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The Progressive Corporation (PGR) vs. Top 20 Hedge Fund Stocks in 2019

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of more than 10 percentage points so far in 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in The Progressive Corporation (NYSE:PGR).

The Progressive Corporation (NYSE:PGR) was in 48 hedge funds’ portfolios at the end of September. PGR investors should be aware of a decrease in support from the world’s most elite money managers in recent months. There were 50 hedge funds in our database with PGR positions at the end of the previous quarter. 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 at the end of this article for Q2 rankings).

If you’d ask most market participants, hedge funds are perceived as slow, old investment vehicles of years past. While there are over 8000 funds with their doors open at the moment, We choose to focus on the moguls of this group, approximately 750 funds. These hedge fund managers administer the majority of the smart money’s total capital, and by tracking their highest performing equity investments, Insider Monkey has uncovered a few investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

RENAISSANCE TECHNOLOGIES

Jim Simons of Renaissance Technologies

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s take a peek at the key hedge fund action regarding The Progressive Corporation (NYSE:PGR).

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

Heading into the fourth quarter of 2019, a total of 48 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PGR over the last 17 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Is PGR A Good Stock To Buy?

The largest stake in The Progressive Corporation (NYSE:PGR) was held by Renaissance Technologies, which reported holding $446.1 million worth of stock at the end of September. It was followed by AQR Capital Management with a $220.2 million position. Other investors bullish on the company included Two Sigma Advisors, D E Shaw, and Ariel Investments. In terms of the portfolio weights assigned to each position Steel Canyon Capital allocated the biggest weight to The Progressive Corporation (NYSE:PGR), around 12.12% of its 13F portfolio. One Tusk Investment Partners is also relatively very bullish on the stock, earmarking 8.48 percent of its 13F equity portfolio to PGR.

Since The Progressive Corporation (NYSE:PGR) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of fund managers that elected to cut their positions entirely last quarter. It’s worth mentioning that Christopher James’s Partner Fund Management said goodbye to the biggest stake of all the hedgies tracked by Insider Monkey, valued at about $52.2 million in stock, and Gregg Moskowitz’s Interval Partners was right behind this move, as the fund dumped about $6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to The Progressive Corporation (NYSE:PGR). We will take a look at Illumina, Inc. (NASDAQ:ILMN), Baxter International Inc. (NYSE:BAX), Las Vegas Sands Corp. (NYSE:LVS), and Metlife Inc (NYSE:MET). This group of stocks’ market valuations resemble PGR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ILMN 37 1183062 -6
BAX 33 2445089 -1
LVS 39 1983338 0
MET 35 2050364 9
Average 36 1915463 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1915 million. That figure was $1563 million in PGR’s case. Las Vegas Sands Corp. (NYSE:LVS) is the most popular stock in this table. On the other hand Baxter International Inc. (NYSE:BAX) is the least popular one with only 33 bullish hedge fund positions. Compared to these stocks The Progressive Corporation (NYSE:PGR) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately PGR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PGR were disappointed as the stock returned 23.9% so far in 2019 (through 12/23) and trailed 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 65 percent of these stocks already outperformed the market in 2019.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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