Berkshire Hathaway Inc (BRK.B)

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Berkshire Hathaway eyes new investment, may add Progressive to portfolio
By: Investing | November 24, 2023

Warren Buffett’s leadership at Berkshire Hathaway (NYSE:BRKa) has been marked by a notable compounded annual growth rate of 20% since 1965. Today, the conglomerate's latest confidential filing has sparked curiosity in the financial world with a suggested $1.7 billion investment in an undisclosed company. This move mirrors Buffett's history of making strategic acquisitions, such as those of Chevron (NYSE:CVX) and Verizon Communications (NYSE:VZ) in 2020.

The intrigue deepens as Berkshire Hathaway has recently adjusted its portfolio. The firm reduced its stakes in companies like Globe Life (NYSE:GL), Markel (NYSE:MKL), and Aon (NYSE:AON), while simultaneously increasing its investments in the financial sector by $1.2 billion. Speculation is rife that Progressive Corporation (NYSE:PGR) might be Berkshire's latest target for investment.

Progressive is renowned for its disciplined underwriting practices initiated by Peter B. Lewis in 1965, which have led to an average loss ratio significantly lower than that of GEICO, a subsidiary of Berkshire. Ajit Jain, who has been at the helm of Berkshire’s insurance operations since 1986, has praised Progressive's telematics-based pricing model for contributing to these low loss ratios.

While the market anticipates confirmation from Berkshire’s fourth quarter filings due next February, Progressive is already being recognized as a lucrative investment opportunity. If Buffett and Vice Chairman Charlie Munger’s previous commendations are anything to go by, Progressive’s robust management and competitive edge could soon place it within Berkshire Hathaway’s diverse and carefully curated investment portfolio.

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