TROW 26 516235 -3
STJ 41 599886 0
ADI 32 1189511 5

As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $1.92 billion and Baxter International Inc. (NYSE:BAX) is the most popular stock in this table. On the other hand, T. Rowe Price Group, Inc. (NASDAQ:TROW) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks, The Progressive Corporation (NYSE:PGR) is even less popular than T. Rowe Price Group, Inc. (NASDAQ:TROW). This should raise some questions regarding Progressive Corporation’s performance in the short- to medium-term and, therefore, a more detailed analysis is required before making a decision.