Should I Buy The Progressive Corporation (PGR)?

Is The Progressive Corporation (NYSE:PGR) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

The Progressive Corporation (NYSE:PGR) was in 47 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 53. PGR investors should pay attention to an increase in enthusiasm from smart money in recent months. There were 44 hedge funds in our database with PGR holdings at the end of June. Our calculations also showed that PGR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a glance at the fresh hedge fund action regarding The Progressive Corporation (NYSE:PGR).

William Gray Orbis Investment Management

William Gray of Orbis Investment Management

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

Heading into the fourth quarter of 2021, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the second quarter of 2021. On the other hand, there were a total of 47 hedge funds with a bullish position in PGR a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

More specifically, Orbis Investment Management was the largest shareholder of The Progressive Corporation (NYSE:PGR), with a stake worth $408.1 million reported as of the end of September. Trailing Orbis Investment Management was Brave Warrior Capital, which amassed a stake valued at $206.3 million. AQR Capital Management, Abrams Bison Investments, and BloombergSen 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 7.23% of its 13F portfolio. Brave Warrior Capital is also relatively very bullish on the stock, dishing out 7.23 percent of its 13F equity portfolio to PGR.

As one would reasonably expect, specific money managers were leading the bulls’ herd. Orbis Investment Management, managed by William B. Gray, initiated the most outsized position in The Progressive Corporation (NYSE:PGR). Orbis Investment Management had $408.1 million invested in the company at the end of the quarter. Thomas Bancroft’s Makaira Partners also initiated a $6.8 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Renaissance Technologies, and Ran Pang’s Quantamental Technologies.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The Progressive Corporation (NYSE:PGR) but similarly valued. These stocks are Metlife Inc (NYSE:MET), IDEXX Laboratories, Inc. (NASDAQ:IDXX), Align Technology, Inc. (NASDAQ:ALGN), Lululemon Athletica inc. (NASDAQ:LULU), Public Storage (NYSE:PSA), NXP Semiconductors NV (NASDAQ:NXPI), and Ferrari N.V. (NYSE:RACE). All of these stocks’ market caps are similar to PGR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MET 39 1145473 -2
IDXX 43 3698749 4
ALGN 49 2262912 -8
LULU 41 709432 -5
PSA 35 1260285 8
NXPI 51 1080819 -1
RACE 27 1177569 0
Average 40.7 1619320 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 40.7 hedge funds with bullish positions and the average amount invested in these stocks was $1619 million. That figure was $1575 million in PGR’s case. NXP Semiconductors NV (NASDAQ:NXPI) is the most popular stock in this table. On the other hand Ferrari N.V. (NYSE:RACE) is the least popular one with only 27 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. Our overall hedge fund sentiment score for PGR is 76.3. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately PGR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PGR were disappointed as the stock returned 2.9% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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