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Progressive Corp (PGR) Dominates Bullish Returns in Ariel Investments’ Port

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Ariel Investments, a minority-owned investment company that focuses in small and mid-capitalized US based stocks, published its third-quarter 2020 Investor Letter – a copy of which can be downloaded here. A positive return of 4.56% was recorded by the fund for the 3rd Quarter of 2020, ahead of its Russell 2500 Value benchmark that returned 3.54%. You can view the fund’s top 10 holdings to have a peek at their top bets for 2021.

Ariel Investments in their Q3 2020 Investor Letter said that they were able to distinguish a value in The Progressive Corporation (NYSE: PGR) and a top contributor for the hedge fund. Progressive Corporation is an insurance company that currently has a $54.661 billion market cap. For the past 3 months, PGR delivered a -3.24% return and settled at $93.35 per share at the closing of January 14th.

Here is what Ariel Investments has to say about The Progressive Corporation in their Investor Letter:

"Personal auto insurer, Progressive Corporation (NYSE: PGR) was the top contributor to results over the trailing twelve-month period. The company has been delivering robust earnings results highlighted by premium growth and margin expansion. PGR is experiencing an improvement in auto losses, as people are driving less due to the persistence of the pandemic. Looking ahead, we expect the top line will continue to benefit from PGR’s digital dominance for auto insurance in the direct channel, as well as from the rollout of several new niche commercial products. At current levels, PGR is trading at a 5% discount to our estimate of private market value."

Pixabay/Public Domain

Last December 2020, we published an article telling that The Progressive Corporation (NYSE: PGR) was in 47 hedge funds’ portfolio, almost making it to its all time high statistics of 53. The Progressive Corporation proved its worth by delivering a 22.63% return in the past 12 months.

As of September 2020, Ariel Investments had a 741K share position in PGR that amounted to $70 million. This made Ariel Investments as the top 7 hedge fund that holds most of PGR’s stake, just behind Abrams Bison Investments with $87 million worth of PGR shares and GQG Partners tops PGR's list with $317 million. However, our calculations showed that The Progressive Corporation (NYSE: PGR) does not belong to the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website.

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