Financial Sector Ideas

[gfp927z]

>>> The Progressive Corporation (NYSE:PGR) - Number of Hedge Fund Holders: 71


https://finance.yahoo.com/news/15-best-financial-stocks-buy-125633619.html


On April 13, The Progressive Corporation (NYSE:PGR) released earnings for the first quarter of fiscal 2023. The company's EPS for the quarter was $0.66. The Progressive Corporation (NYSE:PGR) generated a revenue of $16.11 billion, up 22.22% year over year and ahead of market consensus by $97 million.

The Progressive Corporation (NYSE:PGR) is one of the best financial stocks to buy now. As of April 14, the stock has appreciated by 23.91% over the past 12 months.

This April, BofA analyst Joshua Shanker raised his price target on The Progressive Corporation (NYSE:PGR) to $188 from $178 and reiterated a Buy rating on the shares.

71 hedge funds disclosed having stakes in The Progressive Corporation (NYSE:PGR) at the close of Q4 2022. The total value of these stakes amounted to $2.3 billion. As of December 31, Orbis Investment Management is the top shareholder in the company and has a position worth $455 million.

Giverny Capital made the following comment about The Progressive Corporation (NYSE:PGR) in its Q4 2022 investor letter:

“At the top of our performance list, The Progressive Corporation (NYSE:PGR) rose 26% for the year as it generated outstanding results relative to other large auto insurers. Markel and Berkshire Hathaway rose modestly. The three companies compete in diverse lines of insurance, but they all benefit from rising rates for property coverage after an extended period of weather catastrophes, rising jury awards in lawsuits and inflated loss costs. Our insurers tend to be careful underwriters, so their profitability rises with rates. Our insurers also benefit from rising interest rates because they tend to invest premiums paid by customers into fixed income securities until they pay claims.

Our largest holding at year-end was Progressive, ascending to the top spot thanks to 26% appreciation in a year when most of our holdings lost value.

The auto insurance industry is in turmoil, with most companies losing money as soaring used car prices drive up the cost of accident repairs and replacements. It is hard to overstate Progressive’s superiority to its peer group. It is the most sophisticated underwriter in the country, and it began raising insurance premiums earlier than its peers did as driving patterns and repair costs worsened in 2021. It did other smart things, too, including reducing advertising and sales efforts in markets where it could not get rate increases – thus choosing where it would compete hardest for customers – and not renewing the policies of high-risk drivers. This may seem elementary, but most other major insurers did the opposite: they used the windfall profits earned during pandemic quarantine to ratchet up their marketing efforts to attract new customers. They cut rates to try to grow faster.

A recent report from JP Morgan estimated the top 10 US auto insurers recently paid out 81 cents in auto repair costs for every dollar of premiums collected in 2022. That 81% figure does not include corporate overhead, agent commissions, advertising or any other cost of running the business. Progressive’s tally was 71 cents on the dollar. The industry is in the process of unwinding its bad decisions – everybody is raising rates now. Progressive traditionally benefits when customers shop around more in response to rate hikes. We think Progressive’s growth rate is likely to accelerate in 2023 as it wins business from other insurers while maintaining industry-leading profitability. We would also note that used car prices finally have begun to fall, suggesting auto insurers could get relief on their loss costs even as they start charging higher rates.

<<<



---